The former Desert Life Rehabilitation & Care Center, a Kindred Healthcare managed center at 1919 West Medical Street in Tucson has sold for $10.13 million ($44,022 per bed). The 65,294-square-foot facility in four buildings sit on 9.58 acres at the corner of Orange Grove and Corona roads, adjacent to Northwest Hospital Medical Plaza in Tucson.

The Ensign Group acquired the 230-bed skilled nursing facility. The California–based Ensign Group, has rebranded the facility since buying it to Casas Adobes Post-Acute Rehabilitation Center.

“We are excited to add a second operation this year to our 15 existing operations in Arizona,” said Christopher Christensen, Ensign’s President and Chief Executive Officer, referring to Ensign’s March acquisition of Horizon Post-Acute and Rehabilitation Center, a 196-bed skilled nursing facility in Glendale, Arizona. “Together with Ensign’s existing operations in the Tucson market, this new addition strengthens our local cluster and will magnify our ability to provide top quality care to the patients and families we serve,” he added.

“We are proud to be joining a wonderful team of caregivers as we seek to reinforce and strengthen the caring, patient-centered environment they have created here,” said John Albrechtsen, President of Bandera Healthcare, Ensign’s Arizona-based portfolio subsidiary. He added that the residents, their families, and the broader community have embraced the news of Ensign’s acquisition of this facility and are encouraged by Ensign’s local reputation. Casas Adobes had an occupancy rate of approximately 43% at acquisition and is expected to be mildly accretive to earnings in 2014.

The Ensign Group Inc. is the parent company of the Ensign group of skilled nursing, rehabilitative care services, home health care, hospice care, assisted living and urgent care companies. Its independent operating subsidiaries provide physical, occupational and speech therapies, home health and hospice services, urgent care services and other rehabilitative and healthcare services in eleven states throughout the western and mid-western U.S.

The new owners expect Casas Adobes Post-Acute, with an occupancy rate of around 43%, to be mildly accretive to earnings in 2014. This acquisition marks Ensign’s 121^st addition to its portfolio of healthcare facilities and the 16th in the row of its Arizona operations. One of these, Horizon Post-Acute and Rehabilitation Center in Glendale, AZ was purchased earlier this year. Horizon Post-Acute and Casas Adobes Post-Acute will remain with Ensign after separating its real estate business from the healthcare operations.

Ensign purchased Casas Adobes with cash from Ventas Realty, LP an affiliate of Ventas Inc. a REIT out of Chicago, IL. In addition, the real estate assets it acquired in this acquisition and in the Horizon Post-Acute acquisition will remain with Ensign after the completion of the recently disclosed plan to separate Ensign’s real estate business from its healthcare operations.

Christensen is at (949) 487-9500. Albrechtsen can be reached at (520) 795.9574.

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[mepr-show rules=”58038″]Sale date: May 1, 2014. Sale price: $10,125,000. All cash transaction. APN: 102-12-880.  Buying entity was Montebella Health Holdings, LLC an affiliate of The Ensign Group.[/mepr-show]

Historic, mid-town El Con Center sold to TKG El Con Center, a group fronted by St. Louis Rams owner Stanley Kroenke, for $81.75 million ($104 PSF). The 785,000-square-foot center and ground leased pads are on nearly 93-acres at the heart of the Tucson Metro area, 3435 – 3699 East Broadway in Tucson.

This is the Kronke Group’s third center in Tucson, the other two are located at the southeast corner of Ajo & Mission and Broadway Parc at 5855 E Broadway Blvd., across from Park Place Mall.

The investor plans on continuing to operate as a “vital shopping destination,” according to a press release from Eastdil Secured, a real estate investment banking company in Santa Monica, California, that represents the new owners.

The property has value to add, with approximately 30,000-square-feet of space situated between JC Penney’s and Walmart vacant.

The deal marks an end to the two families Kivel and Papanikolas that operated the center for 54-years. The El Con opened in 1960 with original anchor tenants such as Montgomery Ward and Woolworth’s and prospered for decades.

But in the late 1980s the once-prominent retail stores began to fold across the country, and the center found growing competition from newer shopping centers. Although the El Con’s future looked bleak, the owners didn’t give up on it and embarked on a multimillion-dollar makeover to lure stores to the property.

Nancy McClure of CBRE in Tucson worked the strategic plan & leasing from 2003 to 2008, that allowed El Con to be re-tenanted and ‘de-malled’ it into the open-air format that it is today. “I feel very proud of the direction it took and feel invested in its success,” said McClure. “El Con represents a major redevelopment of a Tucson retail landmark.”

Beginning in the early 2000s, national retailers returned to the site, including Home Depot, Target, and Walmart. McClure relocated interior tenants such as Radio Shack to outparcels along Broadway, and others such as Office Depot, In-N-Out Burger, Burlington Coat Factory, Chick-fil-A, Rubio’s and Starbucks joined.

Although the center is the largest feeder for downtown development located within the Rio Nuevo TIF District, its redevelopment has been slow, hindered largely by neighborhood associations contesting the construction of the eventual Walmart store for 10-years. The spillover effect has hurt downtown revitalization.

The latest addition to the center will soon be Cheddars, under construction on outparcel #3 near Rubio’s and Starbucks along Broadway.

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[mepr-show rules=”58038″]Sale date: 5/19/2014. Down payment was $20,250,000 with conventional financing for the balance. APNs: 125-10-136 thru 148. All of the outpads are on ground leases that sold in this transaction, including ground lease for Home Depot. Excluded from the deal was the ground lease occupied by Claim Jumper located on APN #125-10-135 that was retained by seller.[/mepr-show]

Developer Scott Stiteler and partners want to build an 8-story, 150-room AC Marriott Hotel at 5th Avenue, between Broadway and Congress in downtown Tucson. The Rio Nuevo Board had been working on this public-private partnership (P3) project since July, 2013 and on Monday, history was in the making as the Rio Nuevo Board approved this P3 hotel project.

It does seem ironic that with the mandate for a district hotel about to be lifted with the passage of SB 1351, that it is now a P3 project for a hotel comes together. However, it was started long before anyone knew the law would pass.

The deal itself is a little complicated, as most public-private partnership are, and the Rio Nuevo board members spent several hours in discussion, asking questions of legal counsel and Stiteler before being assured the taxpayers would be secure – no matter what happened.

Here’s how it is structured: Rio Nuevo agrees to buy the hotel’s parking structure once complete for $4.3 million in a sale / leaseback agreement with developer. Secured by approximately 200 parking spaces and leased to the hotel for $80 per month per space with escalations up to $100 per month over a seven year term with renewals. The developer can purchase the parking garage in those seven years using a complex formula that equates to 50% of the rent paid Rio Nuevo and a contingency that TIFF revenues from the hotel are 3 times higher than rent. The price to extend the option purchase past seven years is an additional $1 million.

The parking garage is to be built by the developer and transfers to Rio Nuevo only after certificate of occupancy is obtained. That could be as early as two years from now when Rio Nuevo would actually make payment of the $4.3 million for the garage. The leaseback payments start 6-months after close of escrow and is a true triple net lease, with developer responsible for all operating and maintenance costs of the garage. Full terms and conditions were laid out in a 40-page document between Rio Nuevo and hotel developer including all the various “what-if’s” scenarios.

The land costs for the 25,000-square-foot lot and construction will probably exceed the $4.3 million Rio Nuevo is paying, with no other costs passed on to the District. The construction cost for the whole package is nearly $32 million, with most of the money coming from the developer and an $8 million HUD loan.

The lease rate per space provides income to Rio Nuevo at rates higher than normal in the central business district. Stiteler reported that Depot Plaza is leased at $60 per space per month and Plaza Centro is $70 per space. Both are City operated and maintained, while the hotel parking will be lessee maintained and operated.

Stiteler claims, “The hotel will create 220 new jobs downtown and more than 220 construction jobs plus multipliers.”

With Rio Nuevo approval in place, Stiteler is seeking the City of Tucson approval at its June meeting. The project already has approval from Marriott for the hotel, HUD loan approval contingent upon the City of Tucson, GPLED and tax incentives for sidewalks and Arizona Avenue are being requested of the City. Stiteler feels optimistic it will all come together, “We’ve come a long way and I’m eager to build this hotel in this community,” Stiteler said.

The developer behind Proper, Diablo Burger, Hub, Sparkroot, Playground and other popular locations downtown, Stiteler has been a placemaker for downtown for some time, developing and promoting the downtown core as a truly urban destination that models the live, work, play ideal.

As Mark Irvin, Secretary of the Rio Nuevo Board said after the meeting, “This deal really makes sense; I’m proud we voted to move forward.”

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