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STORE Capital REIT buys 3 treatment centers.

Byline: William Morris

An Arizona real estate investment trust is assuming ownership of three Greater Minnesota addiction treatment centers.

STORE Capital of Scottsdale, Arizona, has purchased the Oakridge Treatment Center at 4800 48th St. NE in Rochester; Douglas Place Men's Treatment Center at 1111 Gateway Drive NE in East Grand Forks; and Beauterre Recovery Institute in Owatonna, according to recent certificates of real estate value. All three were sold by New Brighton-based Meridian Behavioral Health, which according to its website operates inpatient and outpatient addiction treatment in five states.

The sales combined total approximately $23.7 million.

Neither party responded to messages seeking comment, but STORE specializes in sale-leaseback transactions, according to its website. Entities connected to the REIT have purchased a number of Minnesota properties in recent years, including restaurants, manufacturing plants and the Woodbury Cabela's store.

STORE paid $6.287 million for Douglas Place, an 85-bed inpatient treatment facility on 7.52 acres of land just off Highway 2 in East Grand Forks. Meridian bought the facility in January 2014, according to a press release from the time, but no sale price was given for that transaction.

In Olmsted County, STORE paid $7.784 million for Oakridge, a 70-bed treatment center located on 90 acres of land northeast of Rochester. Meridian bought the property, formerly a priest treatment center known as the Guest House, for $5.1 million in 2016.

The largest sale was $9.626 million for Beauterre, a 60-bed treatment center just south of Highway 14 in Owatonna. The facility is located on 182 acres bought for $3.575 million in 2014 from the University of St. Thomas, which operated it as the Gainey Conference Center.

Greater Minnesota has seen a challenging market for addiction treatment centers in recent years, said Mike Schiks, executive director and CEO of the Project Turnabout Addiction Recovery Center in Granite Falls and a founder of the Minnesota Alliance of Rural Addiction Treatment Programs. Many programs rely on state reimbursements that have not kept up with costs in the past decade, and the Legislature has yet to pass a solution, he said in an interview.

"It always seems to get kicked down the road," Schiks said, noting that "I think it's a lot more complicated than demand. The demand is high."

A number of facilities have closed or been bought out by for-profit providers in recent years, Schiks said, noting Project Turnabout gets about two purchase offers per year from private investors.

"Other facilities that don't have the capability to grow or expand, get out, or they get picked off by a large chain," he said. " The issue related to the whole dynamics related to reimbursement and regulations have made it difficult for programs to operate."

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Related:

REIT pays $26.3M for Woodbury Cabela's store

Certificates of real estate value

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Publication:Finance and Commerce
Geographic Code:1U4MN
Date:Jan 22, 2019
Words:478
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