Molina Sells Company Headquarters
Molina Healthcare, the Medi-Cal/Medicaid managed care insurer, has sold and leased back its company headquarters in Long Beach and another office building in Columbus, Ohio, for $158 million.
The transaction occurred just 18 months after Molina bought the Long Beach property. It was conducted with a real estate subsidiary of Angelo, Gordon & Co., a New York-based investment firm that specializes in non-traditional transactions.
“Consistent with our long-term capital plan, this transaction unlocks additional capital, allowing Molina Healthcare to fund future growth initiatives,” said health plan chief executive officer J. Mario Molina, M.D. Molina had mentioned a sale and leaseback possibility during a company meeting with investment analysts last February. A company spokesperson said the money would be used for new business ventures and expansion.
The Long Beach property includes two linked 14-story office buildings on five acres of land in the downtown business district. The other property in Columbus houses Molina's Ohio operations. The company operates Medicaid managed care plans in 10 states. Its Ohio affiliate has about 240,000 enrollees.
Molina purchased the Long Beach property in late 2011 for $83 million, one of the biggest commercial real estate deals in the city since the market plummeted after the 2008 financial crisis. Molina purchased the Ohio parcel last year for an unknown sum.
Under the terms of the deal, Angelo Gordon will serve as Molina's landlord.
The sale represents a blip on the radar of Molina's assets – the company reported cash on hand of more than $1.1 billion for the quarter ending March 31. However, it represents something of a trend among healthcare entities to consider selling and leasing back their facilities to healthcare real estate trusts or similar operations.
According to Gerald M. Swiacki, a senior vice president with Lancaster Pollard, a Columbus-based financial advisory firm for hospitals and related entities, selling properties to healthcare REITs and leasing them back is becoming an attractive option. However, Swiacki noted that such deals tend to be more advantageous to hospitals that have specific credit profiles that make such a transaction more attractive than taking on new debt or refinancing their existing bonds or other obligations.
