Where there’s a hospital or health system filing for bankruptcy protection, there’s usually a sale in the offing that involves a real estate investment trust. That’s the most recent twist in the story of St. Christopher’s Hospital for Children, which we first reported in September 2019.
The 188-bed hospital, a critical safety-net hospital for children in North Philadelphia, and Hahnemann University Hospital were sold in September 2018 to California investment banker Joel Freedman, head of American Academic Health System, LLC (AAHS), for $170 million. Hahnemann’s financial troubles prompted Freedman to file for Chapter 11 bankruptcy protection for both hospitals on June 30, 2019. The real estate assets weren’t part of that filing. Hahnemann closed a month later.
St. Christopher’s was rescued by $50 million bid from a joint venture formed by Tower Health and Drexel University, home to the Drexel College of Medicine. Tower Health took the operational lead and the deal closed on December 15, 2019.
Now, local media sources report that Iron Stone Real Estate Partners, a local REIT, has agreed to pay $65 million for the hospital building and its parking garage, and possibly an adjacent outpatient center. The Tower-Drexel JV disclosed the agreement of sale in a bond document filed on January 24, as The Philadelphia Inquirer reported three days later.
Terms of the deal call for Tower-Drexel to lease the properties from Iron Stone for 29 years and 11 months. The JV is responsible for the costs of maintaining the property.
Iron Stone executives declined to comment, but the company is known locally for redeveloping properties it acquires. In 2004, it paid $11 million for the former Medical College of Pennsylvania in the city and turned it into “a hub of business activity,” according to the Inquirer‘s story. St. Christopher’s doesn’t offer the same opportunity for redevelopment, so this is a long-term investment for Iron Stone.
