Kennerly Lamishaw & Rossi LLP

Healthcare Facilities

The Healthcare Facilities Group of Kennerly Lamishaw & Rossi’s attorneys, assist developers, owners, operators and investors, physicians, physician groups, hospitals and health care systems, colleges and universities, and pharmaceutical and biotech companies, with the acquisition, entitlement, financing, development, leasing and sale of healthcare and life science facilities.

Our work with healthcare facilities includes hospitals, acute care and specialty hospitals, “on campus” and off-site single and multi-tenant medical office buildings (MOBs), healthcare villages and medical malls, ambulatory surgery centers (ASCs), urgent care centers, specialty/diagnostic buildings (including imaging facilities, pharmacies, dental offices, ophthalmology offices and dialysis centers), physical therapy, rehabilitation, wellness and fitness centers and health insurance company offices. Our experience with life science facilities includes laboratory and research facilities, medical supply manufacturing, warehousing and distribution centers and clinical study/trial centers.

This is a broad interdisciplinary practice area, utilizing multiple attorneys of varied experiential levels, in the following ways:

Representing developers with the acquisition, entitlement, financing, construction, sale and exchange of healthcare facilities.

  • Representing owners and operators of healthcare and life science facilities, including for profit and non-profit hospitals and healthcare systems, universities and pharmaceutical and biotech companies, with repositioning their real estate and with the leasing and asset management of their facilities – including preparation of form leases and the negotiation and documentation of letters of intent, master leases, space leases, build-to-suit leases, NNN leases and ground leases, work letters and related development agreements, lease amendments, sublease and assignment agreements, lease restructurings and workouts, guarantees, letters of credit, brokerage and management agreements and other lease and property related documents.
  • Representing physicians, physician groups and health care providers in monetizing their healthcare real estate through the partnership sales and the formation of joint venture partnerships and medical condominiums.
  • Representing healthcare investors, private equity funds and financial institutions in forming joint venture partnerships and the financing, recapitalizing and monetizing of their healthcare facility investments.

Healthcare facilities provide a unique relationship between the healthcare provider and its patients, resulting in a niche real estate product that brings together many complex and competing goals. As a result, the real estate requirements of this highly regulated industry, with constantly growing technology, must be developed, operated and maintained to produce an efficient, aesthetically pleasing, state-of-the-art environment focused upon the patient experience and physician satisfaction. As attorneys this requires knowledge of the following issues:

  • Physical plant improvements for the ingress and egress and accessibility of medical patients, including wider corridors and durable floors to withstand high traffic volume and withstand higher uses of wheelchairs, walkers and stretchers and compliance with the Americans with Disabilities Act (ADA) in connection with the conversion of office premises to medical uses.
  • Tenant improvements that address the needs of specialized practices (e.g., enhanced electrical, mechanical and plumbing systems, zone specific HVAC and exhaust systems, supplemental and backup power, strengthened load carrying floors, shielded walls to reduce noise, vibration and transmission from x-ray or other electrical or electromagnetic medical equipment).
  • Specialized security issues pertaining to ingress and egress and immunizations and background checks for contractors working on patient floors.
    Plans and procedures for the storage and delivery of medical gasses
  • Janitorial cleanup and disposal procedures and protocols for bio-hazardous waste and compliance with the Occupational Safety and Health
  • Administration (OSHA) and the “Universal Precautions” (as defined by Centers for Disease Control and Prevention) requirements on the same.
  • Specialized leasehold and equipment financing terms and conditions reflective of the use and cost of the specialized equipment used in the facility.
  • Documentation and implementation of CC&Rs and common area associations for the management and coordination of shared common facilities and the establishment of certain use and practice restrictions.

Although as real estate attorneys we are not providing regulatory compliance counsel, we do recognize those issues that are ancillary to the real estate but nonetheless critical to its successful operation, including:

  • Privacy compliance under the Health Insurance Portability and Accountability Act (HIPAA).
  • Identification of Stark II and the Anti-Kickback Statute issues pertaining to physician self-referrals.
  • Physical plant requirements set forth by the California Office of Statewide Health Planning and Development (OSHPD) and the federal Joint Commission on the Accreditation of Healthcare Organizations (JCAHO).

KLR’s Healthcare Facilities Group is led by William J. Birney and Nancy N. Kennerly, who each have experience on both sides of complex real estate transactions and, whether representing the landlords or the tenants, owners or developers, can assist KLR’s clients with a perspective that keeps the underlying business transaction paramount. KLR offers the highest level of real estate representation, at billing rates below those of the national firms.

HEALTHCARE FACILITY REPRESENTATIONS AND TRANSACTIONS

Listed below is a sampling of the healthcare facility transactions and representations handled by the KLR healthcare facilities’ attorneys:

Medical Office Development – Owner’s counsel for the ground-up development of the following medical office projects:

  • Development for Realm Real Estate Group of a four-building, 240,000 sf medical and office project in Palmdale, California, adjacent to the Palmdale Health Services Hospital (currently under development).
  • Development for Stonebridge Development of a two-building, 60,000 sf medical and office project in Wildomar, California, adjacent to the Southwest Healthcare Hospital.

    Project Counse
    l – Owner’s counsel for leasing and asset management of the following medical office projects:
  • Skypark Office and Medical Complex – 430,000 sf, nine building healthcare village located in Torrance, California, adjacent to the Torrance Memorial Hospital (Archon Group).
  • 6300 Wilshire Boulevard – 375,000 sf building in Los Angeles, California (Fosterlane Management Corporation).
  • Little Tokyo Professional Building – 113,000 sf building located in Downtown Los Angeles, California, adjacent to the St. Vincent Medical Center (Obayashi Corporation).
  • 11 Golden Shore – 104,000 sf building in Long Beach, California, adjacent to the Los Angeles County Long Beach Comprehensive Health Center (Fosterlane Management Corporation).
  • Loma of California Health Center – 87,000 sf, twelve building healthcare village located in Loma Linda, California, adjacent to the Loma Linda University Medical Center (Milan Properties).
  • Stonebridge Office and Medical Complex – 60,000 sf, two building project located in Wildomar, California, adjacent to the Southwest Healthcare Hospital (Stonebridge Development).
  • LNR-Lennar Washington Square – 57,300 sf building located in Marina del Rey, California (LNR).

Significant Medical Office Leases – including medical office building (MOB) leases (master leases, space leases, build-to-suit leases, NNN leases and ground leases) and health insurance company office leases.

Representing the Landlord:

  • 288,749 sf lease to Health Net (Woodland Hills, CA)
  • 74,000 sf lease to Science and Applied Technology, Inc. (Woodland Hills, CA)
  • 66,954 sf lease to UnumProvident Corporation (Glendale, CA)
  • 32,041 sf master lease to St. Vincent Medical Center (Los Angeles, CA)
  • 12,500 sf lease to Third Street Surgery Center (Los Angeles, CA)
  • 12,268 sf lease to Molina Healthcare (Long Beach, CA)
    Representing the Tenant:
  • Cedars-Sinai Medical Center in connection with over 300,000 sf of medical office
    space in Los Angeles, CA)

Specialty Healthcare Leases and Sales

  • Ambulatory surgery center (ASC) leases with Innovative Healthcare Management (8,300 sf Fullerton Surgical Center) and Obayashi Corporation (12,500 sf Third Street Surgery Center).
  • Urgent care lease with Inland Urgent Care (Stonebridge Medical Center).
  • Various pharmacy leases, ground leases and pad sales on behalf of landlords and owners with Thrifty Payless, Inc, d/b/a Rite Aid, CVS Caremark, Walgreens, Longs Drugs Stores and Bear Creek Pharmacy.
  • Medical imaging leases, pertaining to MRI, CAT, PET, ultrasound, DEXA and Fluoroscopy imaging technology, with North Coast Imaging Radiology Medical Group, Inc., Southwest Outpatient Imaging Center and Vital Imaging.
  • Specimen collection center and clinical laboratory leases with Unilab, Quest Diagnostics, American Bio-Clinical Laboratories and Westcliff Medical Laboratories, Inc.
  • Adult day care lease with Pico Adult Day Care.
  • Various ophthalmology leases with private ophthalmologists, East-West Eye Institute, American Eye Institute, the Jules Stein Eye Institute, the Laser Eye Center, Contact Lens Center, and Eyeblaster, Inc.
  • Various dental leases with private dentists, Dental Ceramics and BriteSmile, Inc.Medical Manufacturing, Warehousing and Distribution centers Leases
  • 309,790 sf special purposes warehouse lease for Cedars-Sinai Medical Center in
    Torrance, CA – this facility housed certain receiving and logistical functions for the hospital, including patient record storage, repro-graphics, a licensed pharmacy, drug and medical equipment storage (with a sophisticated racking and retrieval system), an arm of the purchasing department, and crash cart/case cart and drug assembly area (non-sterile dosing).

Finance Transactions – KLR’s broad finance practice represents both lenders and
borrowers with the financing of their projects, including, acquisition, construction and permanent loans and with the modification, workout, defeasance and assumption of both portfolio and securitized loans. Recent healthcare facilities transactions include:

  • $11,800,000 loan to Loma of California Health Center LLC from Citibank, N.A
  • $11,200,000 loan to Stonebridge Medical Center LLC from Bank of America, N.A.

Joint-Venture Transactions – KLR has extensive experience with the formation
of investment combinations, such as corporations, limited liability companies and limited partnerships, and partnership/joint venture structuring, including the negotiation and formation of investment combinations for physicians, physician groups and owners and operators of medical office buildings and other healthcare facilities.

Medical Hotel/Condominium Transactions – KLR attorneys have assisted with the land use approvals, CEQA review and project entitlements, for a multitude of projects, including private developments, public-private partnership projects and a medical hotel that envisioned a ground floor medical surgical suites with the second and third floors devoted to patient recovery hotel rooms.

Construction Transactions – KLR’s construction group has experience in all facets of real estate construction, including the negotiation and documentation of development agreements, construction contracts and tenant improvement agreements, OSHPD projects and FEMA and California Hospital Facilities Seismic Safety Act (SB 1953) remodels. Recent healthcare facilities transactions include:

  • Representation of Landlord with construction of 12,500 sf ASC lease.
  • Representation of Cedars-Sinai Medical Center with their central plant project, the
    development of their 40 story patient care tower and contracts for the new horizontal and vertical transportation systems for the hospital.
  • Representation of Amgen, Inc. in connection with the expansion of its Thousand
    Oaks, CA main campus, including land use and entitlement assessments.
  • Representation of Amgen, Inc. relating to the design, construction, renovation, and retrofitting of biomedical research and manufacturing facilities in Rhode Island(BioNext) and Puerto Rico (Project Opus).