$22/foot: Hospital campus sold for just $6.5 million
The Martha Jefferson Sanatorium was chartered in 1903 and opened on the site the following year. FILE PHOTO BY WILL WALKER
The soon-to-vacated North Downtown campus of Martha Jefferson Hospital has been sold to the developer of the Gleason condo complex with a price–- $6.5 million–- that appears smaller than other downtown deals. But a pair of local investors don't smell any sweetheart dealing.
"It does sound cheap," says realtor Roger Voisinet. "But on the other hand, there are some daunting expenses to convert it."
Voisinet notes that making it an assisted-living facility would probably entail the lowest conversion cost, but he wasn't sure whether there's a market for another one of those in town. And Developer Richard Spurzem notes that just holding such a mammoth place can chew up resources.
"It's a huge amount of land," says Spurzem. "You gotta heat it and keep security when it's vacant."
The buyer, Octagon Partners, appears to be getting 8.113 acres of land holding a whopping 291,134 square feet of structures–- including a 77,644 square-foot parking garage. Several houses along Lexington and Locust Avenues, part of the original offering, appear to have been withheld from the transaction, which reportedly closed September 23.
The sales price of $6.5 million computes to just $22.33 per square foot, one of the lowest–- if not the very lowest–- prices for finished space in recent Charlottesville history. Still, the city values the site at $42.5 million, even if it didn't charge tax.
"That was tax-exempt up until yesterday," says Charlottesville Assessor Roosevelt Barbour in a day-after-the-sale telephone interview. "Hospitals are tax-exempt."
In 2007, several years after announcing that it would leave the city to an 88-acre site at Peter Jefferson Place office park in Albemarle, the Hospital began inviting proposals from developers and formally issued a request for proposals last year. A previously announced development firm bailed out earlier this year.
Besides developing the Gleason, the largest non-UVA building ever built in Charlottesville, buyer Octagon Partners rehabbed the former Hardware Store restaurant building and has another historic rehab project underway at an old school in Staunton.
"We love downtown buildings and we love rehabs," says Octagon principal J.P. Williamson. "And I was born in that building."
The Hospital–- currently constructing its new 500,000 square foot, $275 million headquarters–- will occupy the current facility until the new one is completed in 2011 with the site turned over to Octagon no later than January 1, 2012, according to a release.
"I think it's good for Martha Jefferson, and hopefully it'll work out for Octagon," says Spurzem.
–updated 3:51pm Friday with information on the tax status and the quotations from the assessor
–updated 4:18pm Friday with quote from Williamson
24 comments
Sales at the Gleason have been pretty slow, though perhaps average for the current market, with only 35% of the units sold. I hope things will have picked up a little by the time Octagon comes up with a plan and the financing for rehab MJH. However, in the meantime, the financing and tax carrying costs of the Gleason plus MJH are gonna be substantial.
And as for the selling price? I think MJH was very fortunate to unload it at any price, given that the bank financing environment is pretty grim for speculators at the moment.
"don neuland"- still waiting for asnswers to your baseless accusations............
come on big boy, lay it all out so that we can all know what you know.
Bill,
And then people wonder why their insurance premiums go up. Doc relative says this is why he thinks the idea of 'competition' in the health care industry just doesn't quite work. To compete a hospital spends money like that, and gets MRI machines, etc, and then that all has to be paid for, whether it's needed or not.
Nuts.
What's the value for just the land? Square footage doesn't mean much, if you're just going to tear down or completely gut the place for a different use.
Does this mean that the city will have to cough up hundreds of thousands of dollars to pay MJH because they overassessed the property by $36 million? That is, MJH would have had a lower tax bill if the assessment was at the sale price.
I just added some information to the story clarifying the tax status which is that the property had been untaxed until this sale.--hawes spencer, reporter
Hawes is a crook because he reported the story, including the fact that the price was lower than the valuation? Palin nation.
So now we know why Martha Jeff sold out for so little - it was a prerequisite for getting a deal done with Sentara.
Or maybe just an incredible coincidence.
So you report a story, pass on some news or even a rumor and you are a crook?
Money talks and BS walks- perhaps MJH should not have accepted the offer.
Why are you so bitter Mr. Neuland?
Yeah, Sentara probably wanted to know how much the property was really worth. It may have been on the books for $42.5 million but everyone knew that no one would actually pay that much for it.
If people think the price was too low for the value, then why didn't they put together financing and make a higher bid?
So the old hospital sells for 22.50 a foot and the new one costs 550.00 a square foot.
Hospitals get tax breaks, competitons breaks (no one can buy a private MRI machine and compete for instance)and they build palaces to work in and force insurance companies to pay for because they are entitled to "actual cost plus a profit" for any procedure.
I suppose that if a body shop puts in marble fllors in the work area they can charge state farm 2000 bucks to replace your tailight.
That is the real story. A million plus bucks per room.
They shouldn't get tax breaks if they are going to buld state of the art palaces that don't help patients and better than lesser taj majals
...is why monkeys do not continue to evolve into human beings. I tried watching evolution but my Tivo ran out of storage space.
Was MJH even paying property taxes? If they are tax-exempt, they might well not be paying taxes. And whatever Octagon will do with it, it will now be taxable. That could be another $65,000 a year in tax revenue.
Michael, the answer is no.
Hawes, if you ever decide to print up some funny Hook t-shirts to sell, I'm in for a few that say "You are a real inconsequential crook."
This town is simply corrupt. Including Hawes Spencer. Why is there no outrage by Mr. Spencer? Because he is "neutral", or because he is in league with the Democrat party. This is a criminal deal, and I have formally asked the Virginia Attorney General to investigate. Valuation of this hospital property at more than $42 million, and a selling price of less than $7 million. ???????????? Mr. Hawes, who are you kidding? You are a real inconsequential crook.
Regards,
Don Neuland
I would guess that Mr. Spencer is a reporter. I would think that he is not corrupt. Real reporters of the news do not take sides, and cannot be corrupt.
Was John Miller corrupt because he dogged John Gotti for 10 years?
Mr. Neuland, Why is "this a criminal deal"?
Huh? Hawes is a democrat?
He's off my Christmas Card list for 2010!!!! :)
I strongly disagree with Roger Voisinet. I think this town could easily support more assisted living facilities. There's waiting lists at the better facilities all the time!
A good story (but would take a lot of effort, and I would be happy to put in some time on it since I work at a Court Square law firm and I could do it at lunch) would be to look at the prices of commercial and residential units sold within the City limits this year and compare to the assessed price. My feeling is that assessments have been kept too high during this downtown in Charlottesville. This is going on the ice park, and this sale for Commercial and various residential houses selling for much less than assessments. Maybe there are lots of units selling more than assessed value and you never hear about it.
@ Mr. Neuland: What is criminal about the transaction or about Mr. Spencer's lack of outrage? Martha Jefferson is a private entity, and they are free to sell their assets at a freely negotiated purchase price. What in the heck is the Attorney General going to investigate? JP Williamson's ability to get a good deal? Or, as the article points out, there is a low entry fee but the buyer has to be ready to immediately pay carrying costs, hefty real estate taxes, costs to maintain, securitize, renovate, demolish, and redevelop the project for its use or uses.
And I also disagree with Roger. The only assisted living I am aware of left in the City is Martha Jefferson House on Gordon Avenue. Is the Mary Williams house in Woolen Mills even assisted? We've needed senior living to be located downtown for a long time now. Bring it on!
And Hawes a Democrat?!
"What in the heck is the Attorney General going to investigate?"
I believe the emphasis is on the purchaser getting the property for a very low price, not MJH as the seller. It does rub people the wrong way when they can get nowhere around here and then someone else gets a deal-of-the-century bargain.
Imagine the increase in your own profits if you could get such a bargain, instead, most of us get hammered by the local system.
Look at The Hook Sept 23 issue of "Sold" 1000 Fern St. Assessed at $385,300 and sold for $290,000
"confused easily"- Do yu have a problem with this? Sentara put in a merger offer with caveats. Limit your loses. Done all the time- even in politics....