Ascension Texas: Seton Administrative Office Facility

Facility Highlights

  • Headquarters facility for Ascension Texas
  • Strategically located across from Dell Children’s Hospital (an Ascension hospital)
  • 156,000 SF class A office space
  • Facility was developed in 2008 through a build-to-suit transaction with a for-profit landlord
  • For-profit landlord had escalated rents more than 40% from 2008 to 2019, with additional 10% rent jump coming from renewing lease in place
seton deal image

Transaction Summary

  • SVN | Angelic and our non-profit foundation partner assisted Ascension with negotiation of a purchase and sale contract for the acquisition of the facility from the existing landlord for $82 million
  • Ascension then assigned the purchase contract to non-profit foundation partner with seller’s advance consent and knowledge
  • SVN | Angelic and its lender partner provided all the capital and closed on the acquisition of the facility, simultaneously leasing the facility back to Ascension
  • In connection with the transaction, our non-profit foundation partner transferred the land to Ascension and entered a long-term ground lease

Key Benefits

  • Working with SVN | Angelic allowed Ascension to save working capital for more critical needs and preserve direct debt capacity
  • Ascension is assured long-term control of the facility through ownership of the land and non-profit foundation’s Ground Lease from Ascension
  • Significant reduction in rent realized immediately upon closing, in excess of $1.5 million annually
  • Likely real estate tax exemption, resulting in significant operation expense savings, in excess of $1.3 million annually
  • Lease structured to allow Ascension to only recognize 10 years of obligation while maintaining long-term control of the asset
  • Ascension has purchase option at $100 dollars at the end of the lease and the option to buy the building earlier based on declining outstanding debt balance