Meridian Property Co., a San Ramon-based developer and owner of medical real estate, recently purchased Cotton Medical Center in Pasadena for $37.5 million, company officials announced.
The acquisition of the 115,000-square-foot Cotton Medical Center represents Meridian's largest building purchase and its eighth medical office transaction in the past 12 months, according to chief operating officer John Pollock.
"We see several strong growth drivers from the market as well as recent developments in both Pasadena and Los Angeles," Pollock said in a statement. "Our acquisition team is excited to be involved with this project and we're eager to begin improving these already great buildings."
Cotton Medical Center's close distance to different freeways were part of the reason why Meridian Property Company decided to follow through on their plans to purchase the building property.
"The building's close proximity to Old Town Pasadena, LA Metro's Fillmore Station, and access to the 110, 210, and 134 freeways were also influencing factors in the acquisition," Pollock said.
Meridian, which is headquartered at 2420 Camino Ramon and is a division of Marcus & Millichap Co., plans to modernize the Cotton Medical Center and eyes investing more than $49 million toward future developments at the complex by the time it's fully leased, company officials said.
The medical center is a 2.8-acre complex with a four-story building, a five-story building and a parking garage in Pasadena. It is located near Huntington Memorial Hospital and adjacent to an under-construction Shriners Hospitals for Children.
The complex was built in 1975 and included a "North Tower" that Dr. Bert Cotton first envisioned as part of the building process, Meridian officials said. The "South Tower" was added in 1984.
"The medical center's buildings are well-located, but their interiors and their amenities have not kept place with the marketplace and the occupancy reflects the difference," Pollock said, pointing out that Cotton Medical Center was 71% occupied at the time of the transaction.
Meridian initially plans to spend more than $5 million toward safety, modernization, efficiency, access and machinery improvements, according to Pollock.
"When we look at what health care providers need as the practice of medicine migrates to population health management and accountable care, we view this acquisition as a unique opportunity to help modernize these assets and improve the delivery of care through patient experience," said Andrew Saba, Meridian's Southern California acquisition manager.
Saba added, "As the patient experience becomes an increasingly important metric in the revenue component of medical practice, it is incumbent upon medical building owners to ensure that they are contributing to that portion of their client's bottom line."
The Cotton Medical Center's $37.5 million transaction was completed Jan. 29, according to Meridian. The facility was purchased from Cotton Medical Center, LLC, a group of doctors, many of whom were part of the original development group or practiced at the complex at one time.