North Huntingdon shopping center cost: $19.8 million
Excela Health paid nearly $20 million to purchase the Norwin Hills Shopping Center as part of its plans to increase health care services in western Westmoreland County and counter competitors UPMC and the West Penn-Allegheny Health System.
Michael Busch, Excela's executive vice president and chief operating officer, said purchasing the North Huntingdon property for a medical mall will enable the system to expand its footprint even more than it had planned as UPMC East, which plans to open a 120-bed facility in Monroeville on July 2, competes for Excela's patients.
Excela officials announced the purchase in June but declined to reveal the price. A deed between NH Hills LLC and Excela-Norwin Square Development filed with the Westmoreland County Recorder of Deeds lists the price as $19.8 million.
Busch said the purchase was financed through a line of credit.
"Rates are crazy good right now," he said.
Busch said last week that Excela had no immediate plans to evict any tenants but may not renew leases to free space for Excela Square at Norwin Hills.
The shopping center includes two plaza-style buildings and Galaxy Fitness. Excela shares its building with nine businesses, including an Aldi grocery store, Rite Aid and two salons, and the Norwin Hills Office Center, which houses an additional nine offices.
But ReStore, a building supply store that is part of Habitat for Humanity, was given notice it must vacate by Dec. 31, manager Jim Miller said Thursday.
"I got a call from a (real estate agent) -- it was upsetting -- who basically told me they wouldn't renew my lease. In fact, they said Excela would be happy if I moved out early," Miller said. He was told the space his store occupies will be used as doctor's offices.
Excela spokeswoman Jennifer Miele said yesterday that ReStore would likely be the only tenant displaced to allow for the addition of medical offices.
Excela maintains a 60 percent share of the health care delivery market, according to Moody's, an investment rating service. It warns, however, that Excela has to make inroads into the western end of the county -- the North Huntingdon, Trafford, Irwin and Murrysville areas -- to counter expansion by Pittsburgh-based health systems operating in Monroeville.
Busch said to increase its market share in the western end of the county, Excela needs to recruit more physicians and provide greater access to services.
"Community reaction has been really positive," he said. "We're trying to create a patient experience that is unique in the market."
Excela Health carries $103 million debt, according to Moody's. Its bonds are rated A3, which is considered upper- to medium-grade investments, and its outlook is rated as "stable" by Moody's.
A new UPMC hospital in Monroeville places "Excela at risk of losing volume and market share in the intermediate term," the Moody's report states. "Its balance sheet is not likely to strengthen as there is little free cash-flow after considering fixed requirements and debt service and routine capital investments."
"We're essentially working on a break-even basis right now," Busch said. "We're financially really healthy. We're in good shape from a financial perspective."