HealthSouth, TCC Strike $60M Deal for HQ Campus

BIRMINGHAM, AL-HealthSouth Corp. has signed a deal to sell its 200,000-sf headquarters building and surrounding campus to an investment fund sponsored by Trammell Crow Co. for “at least $60 million.” The agreement covers the 85-acre campus, which HealthSouth will continue to lease for at least one year, and a contiguous 19-acre tract housing an incomplete 13-story building, formerly called the Digital Hospital.

HealthSouth has enlisted Carruthers Real Estate Co. of Birmingham to evaluate alternatives, either remaining in less space in the existing building or finding new space elsewhere in the area. The company did not say how much space it will be seeking, only that it will be looking in the Birmingham area if it moves.

A HealthSouth spokeswoman tells GlobeSt.com that the sale of the property is part of the company’s continued realignment and repositioning. The downsizing of the healthcare giant suggests that it needs considerably less space than the 200,000 sf at its headquarters.

The agreement to sell the headquarters consummates a plan to sell the property that was previously announced by HealthSouth president and CEO Jay Grinney. “We have always believed there was a lot of value in this property,” Grinney says. He calls the existing company headquarters “too big for a company of our size” and says it “required more resources than a healthcare company should be spending on its corporate headquarters.”

Under the terms of the agreement, HealthSouth could stay at its headquarters location. If the company does move, Grinney says “we hope to find something in close proximity to our existing space.”

The transaction, expected to close by the end of July, is another step in a HealthSouth plan launched last year to reduce leverage and grow a post-acute care provider with a focus on its rehabilitation hospitals. Proceeds from the transaction will be used to pay down a portion of the company’s long-term debt.

HealthSouth did not mention details of the Digital Hospital property in its announcement about the headquarters sale, but a public filing by the company notes that it “marketed the Digital Hospital for sale extensively as a hospital,” but was unable to find a buyer. “We no longer own the certificate of need that would enable us to market the Digital Hospital as a hospital,” the company reported in the SEC filing.