PrintAlbuquerque-based Heritage Home Healthcare, with more than 1,200 employees, is lined up to purchase about three-quarters of a 48,400-square-foot "flex" office building at the Journal Center that's been empty and available for more than a year.
Founded in 1993 by Len and Liz Trainor, the company provides both health care and personal care services to people in their homes. Heritage plans to consolidate its corporate headquarters and its Albuquerque operations center, now at separate locations, into 36,000 square feet at Brunacini Development's Journal West building at 3721 Rutledge NE.
"We wanted to own the building that operations is in - build equity in our real estate - plus have room to expand," said Len Trainor, who is company CEO.
The operations center is currently in 23,000 square feet of leased space at 1700 Louisiana NE in the Uptown area. The lease expires in early 2010.
The company owns its 7,551-squarefoot headquarters at 8212 Louisiana NE in the Sedona Pointe office park near Paseo del Norte. Trainor said the headquarters space has gained about 40 percent in value during seven years that the company has owned it.
The headquarters space plays into Heritage's purchase of the 36,000 square feet at Journal West. The deal is being done as a 1031 Exchange, which is a tax-free commercial property swap allowed under the U.S. Internal Revenue Code. In effect, Brunacini is swapping 36,000 square feet at Journal West for Heritage's 7,551 square feet of headquarters space and a bunch of cash.
The value of the deal, which isn't expected to finalize until around the end of the year, has not been disclosed. Maestas & Ward Commercial Real Estate is doing both sides of the transaction: Dave Hill and Martha Carpenter represent Heritage, while Karen Hudson represents Brunacini.
For a company with 1,174 employees in New Mexico (there's another 68 in Arizona), Heritage is hardly a household name. The company provides three basic types of home services:
The licensed care division provides skilled nursing services, typically for a patient recovering from a surgery, illness or injury. "We hire nurses, physical therapists. occupational therapists, speech therapists, social workers as needed to follow a doctor's plan to take care of a patient for a period of time," Trainor said. "It's a team approach."
Personal care and companionship services are one-on-one, with an employee going to a client's house to perform such tasks as bathing the patient, light housekeeping, meal preparation, transportation and running errands. This service is provided on both a long-term and short-term basis.
Hospice care might also be called end-of-life care, functioning in a manner similar to the team approach for skilled nursing services.
Heritage receives a majority of its revenue from government sources, such as Medicare and Medicaid, with the rest coming from health insurers and individuals. The company currently has about 2,000 patients and clients.
With a 1,242 employees and 2,000 "customers," home health care is clearly a labor-intensive business.
"Our number one challenge is finding good people - we've got to be looking for good people all the time," Trainor said. "Management of field staff and clinicians is also key, supporting them in the work that they're doing."
In the end, of course, the business is about enabling patients and clients to stay safe and independent in their homes. "It's a very rewarding business to be in," he said.
Renter to owner
Abasto Utility Locating Co. recently made the move from renter to owner, tapping a U.S. Small Business Administration loan to more than triple the size of its building space.
The 12-year-old company, owned by Pablo Rael, relocated from a leased 3,000-square-foot building on the 2700 block of Girard NE to a 10,000-square-foot office and warehouse on two acres at 104 Sin Nombre Court NE. The building was marketed at an asking price of $1,095,000 by Jim Smith of CB Richard Ellis.
Starting in March 2008, Rael combed the industrial real estate market looking for the right building with enough yard space, said Mike Klinkmann of Grubb & Ellis New Mexico, who with Abe Lillard is Rael's commercial broker. The Sin Nombre building was put under contract a year later.
Rael said he went with the SBA 504 loan program because of its low interest rate and low down payment of 10 percent, less than half of what would have been required for a conventional loan.
The 504 program helps a qualified small business buy real estate - an office or warehouse, for example - for its own use. According to John Woosley, director of the SBA's Albuquerque district office, the program has three parts:
The small business must provide a minimum of a 10 percent down payment.
A bank or other lender provides a conventional loan to cover 50 percent of the property's cost. The bank is in the position of first mortgage holder.
An SBA-certified development company, commonly referred to as a CDC, provides a loan to cover the balance of the property's cost. In the case of a 10 percent down payment, the CDC loan would be 40 percent of the total cost.
The low interest rates on 504 loans stem from the conventional loan covering only half the cost of the property, thus making it extremely low risk. If the property goes to a foreclosure sale, the bank holding the conventional loan is pretty much guaranteed to get its money back.
Another advantage of the 504 program is that the small-business owner making the property purchase does not have to pay certain closing costs, thanks to the American Recovery and Reinvestment Act of 2009, Woosley said.
The SBA is using money from the act to pay the loan origination fees, which can work out to roughly 0.8 percent of the total loan amount, he said. In addition, the SBA has waived all fees normally paid to the government under the 504 program. The government fees work out to roughly 0.2 percent of the loan amount.
Although it doesn't sound like much, a small business owner can walk away from the real estate deal with an extra $10,000 in his or her pocket, based on a $1 million property purchase. The SBA incentives have evidently worked.
"We've doubled our lending volume with the fee waivers since the Recovery Act was passed in February," Woosley said.
If there's a downside to the loan program, it's the fact that it can be time-consuming. Rael said it took several months to close on his purchase.
Abasto's business has held up pretty well during the recession, thanks in large part to on-call contracts with major players like Albuquerque Public Schools, University of New Mexico, City of Albuquerque and, to a lesser degree, Sandia National Laboratories.
"We never run out of work, but it slows down," Rael said.
Abasto uses electronic detectors to locate utility lines, like other companies, but its vacuum excavations to determine precise depth are what set it apart, Rael said. The process uses water or air to excavate, thus eliminating the possibility of damaging underground lines.
Since starting with three employees and one truck equipped with a vacuum excavator in 1997, Abasto has grown to 17 employees, including five part-timers, and 13 vehicles, three of which are equipped with vacuum excavators. Rael, a Tucumcari native, said several employees are family members.
Richard Metcalf covers commercial real estate for the Journal. You may reach him at 823-3972 or rmetcalf@abqjournal.com
