Sierra Health sells Las Vegas real estate holdings for $115 million

Tuesday, Jan. 2, 2001 | 11:12 a.m.

Nevada's largest health insurer has sold the bulk of its real estate holdings to a Los Angeles-based investment fund for $115 million.

Sierra Health Services Inc. announced today it sold 11 of its 12 Las Vegas buildings to CB Richard Ellis Corporate Partners LLC, an affiliate of CB Richard Ellis Investors LLC.

Sierra plans to continue to occupy the properties under 15-year leases. The transaction effectively takes Sierra out of the real estate business and frees up capital for the company and its subsidiaries, which have 3,000 employees and 1.3 million customers systemwide.

In addition to operating Health Plan of Nevada, the company operates Health Plan of Dallas and has a military contract operation in the Northeast.

Of the $61.7 million initial net proceeds of the deal, Sierra will use $50 million as an initial payment on an amended line of credit of $185 million. That credit line, coordinated by Bank of America, was established in the wake of third-quarter charges that led to the sale of two Texas subsidiaries.

CB Richard Ellis officials said the deal is the largest sale and leaseback in state history. Christina Roush, a spokeswoman for CB Richard Ellis in Las Vegas, said the 11 buildings would be resold individually or in packages by the company as investment property to other buyers.

Roush said the resale process already has begun and the company hopes to close those deals by the end of 2001.

The buildings sold by Sierra include about 550,000 square feet of administrative office space and medical clinics. Most of the office space is on the campus of the company's corporate headquarters on North Tenaya Way, just off U.S. 95 in northwest Las Vegas. Other clinics are located throughout the Las Vegas metropolitan area.

Not included in the deal was one administrative office building on the main campus that houses Health Plan of Nevada Inc. and Sierra Health and Life Insurance Co. Inc. Peter O'Neill, a spokesman for Sierra in Las Vegas, said the company kept the one building because of a tax advantage.

Sierra confirmed its strategy to sell off the buildings in October when the company sold its Houston Health Plan operation to AmCare Health Plans Inc., Houston.