Arizona-based Banner Health has sold a health center for $29 million, intending to lease it back, while investing the sale profits into building upgrades.

Montecito Medical Real Estate bought the 73,327-square-foot Banner Health Center in Peoria, according to Vizzda LLC real estate sales database.

Banner spokesperson Rebecca Armendariz did not disclose to the Phoenix Business Journal, which broke the story, what the updates would be exactly, only saying that they would “enhance the patient experience.”

The healthcare system is also selling its Banner Health Care Plus clinic in Phoenix for medical and rehab care to Virtus Real Estate Capital for $48.5 million, and has its Banner Thunderbird Medical Pavilion in Glendale on the market as well.

Increasing labor costs, lack of reimbursement, physician alignment, labor recruitment challenges and capital costs have pushed providers to sell nonessential assets to accrue and invest more money in their primary businesses, according to Julie Johnson, longtime medical office broker and executive vice president for professionals services and investment management company Colliers International

“Many of the health systems in the Phoenix area have been growing and expanding to meet the increase in population during the past several years. This growth requires capital and selling real estate is one way to provide this capital for this growth,” she told the Phoenix Business Journal.

Additionally, Banner announced on its website that it has opened a five-story patient tower at Banner Gateway Medical Center in Gilbert, having built it for $243 million, doubling the size of the hospital.

It also said that it is in the process of acquiring around 48 acres of land for $400 million to build Banner Scottsdale Medical Center, which will consist of an acute care hospital, adjacent medical office building and a cancer center.

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