After being assured a medical office building will be constructed near the future Baptist Memorial Hospital-North Mississippi, the Lafayette County Board of Supervisors agreed Monday to grant a right of first refusal to BMH officials in order for them to enter into an agreement with a third-party developer to construct the facility on 1 acre of adjacent property.

Under the sale agreement of the hospital, Baptist agreed to construct a medical office building in addition to a replacement hospital. The new hospital and the medical campus next to it are subject to covenants such as a right of first refusal for the county and the city. The city will discuss the topic tonight at its Board of Aldermen meeting.

Right of first refusal gave the county and the city joint legal right to purchase or lease any part of the property “in the event BMH decided to sell or lease any part of the property to a third party,” according to county attorney David O’Donnell.

“Baptist is considering leasing 1 acre of the property adjacent to the hospital in order to build a medical office that will be built by a third-party developer,” O’Donnell said.

Greg Duckett with Baptist Heathcare Corporation said BMH would “still hold the ground lease to the property. We would in turn lease it to this third party, Duke Realty, and they would build this medical office building.”

The reason BMH is asking for the partial release is because Duke Realty is a publicly traded real estate investment trust. “In order for them to put this property in their portfolio of properties, they have asked that the restriction be released,” Duckett said. “It is strictly a procedure to allow Duke Realty to obtain its financing so it can construct this medical office building.”

Supervisor Mike Pickens asked if Duke Realty was planning to sell the building or rent it out.

Duckett said Duke Realty will sub-lease office space to physicians that are not in competition with BMH, which is also one of the covenants that was negotiated with the sale of the hospital.

Duckett said if Duke Realty is unsuccessful in renting the space to physicians, BMH has an obligation to offset that expense.

O’Donnell requested a copy of the agreement between BMH and Duke Realty for county records, “so that we have assurances that Duke or whoever the developer is, manager of the medical office building, does in fact have those obligations basically fulfilling what Baptist described of an obligation to build the medical office building.”

Duckett said BMH is trying to meet deadlines to get the building constructed and open. He said the final terms of the negotiations should be complete within 30 to no more than 60 days.

Fallbacks in place

Duckett said the contract with Duke Realty limits their ability to lease the property to anyone that BMH is a competitor with. He added the contract with Duke “hinges on the financial aspect of what we are able to negotiate with them.”

“You have fallbacks in place to ensure that Duke wouldn’t do anything contrary to Baptist as far as anybody that would be an adversarial person or agency coming in against Baptist?” Pickens asked.

Duckett said Duke cannot do anything that is in conflict with Baptist and they cannot do anything that is in conflict with BMH’s obligations to the city and the county.

“Let’s say Duke takes their lease and becomes Bass Pro Shop,” O’Donnell said. “The county and city would consider that a breach of our agreement with Baptist and a violation of our covenants.”