Medical Office Investment: Credit-rated Tenant

[Dan Hennessy]

Investment Info:

Office Space buy & hold investment.

Purchase price: $1
Cash invested: $400,000

In process Medical Office single-tenant deal. Fresenius Medical Center is located at xxx. This building was constructed in 2005 and contains 7,000 square feet of total rentable building area. The tenant, Fresenius Medical Care Roanoke Valley Dialysis has 8.7 years on their modified NN lease. The lease features minimal landlord responsibility, two percent annual increases starting after the 5th year. The lease is corporately-guaranteed by Fresenius

What made you interested in investing in this type of deal?

Strong demographic trends along with migration of healthcare delivery to off-campus facilities is no secret. My analysis of the geographic area suggested a high medical need for kidney dialysis services that this facility serves for a 25 mile radius. The underlying operating performance of the facility confirmed my analysis. The nearly 9 year lease and 5 options to extend the lease where attractive as long-term buy and hold with strong cash flow

How did you find this deal and how did you negotiate it?

I used listing services to underwrite 3-4 deals per month, and then engaged several brokers to interview to represent me. I identified a broker who specializes in medical office buildings and, among dozens of potential investments, we landed on this deal.

How did you finance this deal?

30 LTV. 30%Cash, 70% loan