OFFERING MEMORANDUM. Grandview Medical Group - Lee Branch SINGLE TENANT MEDICAL OFFICE BUILDING 201 DOUG BAKER BOULEVARD BIRMINGHAM, AL

Transcription

1 OFFERING MEMORANDUM Grandview Medical Group - Lee Branch 201 DOUG BAKER BOULEVARD BIRMINGHAM, AL SINGLE TENANT MEDICAL OFFICE BUILDING

2 TABLE OF CONTENTS INVESTMENT OFFERING STOVIE MOORE > Executive Summary 1 Offering Summary Investment Terms > Property Information 4 Property Aerial Property Survey Location Aerial Site & Improvements Descriptions Property Photos > Investment Overview 10 Financial Overview > Tenant Overview 12 Tenant Overview > Market Overview 15 Market Overview Regional Map Local Map

3 1 > Executive Summary

4 EXECUTIVE SUMMARY Offering Summary Colliers International Alabama is pleased to present the opportunity to purchase a 7,601 SF single-tenant, net leased medical office property at Lee Branch Shopping Center in Hoover, Alabama. The property has been fully occupied since June 2013 by Grandview Medical Group, an affiliate of Grandview Medical Center, the area s premiere hospital. The Tenant recently executed a lease renewal which is ten years in duration. Initial rent is $19.00 per square foot, escalating 2.0% per year. The lease is NNN in structure, with the Tenant responsible for all property-related expenses except for roof replacement, structural repairs and replacements, and parking lot repairs and replacements. As part of the recent renewal, the Seller is funding a Tenant Improvement allowance of $76,010 ($10/sf). The new rental rate of $19.00/ sf is considered slightly below market based on market comparables. The lease is guaranteed by Affinity Hospital, LLC (d/b/a Grandview Medical Center). The guarantor is a wholly owned subsidiary of Community Health Systems, one of the nation s largest publicly traded hospital companies. The guarantor owns Grandview Medical Center, the new 372-bed state of the art hospital facility three miles west of the subject property. OFFERING SUMMARY Offering Price LEE BRANCH $2,407,000 ($ PSF) Cap Rate 6.00% Annual Rent Lease Structure Lease Term Tenant Guarantor Location Rentable Area $144,419 ($19.00 PSF) NNN 10 Years Affinity Physician Services, LLC Affinity Hospital, LLC (Grandview Medical Center) 201 Doug Baker Boulevard, Hoover, AL 7,601 SF Year Built Building one story, freestanding INVESTMENT HIGHLIGHTS EXCELLENT CREDIT TENANT The lease is guaranteed by Affinity Hospital, LLC, doing business as Grandview Medical Center in Birmingham. The guarantor is a subsidiary of Community Health Systems, one of the nation s largest publicly traded hospital companies. STRATEGIC LOCATION Located near the intersection of US Highway 280 and Doug Baker Boulevard, the property is accessible and convenient to navigate. The Lee Branch retail center is benefiting from surrounding new household formation along Highway 119 to the west, at Eagle Point to the south, and in Chelsea, AL to the east. ESTABLISHED MEDICAL OFFICE The tenant has been in place since 2013 and rent is below market. LONG TERM NNN LEASE The lease structure provides an opportunity for passive income, with Landlord responsible for only roof, structure, and parking. 2

5 EXECUTIVE SUMMARY Investment Terms Colliers International Alabama is representing the sale of a single-tenant, net leased medical office property at Lee Branch Shopping Center in Hoover, Alabama. The property is fully occupied by Affinity Physician Services, LLC. The Property is being offered as a as-is all cash basis, subject to the limiting conditions described in this Offering Memorandum. The Offering Price is $2,407,000. INITIAL BIDS All Letters of Intent should include, at a minimum, the purchase price, earnest money, inspection provisions, closing date, capital sources (debt & equity) and allocation of closing costs between Purchaser and Seller. CONTACT FOR INFORMATION STOVIE MOORE (stovie.moore@colliers.com) PROPERTY TOURS Tours of the Property will be available to qualified investors approved by the Owner at specified times throughout the marketing process, and will only be available with a Colliers or Owner representative present. Unannounced and/or unescorted tours will not be allowed. To arrange for a property tour, please coordinate with the listing agent. DUE DILIGENCE MATERIALS Colliers will make available to Qualified Purchasers relevant due diligence materials applicable and available. Disclaimer: The Owner reserves the right, at its sole discretion, to reject any and all offers to acquire the building(s) in this portfolio and/or to terminate discussions with any prospective purchaser, at any time, with or without notice. The Owner shall not be bound to any agreement until a mutually agreeable purchase and sale agreement is executed by and delivered to all parties. 3

6 4 > Property Information: 201 Doug Baker Boulevard

7 DOUG BAKER BLVD PROPERTY INFORMATION: 201 DOUG BAKER BLVD Property Aerial N 5

8 PROPERTY INFORMATION: 201 DOUG BAKER BLVD Property Survey 6

9 PROPERTY INFORMATION: 201 DOUG BAKER BLVD Location Aerial BIRMINGHAM GRANDVIEW MEDICAL CENTER N 91,490 VPD Homewood Chelsea 43,170 VPD Vestavia Hills Hoover Outpatient 7

10 PROPERTY INFORMATION: 201 DOUG BAKER BLVD Site & Improvements Description ADDRESS 201 DOUG BAKER BOULEVARD General Property Type Medical Office Parcel ID Year Built Zoning Designation C-2, City of Hoover Zoning Description Community Business District Occupancy Type Single-Tenant Net Building Area (SF) 7,601 SF Land Area (Acres) 1.24 Acres Percent Leased 100% Ingress/Egress Excellent Number of Buildings 1 Stories 1 Total Parking Spaces 64 spaces Parking Spaces/1,000 SF 8.3/1,000 SF Site Improvements Asphalt paving and drives with concrete curbing EXTERIOR Foundation Poured Concrete Exterior Walls Stacked stone, wood, EIFS Exterior Doors Insulated glass door on front / metal doors on side & rear Roof Combination metal, parapet HVAC Central HVAC units provide heating & cooling Landscaping INTERIOR Ceilings Floors Walls Shrubs, bushes and trees Painted drywall, acoustic tile, ceramic tile Hardwood, ceramic tile, vinyl tile, carpet Painted drywall, ceramic tile, stacked stone 8

11 PROPERTY INFORMATION: 201 DOUG BAKER BLVD Property Photos EXTERIOR X-RAY ROOM WAITING ROOM PATIENT EXAM ROOM THERAPY ROOM 9

12 10 > Investment Overview

13 INVESTMENT OVERVIEW Financial Overview CASH FLOW Cash Flow Projections Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 1 Net Rent PSF $19.00 Net Rental Income $144,419 $147,307 $150,254 $153,259 $156,324 $159,450 $162,639 $165,892 $169,210 $172,594 LL Operating Expenses $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 NOI $144,419 $147,307 $150,254 $153,259 $156,324 $159,450 $162,639 $165,892 $169,210 $172,594 NOI Cash-on-Cash 6.00% 6.12% 6.24% 6.37% 6.49% 6.62% 6.76% 6.89% 7.03% 7.17% Reserve Impound (1,140) (1,140) (1,140) (1,140) (1,140) (1,140) (1,140) (1,140) (1,140) (1,140) Net Cash Flow $143,279 $146,167 $149,113 $152,118 $155,184 $158,310 $161,499 $164,752 $168,070 $171,454 Unlevered Cash on Cash 5.95% 6.07% 6.19% 6.32% 6.45% 6.58% 6.71% 6.84% 6.98% 7.12% OFFER PRICING Sales Price $2,407,000 Per Square Foot $ PSF Year 1 Cap Rate 6.00% Area Measures 7,601 SF ASSUMPTIONS Lease Rate $19.00 Lease Term 10 Years Annual Escalations 2.00% Expense Reimbursement NNN Options to Renew 1 x 5 years CapEX Reserve (/sf) $

14 > Tenant Overview 12 PHYSICAL THERAPY ROOM

15 TENANT OVERVIEW Tenant Overview The property is occupied by Affinity Physician Services, LLC, doing business as Grandview Medical Group. The lease is guaranteed by Affinity Hospital, LLC, doing business as Grandview Medical Center. Both the tenant and guarantor are subsidiaries of Community Health Systems, Inc., one of the nation s largest publicly traded hospital companies. TENANT Grandview Medical Group (Tenant) employs over 65 physicians with specialties including cardiology, endocrinology, neurology, neurosurgery, OB-GYN, orthopedics, robotic-assisted surgery, preventative care, primary care, and rheumatology. Grandview Medical Group is affiliated with Grandview Medical Center, which owns the new 372-bed hospital that opened in October 2015 to serve residents of Birmingham and surrounding communities. In addition to the hospital, Grandview Medical Group practices out of 12 primary care physician locations, 14 specialist office locations, 2 imaging centers, and 2 outpatient centers. Currently on site at the subject property are two of Grandview s strongest primary family care physicians in Drs. Tracy Jacobs and Whitney Tew. Other specialized uses at the subject property include dermatology, orthopaedic, and physiotherapy functions. More information about Grandview Medical Group may be found at and at GUARANTOR The lease is guaranteed by Affinity Hospital, LLC (d/b/a Grandview Medical Center). Owned and operated by Affinity Hospital, LLC, Grandview Medical Center is a new 372-bed tertiary care hospital providing comprehensive healthcare services. Conveniently located on Highway 280 just east of I-459 and The Summit, Grandview offers diverse specialties from heart care to labor and delivery to roboticassisted surgery. Specialty units include a Level III trauma center, sleep center, certified Chest Pain Center, recognized stroke center, cardiac cath lab and neonatal, surgical and medical intensive care. 13

16 TENANT OVERVIEW Community Health Systems, Inc. ( CHS ) is one of the largest publicly traded hospital companies in the U.S. and a leading operator of general acute care hospitals and outpatient facilities in communities across the country. As of December 31, 2017, CHS owned or leased 119 hospitals included in continuing operations, with an aggregate of 20,850 licensed beds across 20 states. CHS generates revenues by providing a broad range of general and specialized hospital healthcare services and outpatient services to patients including general acute care, emergency room, general and specialty surgery, critical care, internal medicine, obstetrics, diagnostic, psychiatric and rehabilitation services. CHS also provides additional outpatient services at urgent care centers, occupational medicine clinics, imaging centers, cancer centers and ambulatory surgery centers. CHS has a network of affiliated physicians at hospitals and affiliated businesses, employing approximately 2,000 physicians and an additional 1,000 licensed healthcare practitioners as of year-end CHS did net operating revenues in excess of $15 billion in More information is available at Hospitals 20 States Founded in 1985 NYSE Listed Company since 2000 Over 7000,000 Annual Admissions Over 3.9 Million Annual ED Visits 91,500 Employees 15,750 Physicians on Medical Staffs 14

17 15 > Market Overview

18 MARKET OVERVIEW Market Overview THE CITY OF BIRMINGHAM Birmingham is located in the north-central part of Alabama. Birmingham is the state s most populous city and the seat of Jefferson County. Originally founded in 1871 at the crossing of two rail lines near one of the world s richest mineral deposits, the city boomed so quickly through the production of iron, coal and eventually steel, that it became known as the Magic City and later as the Pittsburgh of the South. Birmingham continues to grow but at a much slower pace than in the 19th century. Today s estimated population of 1.15 million ranks Birmingham in the top 50 metropolitan cities in the United States. Today, Birmingham s economy is a much more diverse mix of industries which is dominated by the educational, healthcare, technology, insurance and banking sectors. Birmingham has emerged into a new era of industry and residential growth after reinventing itself from a historically steel and manufacturing focus into one of the Southeast s most dynamic economies. Driven by a new generation of local leaders who have focused on the developing biotechnology, life sciences, and automotive sectors for growth, Birmingham has witnessed a remarkable economic transformation. ACCOLADES > No. 1 City in the Country Where Your Paycheck Goes the Furthest TRULIA 3/2018 > Highest Concentration of Health Care Jobs ABODO 1/2018 > Mecca For Startups ZY 1/2018 > Named An Up-And-Coming Tech Hotspot LIVABILITY 3/2018 > Top 10 Fastest Growing Incomes SMARTASSET 11/2017 > One of 11 Next Great Destinations TRAVEL CHANNEL 6/

19 MARKET OVERVIEW LOCATION & TRANSPORTATION HEALTHCARE Birmingham is one of the most centrally located cities in the Southeast with an extensive highway network serving the region. Three interstate highways meet in downtown Birmingham: I-65 links Birmingham to Montgomery, and Nashville; I-59 links Birmingham to Chattanooga and New Orleans; and I-20 connects Birmingham and Atlanta. The I-22 corridor connects Birmingham to Memphis and helps form a freeway to connect downtown Atlanta with Birmingham, Memphis, Little Rock, and Oklahoma City. Birmingham serves as a large transportation hub and has strong location attributes for several modes of transportation. It is one of only three Southeastern cities with a six-spoke interstate network. Serving as Alabama s largest rail hub, Norfolk Southern, Burlington Northern, and CSX Transportation have major intermodal freight transport facilities and Port Birmingham provides direct access to the Gulf of Mexico via the Black Warrior River. The Birmingham-Shuttlesworth International Airport is among the largest commercial airports in the Southeastern U.S. and provides central Alabama with convenient air cargo capabilities. Birmingham is a regional hub for healthcare which employs over 80,000 people annually and had more than 1 million patient days in Birmingham is renowned in the Southeast as having a very comprehensive health care system and six local hospitals were recently recognized as top performing hospitals by the leading accrediting body for U.S. health care organizations (The Joint Commission), in its 2013 Annual Report. They include the existing and operating Shelby Baptist Medical Center, Medical West, Brookwood Medical Center, Hill Crest Health Services, Princeton Baptist and Walker Baptist Medical Centers. Opened in 2015, Grandview Medical Center has drastically impacted the landscape of healthcare services within the region. The one-million square-foot hospital (372 beds) is one of the most technologically advanced hospitals in the country. Additionally, the publication reported that more than 345 physicians across 55 specialties were named to the Best Doctors in America. Birmingham is also home to a number of highly acclaimed specialized healthcare entities. The Benjamin Russell Hospital for Children is the 3rd largest pediatric medical facility in the U.S., and it has 8 specialties ranked among the top programs in the U.S. Lakeshore Foundation is one of the nation s premiere rehabilitation facilities for persons with physically disabling conditions. The American Sports Medicine Institute is the largest accredited Orthopedic Sports Medicine Fellowship Program in the U.S. Finally, Encompass Health, formerly HealthSouth, is the nation s largest providers of post-acute healthcare services, operating in 36 states and Puerto Rico. Encompass is headquartered in Birmingham. Grandview Hospital in Birmingham, AL 17

20 MARKET OVERVIEW MAJOR INDUSTRIES Birmingham s diverse economy is centered around 5 major sectors including; Banking & Insurance, Innovation & Technology, Education, Metals & Steel Manufacturing and Automobile Manufacturing. BANKING & INSURANCE Birmingham ranks as one of the larger financial and banking hubs in the Southeast. With a 2017 Annual Average Employment of 20,000 in the Financial Activities sector, metropolitan Birmingham is a major exporter of banking and insurance processing services. Rated by Money Summit, Regions ranks in the top 25 largest U.S. banks with nearly $125 billion in assets. In addition to being the corporate headquarters for Regions Financial Corporation, BBVA Compass, and ServisFirst, the metropolitan area serves as the regional operations for Fortune 500 financial services companies, including State Farm and Allstate. Birmingham also serves as one of four regional processing centers for the U.S. Social Security Administration and the headquarters for Blue Cross and Blue Shield of Alabama. INFORMATION TECHNOLOGY Innovation and technology thrive in the Birmingham seven-county region which boasts nearly 800 technology-based companies. The regional innovation ecosystem is supported by major assets such as the University of Alabama at Birmingham, which ranks 23rd in the nation for funding from the National Institute of Health, Southern Research Institute, with seven FDA-approved drugs on the market, and Innovation Depot, the largest and most successful business technology incubator in the Southeast. In October 2011, CNN Money identified Innovation Depot as one of the seven hottest start up incubators in the nation. Over the last five years Innovation Depot has generated more than $1.4 Billion in economic impact for the Birmingham region and is currently home to 102 companies employing 870. Sources: Innovation Depot, BBA 18 INNOVATION DEPOT BIRMINGHAM

21 MARKET OVERVIEW AUTOMOTIVE INDUSTRY Automobile manufacturing has been the key to growth in the area, beginning with Mercedes in 1997 and continuing with Honda in Subsequently Hyundai opened in Montgomery in 2002 and the Huntsville Toyota plant in Alabama ranks 5th in U.S. car and light truck production. In 2015, automakers built more than 1,000,000 cars and light trucks in Alabama along with 1.7 million engines. Alabama s top export in 2017 was $9.5 billion in motor vehicles, making it the No. 3 auto exporting state in the U.S.. April 2018, Autocar opened a $120 Million heavy truck assembly plant in Birmingham employing almost 750 with anticipated economic annual impact of $645 Million. Mercedes-Benz Campus in Vance, AL EDUCATION Higher education employs nearly 25,000 in the metropolitan area and generates an economic impact of more than $1 Billion annually. Seven universities and colleges, seven community/junior colleges, five degree-granting technical schools, three law schools, and the UAB medical, dental, and other specialized schools offer multiple educational opportunities to the area s work force. As the area s largest employer, the University of Alabama at Birmingham contributes to the economic impact of higher education with its 23,000+ employees, total annual budget of $1.5 Billion and 18,568 students. It offers more than 120 undergraduate and graduate degrees. METALS AND STEEL MANUFACTURING Although the Birmingham economy has diversified into a service based economy, the Birmingham region continues to be a major player in metals manufacturing. Metals and Steel Manufacturing played a vital role in the early development of the Birmingham region. Once known as the Pittsburgh of the South, Birmingham emerged as a major metals and steel production center by the early 1900 s. Several major steel companies remain headquartered in Birmingham including McWane, Inc. and O Neal Steel along with the U.S. Steel regional headquarters. According to the U.S. Bureau of Labor Statistics, metropolitan Birmingham s Production Occupations sector employs over 38,000. UAB Campus in Birmingham, AL 19

22 MARKET OVERVIEW Regional Map NASHVILLE 184 Miles MEMPHIS 212 Miles HUNTSVILLE 85 Miles BIRMINGHAM ATLANTA 145 Miles MONTGOMERY 85 Miles NEW ORLEANS 310 Miles MOBILE 208 Miles PENSACOLA 217 Miles 20

23 MARKET OVERVIEW Location Map Outpatient 21

24 Disclaimer Statement This Offering Memorandum was prepared by Colliers International and has been reviewed by the owner. It contains selected information pertaining to 201 Doug Baker Blvd, Birmingham, AL and does not purport to be all inclusive or to contain all the information which a prospective purchaser may desire. All materials and information received or derived from Colliers International, its directors, officers, agents, advisors, affiliates and/or any third party sources are provided without representation or warranty by Colliers International its directors, officers, agents, advisors, or affiliates as to completeness, veracity, or accuracy, condition of the property, compliance or lack of compliance with applicable governmental requirements,suitability, financial performance of the property, projected financial performance of the property for any party s intended use or any and all other matters. Neither Colliers International, its directors, officers, agents, advisors, or affiliates makes any representation or warranty, express or implied, as to accuracy or completeness of the any materials or information provided, derived, or received. Materials and information from any source, whether written or verbal, that may be furnished for review are not a substitute for a party s active conduct of its own due diligence to determine these and other matters of significance to such party. Colliers International will not investigate or verify any such matters or conduct due diligence for a party unless otherwise agreed in writing. Any party contemplating or under contract or in escrow for a transaction is urged to verify all information and to conduct their own inspections and investigations including through appropriate third party independent professionals selected by such party. All financial data should be verified by the party including by obtaining and reading applicable documents and reports and consulting appropriate independent professionals. Colliers International makes no warranties and/or representations regarding the veracity, completeness, or relevance of any financial data or assumptions. Colliers International does not serve as a financial advisor to any party regarding any proposed transaction. All data and assumptions regarding financial performance, including that used for financial modeling purposes, may differ from actual data or performance. Any estimates of market rents and/or projected rents that may be provided to a party do not necessarily mean that rents can be established at or increased to that level. Parties must evaluate any applicable contractual and governmental limitations as well as market conditions, vacancy factors and other issues in order to determine rents from or for the property. Owner shall have no legal commitment or obligation to any purchaser reviewing the offering memorandum or making an offer to purchase the Property unless a written agreement for the purchase of the property has been fully executed, delivered and approved by the Owner, and any conditions to Owner s obligations thereunder have been satisfied or waived. Legal questions should be discussed by the party with an attorney. Tax questions should be discussed by the party with a certified public accountant or tax attorney. Title questions should be discussed by the party with a title officer or attorney. Questions regarding the condition of the property and whether the property complies with applicable governmental requirements should be discussed by the party with appropriate engineers, architects, contractors, other consultants and governmental agencies. 22

25 STOVIE MOORE Colliers International Direct Mobile COLLIERS INTERNATIONAL 880 Montclair Road, Suite 250 Birmingham, Alabama Direct Fax