Hanger Clinic. National Single Tenant Asset in Heart of Medical District. 514 S Washington St, Spokane, WA, 99204

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1 Hanger Clinic Spokane, WA National Single Tenant Asset in Heart of Medical District 514 S Washington St, Spokane, WA, 99204

2 HANGER CLINIC IS A SINGLE TENANT ASSET CENTRALLY LOCATED IN THE MEDICAL DISTRICT OF SPOKANE, WA. The Property is fully leased by Hanger Clinic, a publicly traded (NYSE:HGR) national company with over 740 locations across 45 states. Hanger Clinic signed a new, 10-year lease in 2014 with further options to extend. Additionally, the Property s lease has scheduled rent growth exhibiting three percent annual increases. The Property is centrally located in Spokane s medical district on the Central Business District periphery in close proximity to several major regional hospitals. Notably, the nearby Sacred Heart and Deaconess Hospitals combine more than 950 beds and employ nearly 6,000 people. The Property also has excellent access to I-90 and a dense population base, boasting more than 200,000 residents within five miles. PRICE: $1,310,000 CAP: 7.15% LEASABLE SF....±3,969 SF LAND AREA....±11,250 SF LEASE TYPE Modified Gross YEAR BUILT (Remodeled in 2007) PARKING...±14 Spaces or 3.5/1,000 SF ADDRESS: 514 S Washington St, Spokane, WA, HANGER CLINIC 2

3 Core Characteristics MEDICAL DISTRICT LOCATION NATIONAL TENANT WITH RENT GROWTH NATIONAL TENANCY Hanger Clinic is a 150+ year old company which operates more than 740 locations across 45 states, employing over 5,000 clinicians and support staff. The company is publicly traded under New York Stock Exchange ticker symbol HGR. BUILT-IN RENT GROWTH WITH LONG REMAINING TERM The Tenant s lease terms include scheduled rent growth with three percent annual escalations for the remaining initial term. Hanger, Inc. has seven years remaining on their lease term and includes two 5-year options to extend, also with three percent annual increases. Over the remaining eight year initial term an investor can expect their yield to increase more than 170 basis points. CLOSE PROXIMITY TO HOSPITALS IN MEDICAL DISTRICT The Property is located in the medical district of Spokane, situated less than a half mile from two of the largest regional hospitals in Eastern Washington and Northern Idaho: Sacred Heart Medical Center and Deaconess Medical Center. These two hospitals service a total of 900 beds. Additionally, there are six hospitals or major medical centers within a 15-mile radius of the Property. DENSE DEMOGRAPHIC BASE WITHIN CENTRAL BUSINESS DISTRICT PERIPHERY The Property is located within an area of dense population, boasting in excess of 200,000 residents within a 5-mile radius. Hanger Clinic is also located on the periphery of downtown Spokane, with excellent access to local employment, shopping, and entertainment. Further, an Interstate 90 interchange is located approximately 1/4 mile north of the Property, offering good local and regional access. HANGER CLINIC 3

4 Hanger Clinic QUICK STATS Hanger, Inc. is the world s premier provider of orthotic and prosthetic (O&P) services and products, offering the most advanced prosthetics, orthotics and clinically differentiated programs. Hanger, Inc. comprises nine business units that serve different segments of the O&P industry. Each business unit contributes to the unique identity of Hanger, Inc. as a patient-focused company, combining a reputation for clinical excellence with a progressive approach to the use of emerging technologies. Headquartered in Austin, Texas, Hanger is now one of the largest rehabilitative product and service organizations in the world. They currently employ 5,000+ individuals across multiple business units. Hanger s comprehensive offering of Integrated Rehabilitative Solutions provides customers with innovative technologies, efficient and effective clinical solutions, and outstanding customer service. It is the unique compilation of two segments Patient Care and Products and Services coming together as one that allows Hanger to more completely serve its customers. SEE HANGER CLINIC S FULL SITE - CLICK HERE 5,000+ TOTAL EMPLOYEES 740+ LOCATIONS IN 45 STATES 150 YEARS IN BUSINESS HANGER CLINIC 4

5 Central Business District AREA HOSPITALS AND MEDICAL CENTERS GONZAGA UNIVERSITY PROVIDENCE SACRED HEART 101 WEST 8TH AVE (0.5 MILES) BEDS: 644 EMPLOYEES: 4,000+ SPOKANE ARENA RIVER PARK SQUARE SPOKANE CONVENTION CENTER WASHINGTON STATE UNIVERSITY EASTERN WASHINGTON UNIVERSITY - SPOKANE ,400 DAILY DEACONESS MEDICAL CENTER 800 WEST 5TH AVE (0.3 MILES) BEDS: 307 EMPLOYEES: 1,604 PROVIDENCE HOLY FAMILY 5633 NORTH LIDGERWOOD ST (4.7 MILES) BEDS: 272 EMPLOYEES: 1,000+ SPOKANE VA MEDICAL CENTER 4815 NORTH ASSEMBLY ST (5.5 MILES) BEDS: 46 HOSPITAL, 38 REHABILITATION Parent facility to VA outpatient facilities from Coeur d Alene, ID to Wenatchee, WA 90 HANGER CLINIC ,000 DAILY 90 VALLEY HOSPITAL EAST MISSION AVE, SPOKANE VALLEY (9.4 MILES) BEDS: 123 EMPLOYEES: 530 SHRINER S CHILDREN S HOSPITAL 911 W 5TH AVE, SPOKANE (0.4 MILES) BEDS: 30 CENTRAL BUSINESS DISTRICT UNIVERSITY DISTRICT MEDICAL DISTRICT HANGER CLINIC 5

6 Medical District APPROXIMATE MAP SCALE 0 DEACONESS MEDICAL CENTER.25 MILES.5 MILES SPOKANE EYE SURGERY CENTER LEWIS & CLARK HIGH SCHOOL INLAND CARDIOLOGY ASSOCIATES SHRINER S CHILDREN S HOSPITAL OB GYN ASSOCIATES OF SPOKANE HANGER CLINIC PROVIDENCE HEART INSTITUTE SPOKANE PHYSICIANS CLINIC PROVIDENCE SACRED HEART MEDICAL CENTER REHABILITATION ASSOCIATES PROVIDENCE ST. JOSEPH RADIATION ONCOLOGY ASSOCIATES FRESENIUS MEDICAL CARE CANCER CARE NORTHWEST INLAND EYE CENTER PAML LABORATORIES HANGER CLINIC 6

7 Site Plan W 5 TH AVE SITE PLAN KEY PARCEL OUTLINE: LEASABLE AREA: LAND AREA: NOT A PART: INGRESS/EGRESS: ±3,969 SF ±11,250 SF PYLON SIGN S WASHINGTON ST DRIVE-THRU COFFEE 14,100 DAILY Site Plan Not To Scale HANGER CLINIC 7

8 Featured Photos << S WASHINGTON ST >> HANGER CLINIC 8

9 Financial Summary PRICE $1,310,000 Capitalization Rate: 7.15% Price Per Foot: 3,969 Square Feet $330 NET OPERATING INCOME SUMMARY SCHEDULED INCOME Per SF Scheduled Rent: 11/1/2017 $26.50 $105,169 Rent Increases Through: 11/1/2018 $0.46 $1,840 Equals: Effective Gross Income $26.96 $107,010 Less: OPERATING EXPENSES Per SF CAMS $0.43 $1,707 Property Taxes $2.45 $9,709 Insurance $0.38 $1,491 Reserves $0.10 $397 Total Operating Expenses $3.35 (13,304) Equals: NET OPERATING INCOME $93,706 This information has been secured from sources we believe to be reliable but we make no representations or warranties, expressed or This information has been secured from sources we believe to be reliable but we make no representations or warranties, expressed or implied, as to the accuracy of the information. Buyer must verify the information and bears all risk for any inaccuracies. HANGER CLINIC 9

10 Rent Roll TENANT INFO TERM RENT SUMMARY Tenant Name Size Date Monthly Rent Percent Increase Annual Rent PSF Cap Rate Hanger Clinic 3,969 4/1/2017 $8,764 $105,169 $ % 4/1/2018 $9, % $108,324 $ % Occupancy Date : April 1, /1/2019 $9, % $111,574 $ % Lease Expiration : June 30, /1/2020 $9, % $114,921 $ % 4/1/2021 $9, % $118,369 $ % 4/1/2022 $10, % $121,920 $ % 4/1/2023 $10, % $125,577 $ % 4/1/2024 $10, % $129,345 $ % Lease Notes Option 1 7/1/2024 $11, % $133,225 $ % Option 2 7/1/2029 $12, % $149,952 $ % comments: Tenant has 3% annual escalation through remaining initial term and into option periods. Tenant has right to terminate after 7th year of lease - if exercised Tenant would ow portion of T.I. Allowance based off $77,500 and leasing commissions based off of 7%. Tenant has two, 5-year option periods with three percent annual increases. This information has been secured from sources we believe to be reliable but we make no representations or warranties, expressed or implied, as to the accuracy of the information. Buyer must verify the information and bears all risk for any inaccuracies. HANGER CLINIC 10

11 Operating Expenses PROJECTED OPERATING EXPENSES Total /SF Notes CAMS $1,707 $ Property Taxes $9,709 $ Insurance $1,491 $ Reserves $397 $0.10 Total Expenses $12,907 $3.35 Notes: 1) Landlord has sole responsibility of landscaping, parking lot, HVAC, and maintenance of property systems. Tenant pays directly all other CAM expenses. Landlord's actual CAM expenses for 2016 were $0.38/SF. Projected CAM charges includes additional $0.05 CAM allowance at $0.43 per square foot. 2) Based on 2017 Spokane County Tax Assessment. 3) Based on on 2016 Actual Expenses. This information has been secured from sources we believe to be reliable but we make no representations or warranties, expressed or implied, as to the accuracy of the information. Buyer must verify the information and bears all risk for any inaccuracies. HANGER CLINIC 11

12 Lease Abstract DATE OF LEASE: April 1, 2014 TERM: 10 Years, 3 Months COMMENCEMENT DATE: April 1, 2014 LEASE EXPIRATION: June 30, 2024 Base Rent: Months Rent PSF Monthly Installments 1-2 N/A N/A 3-12 $24.98 $8, % Annual Rent Bumps Rent Increases: Three percent annual increases on the anniversary of the rent commencement. Option Periods: Lessee has two, 5-year options to extend with 3% annual increases in base rent. Tenant must provide 180 days written notice to exercise option. Real Estate Taxes: Landlord at their sole expense shall pay all property taxes and assessments. Insurance: Tenant is responsible for carrying General Liability Insurance policies that insure both Lessee and Lessor against death, bodily or personal injury, or property damaging occurring on or within the Premises. Tenant is also responsible for holding insurance policies on their personal property and fixtures within the Premises. Landlord at their expense will carry fire and risk insurance on the building. Utility Expenses: Lessee at Lessee s expense shall pay all charges for all electric, gas, water, sewage, garbage, alarm system, phone, internet, and any other service Lessee subscribes or enroll to. Landlord Maintenance Obligations: Landlord is responsible for maintenance and replacement of the structural and exterior portions of the Premises including the roof, parking area, landscaping, HVAC, and other mechanical, electrical, and plumbing systems. Landlord is not responsible for any damage caused by act or omission of Lessee or its employees and contractors. Tenant Maintenance Obligations: Tenant shall keep the premises and adjacent service areas clean and free from snow or ice rubbish, dirt and any unlawful structure, and shall store all trash and garbage within garbage enclosure and arrange for regular pickup of such trash. Tenant shall maintain all the interior surfaces including any tenant improvements or alterations they make. Assignment & Subletting: Tenant shall not assign the lease without prior written consent of the Landlord. Landlord shall not unreasonably withhold its consent to assignment of the lease or subletting of the premises to responsible assignees. Tenant must pay $1,000 to Landlord for underwriting of each potential candidate for assignment at the time the application is made. Tenant may assign the lease without Landlord approval to any entity that is controlled by Hanger, Inc. or any of its affiliates or subsidiaries with written notice to Landlord. No transfer or assignment shall relieve Lessee of its liability under the lease. Lessee shall remain liable to Lessor for the payment of all rent, and the performance of all covenants and conditions of this lease. Termination Clause: Lessee shall have the one time right to terminate the lease at the end of the seventh (7) year of the lease by providing Lessor with a written notice no later than January 31, Lessee must also provide payment of a termination fee equal to the unamortized portion of the Tenant Improvement Allowance, based off $77,500, and the unamortized portion of the real estate commission fee based off of 7%. Lessee must also not be in default beyond applicable cure periods at the time notice is given to Lessor. HANGER CLINIC 12

13 Area Intel & Demos OVERVIEW Settled in 1871 on the Spokane River, the city of Spokane is presently the second largest city in Washington. The city is 92 miles south of the Canadian border, approximately 20 miles from the Washington Idaho border, and 232 miles east of Seattle. Spokane is known as the birthplace of Father s Day, hosted the first environmentally themed World s Fair, Expo 74, and is home to Gonzaga University, Whitworth University, and the growing Riverpoint campus that includes satellite campuses for Eastern Washington University and Washington State University. ECONOMY NATURAL RESOURCES Natural resources have historically been the foundation of Spokane s economy, with the mining, logging, and agriculture industries providing much of the region s economic activity. Considered to be one of the most productive mining districts in North America and due to its location between mining and farming areas, Spokane became an important rail and shipping center. DIVERSIFIED INDUSTRY Today the city s economy has diversified to include other industries, including the high-tech and biotech sectors. As the metropolitan center of the Inland Northwest as well as southeastern British Columbia and Alberta, Spokane serves as a commercial manufacturing, transportation, medical, financial, shopping, and entertainment hub. moses lake Tri-Cities 1.5 Hours 100 Miles 90 2 Hours 140 Miles Spokane 40 min 37 Miles Coeur D Alene CORPORATE HEADQUARTERS & OFFICES Genetics company, Signature Genomic Laboratories and Fortune 1000 technology company, Itron are headquartered in the area. Other companies with head offices in the Spokane area include technology company Key Tronic, hotelier Red Lion Hotels Corporation, and automaker Commuter Cars. The largest military facility in the area is Fairchild Air Force Base near Airway Heights, which employs over 5,100 military and civilian employees and is home to the 92d Air Refueling Wing. POPULATION 1-Mile 3-Mile 5-Mile ,703 97, , ,888 97, , ,181 99, ,474 HANGER CLINIC 1 Mile 3 Miles 5 Miles 2015 HOUSEHOLD INCOMES 1-Mile 3-Mile 5-Mile Average $43,460 $53,011 $56,397 Median $25,438 $35,163 $39,455 HANGER CLINIC 13

14 THE CAPITAL PACIFIC EXPERIENCE - OUR DAILY COMMITMENT TO OUR CLIENTS [ ] KEVIN ADATTO kadatto@capitalpacific.com (503) MICHAEL HORWITZ mhorwitz@capitalpacific.com (503) SEAN TUFTS stufts@capitalpacific.com (206) DAVID GELLNER dgellner@capitalpacific.com (206) SCOTT FRANK sfrank@capitalpacific.com (503) SEAN MACK smack@capitalpacific.com (503) PETER DUNN pdunn@capitalpacific.com (503)