1 LINCOLN HARRIS CSG GROUP 6 Off-Market MOB Acquisitions: DFW Market S T R AT E G Y S T R AT E G Y- I N - A C T I O N Acquire off-market MOB investments The strategy was to leverage Lincoln Harris relationships and offer creative acquisition solutions to prospective sellers. A large healthcare REIT engaged the Lincoln Harris CSG Healthcare Group to help them identify and acquire quality MOBs in N. Texas on an off-market basis DY N A M I C S R E S U LT S The Lincoln Harris Healthcare team sourced 5 off-market acquisitions and 1 off-market build to suit for the REIT between 2014 and 2016 The MOB acquisition market in the 2014-2016 time-frame was very competitive. Off-market acquisition opportunities were very hard to find. Class A Medical Office Buildings (MOBs) Dallas/Ft Worth Metroplex 6 MOBs totaling 333,450 RSF Multiple closings 2014-2016 Occupancy Average occupancy >95% Acquisition Price $96,683,845 5 Acquisitions @6.50% cap and 1BTS @ 6.25% cap
LINCOLN HARRIS CSG GROUP 2 MOB Management & Leasing: Ft Worth, TX Reposition, rebrand and create value Lincoln Harris CSG was engaged by an investor group to increase value of an under-performing Class C MOB. Although under-performing, the off-campus MOB is strategically located in the vibrant Ft Worth medical district. The LH team led the effort to: (1) upgrade the building with a common area retrofit, (2) re-tenant the property with higher quality tenants, (3) elevate the quality of property management, (4) enhance the tenant experience and (5) reduce operating expenses. RESULTS Reduce operating expenses every year since 12 (including 7% reduction in 17) Increased occupancy from< 50% to 90% 100% retention of desired tenants Dramatic increase in tenant satisfaction Increased rent rates by 37% 2016 Class B MOB, off-campus (client owned) Ft Worth, TX 89,990 RSF 2012-2018 Increased occupancy, enhanced management, re-branded building,improved tenant satisfaction, increased rental rates
LINCOLN HARRIS CSG GROUP 4 Portfolio Transaction Management: 50 States stabilize the portfolio and deliver prescribed Over deliver client s expectations proceeds. HealthSouth was one of the largest healthcare providers in the US with a portfolio of 1200+ healthcare properties Alvarez & Marsal was hired by the HealthSouth board to restructure the company and avoid bankruptcy. A&M hired Lincoln Harris CSG to provide real estate services for the 50-state portfolio Execute an aggressive, time-sensitive optimization plan to reduce occupancy cost, RESULTS The Lincoln Harris Team achieved 100% of the client s goals including: Sold 17 surplus assets in 7 months generating $20 million in gains Completed 137 buyouts w/ avg savings of 63% Completed 42 downsizes / relocations resulting in 39% reduction in space Restructured SOX compliance / lease administration platform w/ 10% cost reduction $6.1 million reduction in annual occupancy costs MOBs and Post acute care facilities All 50 states 1200+ properties 2003-2006 Achieved 100% of client s real estate objectives relating to the corporate re-structure (exceeding goals in each category)
5 LINCOLN HARRIS CSG GROUP Hospital Disposition, San Antonio TX S T R AT E G Y S T R AT E G Y- I N - A C T I O N Create buyer demand for vacant hospital campus. LH worked with VMG and the original developer to create an operational business model to attract the interest of system operators. Texas Capital Bank acquired the Forest Park Medical Center via foreclosure. After unsuccessful attempts to sell the property, TCB hired Lincoln Harris CSG to assist with the disposition R E S U LT S The Lincoln Harris Healthcare team sold the property for the Seller s asking price to Methodist Healthcare System. DY N A M I C S Forest Park Medical Center is a trophy quality specialty hospital and MOB. A lack of demand for the property resulted in it being vacant for over 2 years. Class A+ Specialty Hospital and MOB San Antonio, TX Hospital: 154,000 SF, MOB: 80,000 SF Closing Q3 18 Occupancy Hospital 0%, MOB 6% Original cost of Project: >$95,000,000 Sales Price: Undisclosed
LINCOLN HARRIS CSG GROUP 7 Portfolio transition: Property Management / Accounting Leverage best practices to integrate PM and LH mobilized a dedicated and experienced Accounting services team to execute a plan to address the client s challenges and objectives. Lincoln Harris CSG was hired by a large regional RESULTS healthcare system to take over management and The Lincoln Harris Team achieved the following: accounting for a 1,675,043 sf MOB portfolio Completed the accounting and operational transition in < 90 days. Similar transitions with other providers had taken 3 to 5 years. The client was not satisfied with the services Successfully addressed management and being performed on approximately 50% of its accounting issues that had not previously MOB portfolio. Accounting services were of been addressed by other service providers particular concern. Shifted from transition phase to operational phase to value-add phase in less than 4 months. MOBs Texas 18 properties, 1,675,043 sf 2018 (present) Exceeded client expectations with respect to portfolio on-boarding and value-add services
LINCOLN HARRIS CSG GROUP 8 Portfolio Accounting Leverage best practices developed by the Lincoln Harris CSG Accounting group. LH leveraged the expertise of it s dedicated healthcare accounting team. Lincoln Harris CSG was hired by a national REIT to take over accounting only services for a portfolio of 33 MOBs. The client was implementing new policy and system requirements that other service providers were unable to satisfactorily adopt. RESULTS The Lincoln Harris Team achieved the following: LH was the first of multiple service providers to successfully adopt the clients new accounting policies / systems and fully automate the new CAM module Swift and timely portfolio transition. MOBs Arizona, Washington, California, Texas 33 properties, 2,187,889 sf 2016 - present Exceeded client expectations with respect to portfolio on-boarding and value-add services.
9 LINCOLN HARRIS CSG GROUP MOB Leasing S T R AT E G Y S T R AT E G Y- I N - A C T I O N Increase Occupancy & Maximize Revenue Lincoln Harris engaged a local broker and implemented the LH business first marketing strategy to maximize occupancy and long term tenant stability. Lincoln Harris CSG was engaged by a national REIT to lease an off-campus 45,121 square foot problem MOB. R E S U LT S Occupancy increase from 42% to 86% DY N A M I C S Increased rental rates 30% National REIT acquired a 42% occupied, multitenant medical office building. The building had been stigmatized in the market due to poor management with adjacent Hospital tenant move outs. Executing strategic management and leasing plans resulted Hospital users and 3rd party tenants returning to the building. Stabilized asset with long term credit tenants Pending lease will render 100% occupancy Class B MOB (client owned) Oklahoma City, OK 45,121 square feet 2011 present Occupancy increase from 42% to 86% Increased rental rates 30% Stabilized asset with long term credit tenants Lease out for execution brings building to 100% occupancy
10 LINCOLN HARRIS CSG GROUP MOB Leasing S T R AT E G Y Increase Occupancy & Maximize Revenue out for signature that would bring the building to 97% occupied. Lincoln Harris CSG was engaged by a national REIT to lease an on-campus 99,768 square foot Medical Office Building. S T R AT E G Y- I N - A C T I O N Lincoln Harris implemented its business first marketing strategy to maximize occupancy and long term tenant stability. DY N A M I C S National Owner acquired an 88% occupied, multitenant medical office building on the campus of a local physician owned orthopedic hospital. Lincoln Harris CSG assisted with the acquisition of the hospital operations by a name brand hospital system and subsequent long-term renewal of multiple leases in the MOB. An additional, 16,225 square feet of expiring leases were backfilled with new tenants resulting in a current occupancy of 94% with leases R E S U LT S Kept occupancy and rental rates stable through significant tenant roll over. Increased overall occupancy from 72% (including anticipated move-outs) to 94% Increased rental rates from $19.00 to $22.00 per square foot. Assisted in conversation from a physician owned hospital to a brand hospital system owned hospital. Class A MOB (client owned) Bellaire (Houston), TX 99,768 square feet 2015 present Kept occupancy and rental rates stable through significant tenant roll over. Increased occupancy from 72% (effective) to 94% Increased rental rates from $19.00 to $22.00 per square foot. Assisted in conversation from physician owned to name brand hospital system owned attached hospital.
LINCOLN HARRIS CSG GROUP 13 Facilities Management: Government Outpatient Clinic Implement best management practices to dramatically reduce OPEX and meet government maintenance standards LH mobilized a dedicated and experienced team to execute a plan to address the client s challenges and objectives. Lincoln Harris CSG was hired by new ownership firm to improve management of newlyconstructed government facilities, while meeting accreditation standards. The client was not satisfied with the cost of the contracted maintenance services and was looking for partner to improve facility and reduce contractor operating costs. Additionally, the facility needed to meet government standards for outpatient facilities. RESULTS The Lincoln Harris Team achieved the following Improved facility operations for 1500 visitors / day Successfully remedied faulty flooring installation for 275,000 sf Reduced operating expenses by $100,000 per year Met and exceeded all government required maintenance standards for outpatient accreditation Government Outpatient Clinic Austin, Texas 1 property, 275,000 sf 2015-2018 Reduced operating expenses by $100,000 per year
LINCOLN HARRIS CSG GROUP 15 MOB Management & Leasing: Las Vegas, NV Manage and Lease property. Lincoln Harris CSG was engaged by owner to increase value of an under-performing Class B MOB. Although under-performing, the on-campus MOB is strategically located on Hospital Campus and connected to the Hospital via a climate controlled corridor. The LH team led the effort to: (1) upgrade the building with a common area retrofit, (2) re-tenant the property with higher long term quality tenants, (3) elevate the quality of property management and (4) enhance the tenant experience by the addition of an exterior courtyard, Subway and Walgreens retailers. RESULTS Increased occupancy from< 50% to 93% 100% retention of desired tenants Dramatic increase in tenant satisfaction as reflected in Tenant Surveys Generous TI Allowances Class B MOB, on-campus (client owned) Las Vegas, NV 199,421 RSF 2010-2018 Increased occupancy, enhanced management, improved tenant satisfaction, increased rental rates