DAVITA DIALYSIS DETROIT, MICHIGAN OFFERING MEMORANDUM
Investment Overview Marcus & Millichap is pleased to present this newly renovated, DaVita Dialysis center in Detroit, Michigan s largest city. Total Renal Care, Incorporated (Inc) signed a rare 15-year absolute net lease with zero landlord responsibilities. The lease features 2 percent annual rent increases over the base term and in the three, five-year option periods. The lease has a corporate guaranty from DaVita, Incorporated (Inc), a Fortune 500 company that did $14.7-billion in revenue across 2,350 treatment centers in 2016. This asset is located one off the signalized intersection of Whittier Avenue and Kelly Road. More than 10,300 vehicles pass by this asset daily. The subject property is also less than three miles from Saint John Hospital and Medical Center, a 772-bed facility known for excellence in cardiology, oncology, neurosciences, minimally invasive and robotic surgery, women s services, pediatrics, and medical education. There are ideal demographics for a dialysis center in the one-mile radius: more than 20,000 people with an average household income of $39,000. There is also a Rite Aid Pharmacy less than two miles from this asset. Newly Renovated DaVita Dialysis Center in Detroit Michigan s Largest City Rare 15-Year Absolute-Net Lease Zero Landlord Responsibilities Strong Inflation Hedge 2 Percent Annual Rent Increases During the Base Term and in Three, Five-Year Options Corporate Guaranty DaVita, Incorporated New York Stock Exchange (NYSE): DVA Number 181 on Fortune 500 List (2017) One Off Signalized, Hard Corner Intersection of Whittier Avenue and Kelly Road More Than 10,300 Vehicles Per Day (VPD) Less Than Three Miles from St. John Hospital & Medical Center 772-Bed Facility Growing Demand for Dialysis Treatment Michigan Obesity Rate Increased More Than 9 Percent from 2000 to 2016 Ideal Demographics More Than 20,000 People with an Average Household Income of $39,000 in One Mile Less Than Two Miles from Rite Aid Pharmacy Buyer must verify the information and bears all risk for any inaccuracies. Marcus & Millichap is a trademark of 2017 Marcus & Millichap. Activity ID: Y0332342 2
Financial Overview OFFERING SUMMARY PRICE $3,330,000 CAP RATE 6.00% NOI $200,000 PRICE PER SQUARE FOOT $333.00 RENT PER SQUARE FOOT $20.00 YEAR BUILT/RENOVATED 1954/2017 APPROXIMATE LOT SIZE 1.73 Acres GROSS LEASEABLE AREA 10,000 TYPE OF OWNERSHIP LEASE GUARANTOR LEASE TYPE ROOF AND STRUCTURE RENT COMMENCEMENT DATE EST LEASE EXPIRATION DATE LEASE TERM TERM REMAINING INCREASES OPTIONS TO RENEW Fee Simple DaVita, Incorporated Absolute-Net Tenant Responsible Earlier of (i) 180 Days from Possession Date or (ii) Date Tenant Opens For Business* 15 Years from Commencement 15 Years 15 Years 2% Annually 3, 5-Year *Upon determination of the Possession Date and Commencement Date, Landlord shall complete, execute, and forward a Commencement Date Memorandum to Tenant for Tenant s approval and execution ANNUALIZED OPERATING DATA BASE RENT ANNUAL RENT MONTHLY RENT INCREASES Year 1 $200,000 $16,667 Year 2 $204,000 $17,000 2% Year 3 $208,080 $17,340 2% Year 4 $212,242 $17,687 2% Year 5 $216,486 $18,041 2% Year 6 $220,816 $18,401 2% Year 7 $225,232 $18,769 2% Year 8 $229,737 $19,145 2% Year 9 $234,332 $19,528 2% Year 10 $239,019 $19,918 2% Year 11 $243,799 $20,317 2% Year 12 $248,675 $20,723 2% Year 13 $253,648 $21,137 2% Year 14 $258,721 $21,560 2% Year 15 $263,896 $21,991 2% Buyer must verify the information and bears all risk for any inaccuracies. Marcus & Millichap is a trademark of 2017 Marcus & Millichap. Activity ID: Y0332342 3
Tenant Overview - Davita Dialysis DaVita Incorporated, a Fortune 500 company, is the parent company of DaVita Kidney Care and HealthCare Partners, a DaVita Medical Group. DaVita Kidney Care is a leading provider of kidney care in the United States, delivering dialysis services to patients with chronic kidney failure and end stage renal disease. DaVita Kidney Care consistently differentiates itself from other kidney care companies and surpasses national averages for clinical outcomes. The company s clinical outcomes for dialysis have improved for the past decade, and in many key areas measuring quality dialysis care, we lead the nation. As of December 31, 2016, DaVita Kidney Care operated or provided administrative services at 2,350 outpatient dialysis centers located in the United States serving approximately 188,000 patients. The company also operated 154 outpatient dialysis centers located in 11 countries outside the United States. TENANT PROFILE TENANT TRADE NAME DaVita Kidney Care OWNERSHIP Public TENANT Total Renal Care, Incorporated (Inc) LEASE GUARANTOR DaVita, Incorporated (Inc) NUMBER OF LOCATIONS 2,300+ HEADQUARTERED Denver, CO WEB SITE https://www.davita.com/ SALES VOLUME $14.7 Billion (2016) NET WORTH $4.6 Billion (2016) STOCK SYMBOL DVA BOARD NYSE CREDIT RATING BB RATING AGENCY Standard & Poor s (S&P) RANK #181 in Fortune 500 (2017) Buyer must verify the information and bears all risk for any inaccuracies. Marcus & Millichap is a trademark of 2017 Marcus & Millichap. Activity ID: Y0332342 4
Aerial Overview Buyer must verify the information and bears all risk for any inaccuracies. Marcus & Millichap is a trademark of 2017 Marcus & Millichap. Activity ID: Y0332342 5
Area Overview & Demographics Lathrup Village 39 696 Southfield 10 Berkley Oak Park 1 102 Royal Oak Huntington Woods 10 Ferndale 8 75 Madison Heights Hazel Park 1 75 1 696 102 Hamtramck 53 5 MILE RADIUS Warren 696 Center Line 53 3 MILE RADIUS 97 3 97 3 1 MILE 94 97 102 3 Eastpointe SITE 94 St Clair Shores Woods Harper Woods Shores Farms Lake St Clair United States Canada 96 10 75 94 Park 39 96 1 3 94 153 Dearborn 12 Detroit 1-Mile 3-Mile 5-Mile Population 2000 Population 35,414 217,494 446,819 2010 Population 23,799 166,437 361,148 2017 Population 21,166 153,396 344,525 2021 Population 20,434 149,895 341,244 1-Mile 3-Mile 5-Mile Households 2000 Households 10,748 72,860 158,630 2010 Households 7,763 58,300 133,330 2017 Households 6,850 53,641 127,313 2021 Households 6,601 52,412 126,212 1-Mile 3-Mile 5-Mile Household (HH) Incomes 2017 Average HH Income $39,545 $49,935 $56,747 2017 Median HH Income $28,455 $34,677 $37,728 2017 Per Capita Income $12,798 $17,462 $20,970 Buyer must verify the information and bears all risk for any inaccuracies. Marcus & Millichap is a trademark of 2017 Marcus & Millichap. Activity ID: Y0332342 6
Market Overview - Detroit, Michigan Detroit is located in southeast Michigan on the Detroit River between Lake Huron and Lake Erie. Detroit is the largest city in the state and the tenth-largest in the country, with around 1,000,000 residents and a metropolitan population 4 times that size. It is the oldest major city west of the original colonies. The city began as a fur-trading town in the 1700s, Detroit took full advantage of its prime geographical location in the 1800s, becoming a major shipping and manufacturing center. With an influx of workers from Europe and the American South, Detroit was an industrial juggernaut in the early 1900s. During the two World Wars, Detroit was a leading supplier to the military. The birthplace of the automobile and the home of the Big 3 (General Motors, Ford, and Chrysler), Detroit remains the nucleus of the industry despite competition from Japan and Europe. One of the largest manufacturing cities in the country, Detroit is a leader in steel, fabricated-metal, chemicals, paper products, food, and beverages. The healthcare industry is also among the city s leading employers. Several major corporations are based in the city, including three Fortune 500 companies. The most heavily represented sectors are manufacturing (particularly automotive), finance, technology, and health care. The most significant companies based in Detroit include: General Motors, Quicken Loans, Ally Financial, Compuware, Shinola, American Axle, Little Caesars, DTE Energy, Lowe Campbell Ewald, Blue Cross Blue Shield of Michigan, and Rossetti Architects. About 80,500 people work in downtown Detroit, comprising onefifth of the city s employment base. Aside from the numerous Detroit-based companies listed above, downtown contains large offices for Comerica, Chrysler, HP Enterprise, Deloitte, PricewaterhouseCoopers, KPMG, and Ernst & Young. Thousands more employees work in Midtown, north of the central business district. Midtown s anchors are the city s largest single employer Detroit Medical Center, Wayne State University, and the Henry Ford Health System in New Center. Midtown is also home to watchmaker Shinola and an array of small and startup companies. New Center bases TechTown, a research and business incubator hub that is part of the WSU system. Like downtown and Corktown, Midtown also has a fast-growing retailing and restaurant scene. ACTUAL PROPERTY Buyer must verify the information and bears all risk for any inaccuracies. Marcus & Millichap is a trademark of 2017 Marcus & Millichap. Activity ID: Y0332342 7
Marcus & Millichap hereby advises all prospective purchasers of Net Leased property as follows: The information contained in this Marketing Brochure has been obtained from sources we believe to be reliable. However, Marcus & Millichap has not and will not verify any of this information, nor has Marcus & Millichap conducted any investigation regarding these matters. Marcus & Millichap makes no guarantee, warranty or representation whatsoever about the accuracy or completeness of any information provided. As the Buyer of a net leased property, it is the Buyer s responsibility to independently confirm the accuracy and completeness of all material information before completing any purchase. This Marketing Brochure is not a substitute for your thorough due diligence investigation of this investment opportunity. Marcus & Millichap expressly denies any obligation to conduct a due diligence examination of this Property for Buyer. Any projections, opinions, assumptions or estimates used in this Marketing Brochure are for example only and do not represent the current or future performance of this property. The value of a net leased property to you depends on factors that should be evaluated by you and your tax, financial and legal advisors. Buyer and Buyer s tax, financial, legal, and construction advisors should conduct a careful, independent investigation of any net leased property to determine to your satisfaction with the suitability of the property for your needs. Like all real estate investments, this investment carries significant risks. Buyer and Buyer s legal and financial advisors must request and carefully review all legal and financial documents related to the property and tenant. While the tenant s past performance at this or other locations is an important consideration, it is not a guarantee of future success. Similarly, the lease rate for some properties, including newly-constructed facilities or newly-acquired locations, may be set based on a tenant s projected sales with little or no record of actual performance, or comparable rents for the area. Returns are not guaranteed; the tenant and any guarantors may fail to pay the lease rent or property taxes, or may fail to comply with other material terms of the lease; cash flow may be interrupted in part or in whole due to market, economic, environmental or other conditions. Regardless of tenant history and lease guarantees, Buyer is responsible for conducting his/her own investigation of all matters affecting the intrinsic value of the property and the value of any long-term lease, including the likelihood of locating a replacement tenant if the current tenant should default or abandon the property, and the lease terms that Buyer may be able to negotiate with a potential replacement tenant considering the location of the property, and Buyer s legal ability to make alternate use of the property. By accepting this Marketing Brochure you agree to release Marcus & Millichap Real Estate Investment Services and hold it harmless from any kind of claim, cost, expense, or liability arising out of your investigation and/or purchase of this net leased property.
DAVITA DIALYSIS DETROIT, MICHIGAN 11707 WHITTIER AVENUE, DETROIT, MICHIGAN 48224 BROKER OF RECORD: STEVEN CHABEN MARCUS & MILLICHAP LICENSE: 6502387903