fresenius medical care and medical office building · 2017-10-12 · fresenius lease summary lease...

Confidential Offering MemorandumFresenius Medical Care and Medical Office Building400 John Deere Road, Moline, IL 61265

CONFIDENTIALITY AGREEMENT

The information contained in the following Marketing Brochure is proprietary and strictly confidential. It is intended to be reviewed only

by the party receiving it from Institutional Property Advisors, a Division of Marcus & Millichap (“IPA”) and should not be made available to

any other person or entity without the written consent of IPA. This Marketing Brochure has been prepared to provide summary, unverified

information to prospective purchasers, and to establish only a preliminary level of interest in the subject property. The information contained

herein is not a substitute for a thorough due diligence investigation. IPA and Marcus & Millichap have not made any investigation, and make

no warranty or representation, with respect to the income or expenses for the subject property, the future projected financial performance of

the property, the size and square footage of the property and improvements, the presence or absence of contaminating substances, PCB’s or

asbestos, the compliance with State and Federal regulations, the physical condition of the improvements thereon, or the financial condition

or business prospects of any tenant, or any tenant’s plans or intentions to continue its occupancy of the subject property. The information

contained in this Marketing Brochure has been obtained from sources we believe to be reliable; however, IPA and Marcus & Millichap have

not verified, and will not verify, any of the information contained herein, nor has IPA or Marcus & Millichap conducted any investigation

regarding these matters and they make no warranty or representation whatsoever regarding the accuracy or completeness of the information

provided. All potential buyers must take appropriate measures to verify all of the information set forth herein.

Seller retains all rights and discretion to determine the offer and acceptance process including but not limited to the right to accept or reject

any offer in its sole and absolute discretion. Seller shall only be bound by duly executed and enforceable agreements entered into, if any. ALL

MATTERS PRIVILEGED AND CONFIDENTIAL

NON-ENDORSEMENT NOTICE

Institutional Property Advisors, a Division of Marcus & Millichap (“IPA”) is not affiliated with, sponsored by, or endorsed by any commercial tenant

or lessee identified in this marketing package. The presence of any corporation’s logo or name is not intended to indicate or imply affiliation with,

or sponsorship or endorsement by, said corporation of IPA or Marcus & Millichap, its affiliates or subsidiaries, or any agent, product, service, or

commercial listing of IPA or Marcus & Millichap, and is solely included for the purpose of providing tenant lessee information about this listing to

prospective customers.

ALL PROPERTY SHOWINGS ARE BY APPOINTMENT ONLY. PLEASE CONTACT YOUR INSTITUTIONAL PROPERTY ADVISORS

LISTING ADVISORS FOR MORE DETAILS.

INVESTMENT OVERVIEW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

FINANCIAL ANALYSIS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

DEMOGRAPHICS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Table of Contents

Exclusive Advisor:

www .ipausa .com

Investment Sales:

Scott NiedergangSenior Director, IPA Medical OfficeDOWNTOWN CHICAGODirect: (312) [email protected]: IL 475.430614

Gino LollioSenior Director, IPA Medical OfficeDOWNTOWN CHICAGODirect: (312) [email protected]: IL 475.145430

INVESTMENT OVERVIEW

OVERVIEW

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This information has been secured from sources we believe to be reliable, but we make no representations or warranties, express or implied, as to the accuracy of the information. References to square footage or age are approximate. Buyer must verify the information and bears all risk for any inaccuracies. Institutional Property Advisors, IPA, and Marcus & Millichap are service marks of Marcus & Millichap Real Estate Investment Services, Inc. © 2017 Marcus & Millichap. All rights reserved. ACT ID Y0370078

Investment Overview

Investment Highlights�� 21,142-Square-Foot, Two-Tenant Medical Office Building Fully Occupied by

Fresenius Medical Care (FMC) and Quad Cities Nephrology Associates

�� Quad Cities Kidney Center, Ltd. in Top 10 Percent Profit Margin for Dialysis Clinics Nationally | Recently Acquired by FMC

�� FMC Executed Brand New 15-Year Lease on May 1, 2016 | 10 Percent Rent Escalations Every Five Years with Three, Five-Year Options to Renew

�� Property Holds Corporate Guaranty from Fresenius Medical Care Holdings, Inc. (Standard & Poor’s BBB-)

�� Located On-Campus of UnityPoint Health’s Trinity Moline | The First Comprehensive Outpatient Complex in the Quad-Cities Region

�� Average Five-Mile Population Exceeds 125,000 | Average Household Income within One-Mile is Approximately $73,000

Institutional Property Advisors (IPA) is pleased to present an on-campus medical office building inclusive of a dialysis clinic and nephrology practice in Moline, Illinois.

The subject property is 21,142-square-foot, two-tenant medical office building that is fully occupied by Fresenius Medical Care (FMC). Fresenius Medical Care (Standard & Poor’s BBB-)) recently acquired the operational interest of Quad Cities Kidney Center, Ltd., the previous operator of this location. At that time, FMC agreed to execute a brand new 15-year lease. The lease commenced May 1, 2016 and include 10 percent rent escalations every five years with three, five-year renewal options. Prior to

their acquisition by FMC, Quad Cities Kidney Center, Ltd. had a top 10 percent profit margin for

all dialysis clinics in the country. Quad Cities Nephrology Associates will be signing a co-terminus lease to FMC to encumber the former ASC space.

The subject property is on the campus of UnityPoint Health’s Trinity Moline campus. Founded in 1997, it was the first comprehensive outpatient complex in the Quad-Cities region, and has served a health care delivery model for the future. The park-like campus was designed to create a therapeutic healing environment.

The population within a five-mile radius of the subject property is 129,634. The average household income within one-mile of the subject property is $73,673.

E M P L OY E E S

2015

104,033

O P E R AT I N G I N C O M E ( E B I T )

2015 1

2,3872014

( 2014: 99,895 )Change of 6 %

Fresenius Medical Care is the world’s leading provider of products and services for people with chronic kidney failure..

2015

( 2014: $ 15,832 M )

Change of 6 % Change of 2 %

2015

294,381( 2014: 286,312 )

R E V E N U EI N $ M

PAT I E N T S

660,12014

N E T I N C O M EI N $ M

2015 1

2015

3,418( 2014: 3,361 )

D I A LYS IS C E N TE RS

2015 2014

3,044 2,954

1,960 1,861

1,025 941

S E L E C T E D K E Y F I G U R E S I N $ M

Earnings before interest, taxes, depreciation and amortization ( EBITDA )

Free cash �ow 2

935 920

Net cash provided by ( used in ) operating activities

Capital expenditures

66 1,770

13.9 14.2

Acquisitions and investments, net

Operating income margin in %

6.9 6.9Return on invested capital ( ROIC ) in %

41.1 39.5Equity ratio ( equity / total assets ) in %

FRESENIUS MEDICAL CARE AND MEDICAL OFFICE BUILDING

4This information has been secured from sources we believe to be reliable, but we make no representations or warranties, express or implied, as to the accuracy of the information. References to square footage or age are approximate. Buyer must verify the information and bears all risk for any inaccuracies. Institutional Property Advisors, IPA, and Marcus & Millichap are service marks of Marcus & Millichap Real Estate Investment Services, Inc. © 2017 Marcus & Millichap. All rights reserved. ACT ID Y0370078

FINANCIAL ANALYSISIN

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Providers

Quad Cities Nephrology Associates, PLC LLC was founded in 1996 by VR Alla, MD. Since 1996, the practice has grown from 1 practice location to 9 practice locations, serving the greater Quad Cities metro area and surrounding rural areas with locations in both Illinois and Iowa. The company consists of four full time Nephrologists and two full time Nurse Practitioners. With over 38 years of experience, the practice provides the highest level of quality care for patients that have chronic kidney disease, hypertension, and anemia. The group also provides medical care to patients who have end stage renal disease on dialysis.

V R Alla, M .D . – Dr. Alla received his Medical degree at J.N. Medical College, Belgqaum, India. He completed his Internal Medicine residency at Mercy Hospital,Chicago and his Nephrology fellowship at the University of Illinois, Chicago graduating in 1980. After graduating he came to the Quad Cities where he was the founder of the Quad Cities Kidney Centers and the Quad Cities Nephrology Associates. Dr. Alla’s interest include Chronic Kidney Disease, Hypertension and Dialysis (End Stage Renal Disease).

Rajesh Alla, M .D . – Dr. Rajesh Alla grew up in the Quad Cities. He earned his undergraduate degree from Yale University in New Haven, CT. He received his medical degree from Vanderbuilt University in Nashville, TN. He completed his Internal Medicine Residency and Nephrology Fellowship at Washington University Medical Center in St. Louis, MO. He is board certified in Nephrology and Internal Medicine. In addition, he is certified as a Hypertension Specialist. He is licensed to practice in both Illinois and Iowa. He joined Quad Cities Nephrology Associates in 2007. His interests include Chronic Kidney Disease, Hypertension, and End Stage Renal Disease.

Suresh Alla, M .D . – Dr. Suresh Alla grew up in the Quad Cities. He received his Medical degree from the University of Michigan Medical School in Ann Arbor. He completed his Internal Medicine residency at University of Colorado Health Sciences Center, Denver, CO and his Nephrology fellowship at Hospital of the University of Pennsylvania, Philadelphia, PA. He board certified in Internal Medicine and Nephrology. In addition he certified as a Clinical Hypertension Specialist. He is licensed to practice in both Illinois and Iowa. His interests include Hypertension and Home Dialysis Therapies. He joined Quad Cities Nephrology Associates in 2012.

Travis Figanbaum, M .D . – Dr. Figanbaum grew up in the rural Quad Cities area. He recieved his Medical degree from the University of Illinois College of Medicine at Rockford. He completed his Internal Medicine internship and residency at The Mayo Clinic, Rochester, MN. He practiced General Medicine prior to returning to pursue his nephrology training. He received his Nephrology fellowship training at the University of Iowa Hospital and Clinics. In 2014, he joined Quad Cities Nephrology Associates, where his interests include Chronic Kidney Disease, Hyptertension, and End Stage Renal Disease, particularly Home Hemodialysis. He is board certified in Internal Medicine and Nephrology.

Ravinder Pal S . Bhatti, M .D . – Dr. Bhatti received his Medical Degree from University of Delhi, India. He pursued his Masters in Public Health at the University of Miami thereafter. He completed his Internal Medicine Residency at Saint Joseph Hospital, Chicago and his Nephrology Fellowship at University of Arkansas for Medical Sciences at Little Rock, Arkansas. He joined Quad Cities Nephrology Associates in July 2016. He is board Certified in Internal Medicine and Board Eligible in Nephrology. His interests include Chronic Kidney Disease and Home Dialysis modalities. Away from work, he likes spending some his time pursing his hobbies of computer programming and photography.




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Property Photos




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Regional Map

Quad Cities Kidney Center – Moline




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Local Map





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Market Aerial





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Proximity to Nearby Hospital





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Aerial


FINANCIAL ANALYSIS

FINANCIAL ANALYSIS




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Financial Overview

OFFERING SUMMARY

Address 400 John Deere Road, Moline, IL 61265

Property Type Two-Tenant Medical Office Building

Offering Price $5,740,000 1

Cap Rate 7.00%

Rentable Square Feet 21,1422

Price/SF $271.50

Year Built 1996

Lot Size 1.03 Acres

FRESENIUS LEASE SUMMARY

Lease Type Triple Net (NNN)

Roof and Structure Landlord Responsible

Lease Guarantor Fresenius Medical Care (FMC)

Original Lease Term 15 Years

Lease Commencement Date 5/1/2016

Lease Expiration Date 4/28/2031

Lease Term Remaining 14+ Years

Options (3) 5-Year

Increases 10 Percent Rent Escalations Every Five Years

QUAD CITIES NEPHROLOGY ASSOCIATES LEASE SUMMARY

Lease Type Triple Net (NNN)

Roof and Structure Landlord Responsible

Lease Guarantor Quad Cities Nephrology Associates

Original Lease Term 15 Years

Lease Commencement Date TBD


Lease Term Remaining 14+ Years

Options (3) 5-Year

Increases 10 Percent Rent Escalations Every Five Years

MONTHLY RENT ANNUAL RENT RENT PER SF GROUND LEASE RENT NOI

$35,236.67 $422,840.00 $20.00 ($21,000.00) $401,840

GROUND LEASE SUMMARY

Total Square Feet 1.03 Acres

Lease Commencement Date 12/31/1996


Options (12) 5-Year

Increases None




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Rent Roll

TENANT RENTABLE SF % OF BLDG LEASE COMMENCEMENT

LEASE EXPIRATION

LEASE TYPE RENT/SF MONTHLY RENT

ANNUAL RENT

ESCALATIONS OPTIONS

Fresenius Medical Care 15,506 15,506 5/1/2016 4/28/2031 NNN $20.00 $25,843.33 $310,120 10% Every 5 Years (3) 5-Year

Quad Cities Nephrology Associates 5,636 5,636 TBD 4/28/2031 NNN $20.00 $9,393.33 $112,720 10% Every 5 Years (3) 5-Year

Ground Lease Terms 1.03 Acres 1.03 Acres 12/31/1996 12/31/2027 -- -- $21,000 -- (12) 5-Year

Total Available Square Feet 0 0% Gross Rent: $422,840

Total Occupied Square Feet 21,142 100% Ground

Lease:-$21,000

Total Square Feet: 21,142 100% Net Rent: $401,840

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This information has been secured from sources we believe to be reliable, but we make no representations or warranties, express or implied, as to the accuracy of the information. References to square footage or age are approximate. Buyer must verify the information and bears all risk for any inaccuracies. Institutional Property Advisors, IPA, and Marcus & Millichap are service marks of Marcus & Millichap Real Estate Investment Services, Inc. © 2017 Marcus & Millichap. All rights reserved. ACT ID Y0370078

Lease Abstract | Ground Lease

N . RIGHT OF FIRST REFUSAL, PURCHASE BY LANDLORD ON EXPIRATION OR EARLIER TERMINATION OF LEASE, LANDLORD’S RIGHT OF RELOCATION, AND PURCHASE ON TERMINATION OF LEASE FOR BREACH

1. Landlord shall have the right of first refusal to purchase either the building located on the Premises and/or to purchase the Quad Cities Kidney Center in the event Tenant desires to sell either or both of said assets. If Landlord does not exercise such right of first refusal (as applicable to the respective asset being offered for sale) in the manner set forth in this paragraph N within 90 days after notification in writing of intent to sell by Tenant, Tenant shall be free to sell the respective asset to any third party which it may desire; however, Tenant may not sell the same or assign the lease or sublet to any person, corporation, or entity which is or would be in direct economic competition with Landlord or any entity affiliated with Landlord. Thereafter, in the event Tenant sells the Quad Cities Kidney Center, Tenant must give Landlord written notice by certified mail within seven (7) days of execution of a contract for sale to advise Landlord of the future effective date (not less than 90 days after execution of the contract for sale) of the contract for sale and the name of purchaser. Within 90 days after receipt of said notice, Landlord may terminate this lease by written notice to Tenant in which event Landlord shall purchase the building situated on the Premises according to the procedure set forth paragraph N(2) hereof and such termination shall become effective on the 360th day following Tenant’s receipt of Landlord’s notice hereunder to terminate lease and intention to purchase building.

2. Upon expiration of the term of this lease or earlier termination of this lease, Landlord shall then be required to purchase the real estate improvements situated on Lot 2 for a purchase price that will be determined by two fair market value appraisals (one appraisal obtained by each party) each of which shall assume that: 1) The land and buildings

are owned in “fee simple” and, 2) If the property is not to be used for a kidney dialysis center, the appraisal should be at the highest and best use as a professional office building and not a kidney dialysis center. Landlord shall then purchase the real estate improvements at the average appraised price less the fair market value of the land as of the date of the expiration of the lease. If there is a failure to reach an agreement regarding the appraised value and sale price of the improvements, the parties shall engage the services of a third appraiser who shall determine the purchase price. Such purchase shall occur within 60 days from the expiration of the term of this lease.

3. Notwithstanding the foregoing provisions of this paragraph N, at any time after the expiration of the Original Term, Landlord shall have the right to cancel this lease. Landlord shall give Tenant at least 18 months prior written notice of its intent to so cancel and Tenant shall have the option of requiring the Landlord to either: a) provide a similar facility, at Landlord’s sole cost and expense, at a different location acceptable to Tenant and pay Tenant’s reasonable relocation costs to such similar facility, which facility shall be leased to Tenant upon the same terms and conditions as this lease, or b) to purchase the improvements on the subject property with the purchase price being determined by appraisals made in accordance with paragraph N2 above, except that the appraisals shall be based on the value of the building as a kidney dialysis center, taking into account Tenant’s extraordinary plumbing costs to suit the building as a kidney dialysis facility. In no event shall the purchase price under this paragraph N3 be less than the remaining undepreciated value of the building.

DEMOGRAPHICS

DEMOGRAPHICS


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Demographic Summary

INCOME 1-MILE 3-MILE 5-MILE

$ 0 - $14,999 7.8% 10.7% 15.1%

$ 15,000 - $24,999 13.3% 13.0% 13.1%

$ 25,000 - $34,999 12.6% 11.3% 11.5%

$ 35,000 - $49,999 10.7% 14.5% 13.8%

$ 50,000 - $74,999 21.4% 23.0% 20.3%

$ 75,000 - $99,999 17.2% 13.5% 12.3%

$100,000 - $124,999 6.9% 6.3% 6.3%

$125,000 - $149,999 3.4% 2.8% 3.0%

$150,000 - $199,999 2.7% 2.6% 2.3%

$200,000 - $249,999 1.5% 1.0% 1.0%

$250,000 + 2.5% 1.5% 1.5%

2014 Median Household Income $55,766 $50,642 $45,418

2014 Per Capita Income $33,705 $27,675 $26,568

2014 Average Household Income $73,673 $64,455 $61,518

HOUSEHOLDS 1-MILE 3-MILE 5-MILE

2000 Households 2,053 25,521 55,535

2010 Households 2,069 25,031 55,017

2014 Households 2,093 24,975 55,122

2019 Households 2,116 24,884 55,258

2014 Average Household Size 2.19 2.30 2.28

2014 Daytime Population 4,764 40,579 95,723

2000 Owner Occupied Housing Units 75.73% 66.88% 61.76%

2000 Renter Occupied Housing Units 20.28% 27.67% 32.01%

2000 Vacant 3.99% 5.45% 6.23%



2014 Vacant 5.41% 6.79% 7.49%



2019 Vacant 5.60% 7.01% 7.68%

POPULATION 1-MILE 3-MILE 5-MILE

2000 Population 4,607 60,924 132,910

2010 Population 4,540 59,432 129,639

2014 Population 4,584 59,236 129,634

2019 Population 4,595 58,816 129,287

Demographic data © 2010 by Experian/Applied Geographic Solutions and CoStar Group©


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Demographic data © 2012 by Experian/Applied Geographic Solutions and CoStar Group©

Demographic Summary

Housing In 2000, there were 36,578 owner occupied housing units in your area and there were 18,955 renter occupied housing units in your area. The median rent at the time was $378.

Employment In 2014, there are 95,723 employees in your selected area, this is also known as the daytime population. The 2000 Census revealed that 56.23% of employees are employed in white-collar occupations in this geography, and 43.65% are employed in blue-collar occupations. In 2014, unemployment in this area is 8.38%. In 2000, the average time traveled to work was 18.4 minutes.

PopulationIn 2014, the population in your selected geography is 129,633. The population has changed by -2.46% since 2000. It is estimated that the population in your area will be 129,286 five years from now, which represents a change of 0.26% from the current year. The current population is 48.66% male and 51.33% female. The median age of the population in your area is 38.8, compare this to the Entire US average which is 37.3. The population density in your area is 1,647.53 people per square mile.

Households There are currently 55,121 households in your selected geography. The number of households has changed by 0.74% since 2000. It is estimated that the number of households in your area will be 55,257 five years from now, which represents a change of 0.24%from the current year. The average household size in your area is 2.28 persons.

Income In 2014, the median household income for your selected geography is $45,417, compare this to the Entire US average which is currently $51,972. The median household income for your area has changed by 24.46% since 2000. It is estimated that the median household income in your area will be $54,056 five years from now, which represents a change of 19.01% from the current year.

The current year per capita income in your area is $26,567, compare this to the Entire US average, which is $28,599. The current year average household income in your area is $61,518, compare this to the Entire US average which is $74,533.

Geography: Five Miles

Exclusive Advisor:Investment Sales:

www .ipausa .com

Scott NiedergangSenior Director, IPA Medical OfficeDOWNTOWN CHICAGODirect: (312) [email protected]: IL 475.430614

Gino LollioSenior Director, IPA Medical OfficeDOWNTOWN CHICAGODirect: (312) [email protected]: IL 475.145430

fresenius medical care and medical office building · 2017-10-12 · fresenius lease summary lease...

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