offering memorandum - loopnet · landscaping $11,000 $0.31 $11,000 $0.31 pest extermination $2,500...

DECATUR MEDICAL CENTER2349 Danville Rd SW • Decatur, AL 35603

OFFERING MEMORANDUM

1

REPACKAGED WITH MORE SQ. FT. and 8.5 CAP [11/2018]

N O N - E N D O R S E M E N T A N D D I S C L A I M E R N O T I C E

Confidentiality and DisclaimerThe 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 Marcus & Millichap and

should not be made available to any other person or entity without the written consent of Marcus & Millichap. 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. Marcus & Millichap has not made any investigation, and makes 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, Marcus & Millichap has not verified, and will not verify, any of the information contained herein, nor has Marcus & Millichap conducted any investigation regarding these

matters and makes 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. Marcus & Millichap is a service mark of Marcus & Millichap Real Estate Investment Services, Inc. © 2018 Marcus & Millichap. All rights reserved.

Non-Endorsement NoticeMarcus & Millichap 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 Marcus & Millichap, its affiliates or subsidiaries, or any agent, product,

service, or commercial listing of 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 CONSULT YOUR MARCUS & MILLICHAP AGENT FOR MORE DETAILS.

DECATUR MEDICAL CENTER

Decatur, AL

ACT ID Z0780007

2

Listed by: Bryan W. Stone (TN) |615-997-2862| [email protected] & Kyle Gross (NC)| [email protected]

[AL Broker of Record: Eddie Greenhalgh|[email protected]]

mailto:[email protected]

mailto:[email protected]

TABLE OF CONTENTS

SECTION

INVESTMENT OVERVIEW 01Offering Summary

Regional Map

Local Map

Aerial Photo

Parcel Map

FINANCIAL ANALYSIS 02

Tenant Summary

Lease Expiration Summary

Operating Statement

Notes

Pricing Detail

Acquisition Financing

MARKET COMPARABLES 03

Sales Comparables

Lease Comparables

MARKET OVERVIEW 04

Market Analysis

Demographic Analysis


3


4

INVESTMENT

OVERVIEW


#

OFFERING SUMMARY

5

EXECUTIVE SUMMARY

EXPENSES

CURRENT $/SF POST-SALE $/SF

Electric $8,200 $0.23 $8,200 $0.23

Water $250 $0.01 $250 $0.01

Cleaning $6,200 $0.17 $6,200 $0.17

Trash Removal $2,600 $0.07 $2,600 $0.07

Repairs & Maintenance $3,800 $0.11 $3,800 $0.11

Landscaping $11,000 $0.31 $11,000 $0.31

Pest Extermination $2,500 $0.07 $2,500 $0.07

Administration $5,000 $0.14 $5,000 $0.14

Insurance $6,000 $0.17 $6,000 $0.17

Real Estate Taxes $44,000 $1.22 $50,000 $1.39

Management Fee $30,000 $0.83 $30,000 $0.83

Other Expenses - Non Reimbursable $5,000 $0.14 $5,000 $0.14

Total Expenses $124,550 $3.47 $130,550 $3.63

VITAL DATA

CURRENT POST-SALE

Price $6,575,000 CAP Rate 8.54% 8.52%Loan Amount $4,602,500 Net Operating Income $561,395 $560,176

Loan Type Proposed NewNet Cash Flow After Debt Service

11.82% / $238,526 11.76% / $237,306

Interest Rate / Amortization 5.00% / 25 Years Total Return 16.52% / $333,425 16.70% / $337,061

Rentable SF 29,362

Price/SF $182.93

Current Occupancy 93.88%

Year Built 2001

Lot Size 2.73 acre(s)

DEMOGRAPHICS

1-Miles 3-Miles 5-Miles

2017 Estimate Pop 6,958 42,868 60,755

2010 Census Pop 6,902 42,606 60,238

2017 Estimate HH 3,084 17,081 24,089

2010 Census HH 3,077 17,082 24,022

Median HH Income $45,850 $44,097 $45,519

Per Capita Income $25,337 $23,620 $24,470

Average HH Income $56,790 $58,674 $61,005


OFFERING SUMMARY

▪ 36,000 Sq. Ft. multi-tenant MOB

▪ County health authority (Huntsville Hosp. Health Sys) anchors MOB at 60% RBA

▪ HHHS boasts a credit rating of A1 (2017)

▪ Low vacancy at only six-percent (6%)

INVESTMENT HIGHLIGHTS

With a premier healthcare anchor tenant, Marcus & Millichap is pleased to exclusively present this 36,000 sq. ft. medical office

building (MOB) located outside Huntsville AL. This three (3) building, multi-tenant MOB boasts the Huntsville Hospital Health

System (dba Decatur Morgan Hospital) as its anchor with seventy-percent (60%) of its RBA with currently only six-percent (6%)

vacancy. The Huntsville Hospital Health System is the municipal health care authority and entered into 40-year lease agreement

with Decatur Morgan Hospital in 2012 consolidating all of the county's healthcare locations throughout the region.

The Huntsville Hospital Health System (HHHS) boast a A1 LT credit rating by Moody's in 2017. Such a respectable rating is

attributable to HHHS' lead market share across its service area, operator of a regional referral hospital that provides many high

acuity and unique services within the service area, and the organization's track record of adequate financial performance. The

stable outlook reflects our expectation that Huntsville will maintain and improve financial performance from results and that the

HHHS will continue to fund routine capital needs through cash flow.

INVESTMENT OVERVIEW

6

THE OFFERING

Property Decatur Medical Center

Price $6,575,000

Property Address 2349 Danville Rd SW, Decatur, AL

SITE DESCRIPTION

Year Built/Renovated 2001

Rentable Square Feet 36000

Ownership Fee Simple


REGIONAL MAP


7

LOCAL MAP


8

Beltline Plaza Shopping Center

Decatur Mall

PROPERTY PHOTO


9

12


10

PROPERTY PHOTOS


11

PARCEL MAP

12

Our Parcel Buildings


3,508 Sq. Ft.Currently occupied by Dr. Dale PotterOphthalmology Practice since 2004New five-yr lease starting 11/2018

2,973 Sq. Ft.Currently occupied by ALFA Insurance (2001) & Healthsource Chiropractic of Decatur (2016)

Both outparcel buildings are fully occupied, and benefit from excellent visibility and signage, with frontage along Danville Rd SW. This location is surrounded by regional shopping centers, the Decatur Mall, several national hotels, and many retail amenities. The site is also in close proximity to some of the sub-market’s most well established residential areas.


13

FINANCIAL

ANALYSIS

FINANCIAL ANALYSIS


PRICING DETAIL

14

12

TENANT PROFILES


15

Huntsville Health Sys dba Decatur Morgan Hosp

Decatur Morgan Hospital (“DMH”) has been meeting the health and wellness

needs for citizens of Morgan and surrounding counties for 100 years. Decatur

General grew into a 273 bed acute care hospital with an additional 64 bed

behavioral health facility, with a medical staff of more than 200 physicians and

more than 1000 employees. DMH is accredited by The Joint Commission and

together serve more than 250,000 people in 5 counties. In early 2012, Huntsville

Hospital System (HHS) entered into a lease arrangement with Decatur General to

form Decatur Morgan Hospital, wherein HHS assumes all liability for a term of

forty (40) years. The entity currently has four locations in Morgan County - the

Decatur General Campus, Parkway Campus, West Campus and the Danville Road

Campus and there is room for continued facility growth.

At this location, the Decatur Morgan Hospital provides Outpatient Physical,

Occupational and Speech Therapy, and Industrial Rehab Services. Further,

cardiovascular training, strengthening, exercise, toning, group exercise and pool

classes weekly are offered. Individualized instruction from on-staff Exercise

Specialists for programming, instruction in equipment use, and assistance with

individual programs. Two indoor heated pools available. Private locker room and

dressing area.

General Information

Tenant Name Huntsville Health Sys dba Decatur Morgan Hosp

Website http://decaturmorganhospital.net/about/

Parent Company Huntsville Health System

Headquartered Huntsville AL

Rentable Square Feet 20,601 SF

Percentage of RBA 70.16%

Lease Commencement 5/1/2001

Lease Expiration 4/30/2026


16

MARKET

OVERVIEW

DECATUR, ALABAMA

17

MARKET OVERVIEW

DECATUR, ALABAMA

Located on the Tennessee River in Morgan County, the Northern Alabama City of Decatur boasts a rich heritage and dynamic future, home to a diverse group of people due to its progressive business environment and the City’s welcoming spirit and sense of community. Decatur is home to a thriving arts and education community, including the Princess Theatre Center for the Performing Arts, The Carnegie Visual Arts Center, and the Alabama Center for the Arts. Decatur also hosts many festivals each year including Alabama Jubilee, the oldest hot-air balloon race in the mid-south, that was started in Decatur in 1978. The Alabama Jubilee is held at Point Mallard Park along the Tennessee River, and has been accoladed as a “Top 20 Tourism Event in the Southeast for May” by Atlanta-based Southeast Tourism Society.

Similar to many southern cities in the early 19th century, much of Decatur’s early prosperity was based on it’s location along the river. Established in 1971, The Port of Decatur is one of the most active ports on the Tennessee River, with access to the Tennessee-Tombigbee Waterway, Ohio, and Mississippi river systems, as well as Norfolk Southern and CSX railroads. This port helps provide local economy growth in the cargo transit, manufacturing, and hi-tech industries, with port throughput largely dominated by imports of industrial and agricultural commodities including sand, asphalt, grains and fertilizers, coal, and steel piping.

Decatur’s business climate is as progressive as it is diverse. Industrial giants such as United Launch Alliance, Nucor Steel, Daikin America, and 3M as well as award-winning small retailers like Big Bob Gibson’s Barbecue and Morgan Price Candy Company are located in Decatur. Outdoor recreation is a year-round staple in Decatur. Its location on the Tennessee River is taken advantage of for boating, water skiing, and fishing. Point Mallard Park features 750 acres for recreational use with year round activities, including the J. Gilmer Blackburn Aquatic center, gold course, indoor ice rink, hiking and biking trails by the river, sports fields and campground. Established in 1938, Wheeler National Wildlife Refuge is another highly frequented natural attraction nearby, this 35,000 acre National Wildlife Refuge stretches for 20 miles along both sides of the Tennessee river and hosts hundreds of different species of animals, including habitats for twelve federally listed endangered or threatened species.

DECATUR, ALABAMA

18

MARKET OVERVIEW

HUNTSVILLE, ALABAMA

Huntsville Alabama is quickly becoming one of the fastest growing cities in the South. Beyond being the historic home of NASA and the Apollo missions, it has thrived as a leader of tech and science jobs. Decatur Alabama, a suburban city of Huntsville, lies in the same county (Morgan) with I-565 connecting the two.

Toyota-Mazda selects Huntsville, Alabama for landmark automotive manufacturing facility:

On March 8, 2018, Mazda-Toyota announced the construction of a new manufacturing facility to Huntsville. This new manufacturing plant and the presence of Mazda-Toyota is slated to bring over 4000 new jobs to the area with an average salary of over $50,000.

OVERVIEW

HUNTSVILLE

Huntsville is located 100 miles north of Birmingham and 110 miles south

of Nashville. The metro is known for its notable aerospace and defense

industries. Employment in related sectors offers higher-paying salaries,

benefiting the area as the cost of living remains below that of many other

markets. A low cost of living here allows roughly 70 percent of

households to afford to own their home. The Huntsville metro

encompasses the counties of Limestone and Madison.

▪ Government contractors such as Boeing, Northrop Grumman and Lockheed Martin are leading

employers, supporting the area’s space and defense industry.

▪ Huntsville has a growing science, technology, engineering and mathematics (STEM) workforce. The

area is being reinvented as a tech center, aided by organizations such as the Hudson Alpha Institute

for Biotechnology and the Redstone Arsenal.

▪ The median pay for STEM occupations in the area is $138,750 annually, fueling the redevelopment

of older buildings to attract a greater number of qualified workers to the metro.

DEMOGRAPHICS

1

ECONOMY

METRO HIGHLIGHTS

* Forecast

Sources: Marcus & Millichap Research Services; BLS; Bureau of Economic Analysis; Experian; Fortune; Moody’s Analytics; U.S. Census Bureau


U.S. ARMY – REDSTONE ARSENAL

More than 35,000 individuals are employed at this garrison to support the

Army’s missile programs.

NASA

Marshall Space Flight Center was where the most powerful rocket ever

designed was developed, enabling the exploration far into the solar system. It

has a workforce of nearly 6,000.

HIGHER EDUCATION

The University of Alabama Huntsville has more than 8,000 students, with

roughly half earning a degree in engineering or science.

453K

2017POPULATION:

181K

2017HOUSEHOLDS:

38.7

2017MEDIAN AGE:

$60,200

2017 MEDIAN HOUSEHOLD INCOME:

U.S. Median:

37.8U.S. Median:

$56,3008.3%

Growth2017-2022*:

7.4%

Growth2017-2022*:

PROPERTY NAME

MARKETING TEAM


DEMOGRAPHICS

Source: © 2017 Experian

Created on June 2018

POPULATION 1 Miles 3 Miles 5 Miles

▪ 2022 Projection

Total Population 6,963 43,684 61,761

▪ 2017 Estimate


▪ 2010 Census


▪ 2000 Census


▪ Current Daytime Population

2017 Estimate 7,117 45,016 73,506

HOUSEHOLDS 1 Miles 3 Miles 5 Miles

▪ 2022 Projection

Total Households 3,114 17,529 24,640

▪ 2017 Estimate


Average (Mean) Household Size 2.30 2.48 2.46

▪ 2010 Census


▪ 2000 Census


HOUSEHOLDS BY INCOME 1 Miles 3 Miles 5 Miles

▪ 2017 Estimate

$200,000 or More 1.08% 1.65% 1.94%

$150,000 - $199,999 2.43% 2.89% 3.28%

$100,000 - $149,000 9.77% 9.60% 10.32%

$75,000 - $99,999 10.86% 11.28% 11.50%

$50,000 - $74,999 22.45% 19.48% 19.05%

$35,000 - $49,999 12.49% 13.26% 13.07%

$25,000 - $34,999 14.15% 13.10% 12.03%

$15,000 - $24,999 13.78% 14.07% 13.57%

Under $15,000 14.42% 15.11% 15.74%

Average Household Income $56,790 $58,674 $61,005

Median Household Income $45,850 $44,097 $45,519

Per Capita Income $25,337 $23,620 $24,470

POPULATION PROFILE 1 Miles 3 Miles 5 Miles

▪ Population By Age

2017 Estimate Total Population 6,958 42,868 60,755

Under 20 24.28% 26.17% 25.81%

20 to 34 Years 21.09% 21.30% 20.40%

35 to 49 Years 18.19% 18.73% 18.87%

50 to 59 Years 13.38% 13.18% 13.57%

60 to 64 Years 5.83% 5.75% 5.94%

65 to 69 Years 4.39% 4.72% 4.85%

70 to 74 Years 3.82% 3.70% 3.86%

Age 75+ 9.00% 6.45% 6.69%

Median Age 38.58 36.92 37.92

▪ Population by Gender

2017 Estimate Total Population 6,958 42,868 60,755

Male Population 46.71% 48.79% 49.05%

Female Population 53.29% 51.21% 50.95%

AVERAGE HEALTH CARE

EXPENDITURE1 Miles 3 Miles 5 Miles

▪ 2017 Estimate Total Expenditure

Percent of Total 17.30% 18.35% 18.26%

Health Care Insurance $3,140 $3,133 $3,222

Percent of Total 71.64% 72.28% 72.11%

Medical Services $555 $531 $545

Percent of Total 12.67% 12.26% 12.19%

Medical Supplies $180 $174 $184

Percent of Total 4.10% 4.01% 4.11%

▪ Percentage Change 2017-

Health Care Insurance 21.19% 22.77% 21.88%

Medical Services 21.89% 24.09% 23.51%

Medical Supplies 41.50% 42.96% 40.81%

20

Income

In 2017, the median household income for your selected geography is

$45,850, compare this to the US average which is currently $56,286.

The median household income for your area has changed by 21.59%

since 2000. It is estimated that the median household income in your

area will be $55,011 five years from now, which represents a change

of 19.98% from the current year.

The current year per capita income in your area is $25,337, compare

this to the US average, which is $30,982. The current year average

household income in your area is $56,790, compare this to the US

average which is $81,217.

Population

In 2017, the population in your selected geography is 6,958. The

population has changed by 20.55% since 2000. It is estimated that

the population in your area will be 6,963.00 five years from now,

which represents a change of 0.07% from the current year. The

current population is 46.71% male and 53.29% female. The median

age of the population in your area is 38.58, compare this to the US

average which is 37.83. The population density in your area is

2,214.37 people per square mile.

Households

There are currently 3,084 households in your selected geography. The

number of households has changed by 23.46% since 2000. It is

estimated that the number of households in your area will be 3,114

five years from now, which represents a change of 0.97% from the

current year. The average household size in your area is 2.30 persons.

Employment

In 2017, there are 3,606 employees in your selected area, this is also

known as the daytime population. The 2000 Census revealed that

55.64% of employees are employed in white-collar occupations in

this geography, and 42.98% are employed in blue-collar occupations.

In 2017, unemployment in this area is 4.00%. In 2000, the average

time traveled to work was 22.00 minutes.

Race and Ethnicity

The current year racial makeup of your selected area is as follows:

67.20% White, 20.69% Black, 0.09% Native American and 2.03%

Asian/Pacific Islander. Compare these to US averages which are:

70.42% White, 12.85% Black, 0.19% Native American and 5.53%

Asian/Pacific Islander. People of Hispanic origin are counted

independently of race.

People of Hispanic origin make up 11.78% of the current year

population in your selected area. Compare this to the US average of

17.88%.

PROPERTY NAME

MARKETING TEAM


Housing

The median housing value in your area was $112,019 in 2017,

compare this to the US average of $193,953. In 2000, there were

1,536 owner occupied housing units in your area and there were 963

renter occupied housing units in your area. The median rent at the

time was $383.

Source: © 2017 Experian

DEMOGRAPHICS

21


22

MARKET

COMPARABLES


SALES COMPARABLES MAP

23


(SUBJECT)

Clearwater Cancer Inst.

Atmore Community

Hospital - MedPlus Urgent

Care

Piedmont Health MOB

Tennessee Orthopaedic

Clinic

Vanderbilt Medical

(Nashville MSA)

SALES COMPARABLES

ON MARKET COMPARABLES

1

2

3

4

5

24

PROPERTY NAMEDECATUR MEDICAL CENTER

SALES COMPARABLES

Avg. 6.30%

Avg. 7.30%

0.0

0.8

1.6

2.4

3.2

4.0

4.8

5.6

6.4

7.2

8.0

Decatur

Medical

Center

Clearwater

Cancer

Inst.

Atmore

Community

Hospital -

MedPlus

Urgent Care

Piedmont

Health MOB

Tennessee

Orthopaedic

Clinic

Vanderbilt

Medical

(Nashville

MSA)

Average Cap Rate

SALES COMPARABLES

ON MARKET COMPARABLES

SALES COMPS AVG

ON MARKET COMPS AVG

PROPERTY NAME

MARKETING TEAM


SALES COMPARABLES

rentpropertyname1

rentpropertyaddress1

rentpropertyname1


rentpropertyname1


25

SALES COMPARABLES ON MARKET COMPARABLES

Asking Price $6,250,000

CAP Rate 7.17%

Year Built 2001

Occupancy 93%

Parking Ratio 4.1:1000

DECATUR MEDICAL CENTER2349 Danville Rd SW, Decatur, AL, 35603

1

Close of Escrow 8/1/2017

Sales Price $53,000,000

Rentable SF 118,000

CAP Rate 6.30%

Year Built 2006

Occupancy 100%

NOTES

Purchased by DOC REIT; Single-tenant

CLEARWATER CANCER INST.3601 Cci Dr NW, Huntsville, AL, 35805

2

On Market

List Price $1,000,000

Rentable SF 4,200

CAP Rate 7.45%

Year Built 1988

ATMORE COMMUNITY HOSPITAL -MEDPLUS URGENT CARE406 Medical Park Drive, Atmore, AL, 36502

PROPERTY NAME

MARKETING TEAM


SALES COMPARABLES

rentpropertyname1


rentpropertyname1


rentpropertyname1


26

SALES COMPARABLES ON MARKET COMPARABLES

3

On Market


Rentable SF 20,608

CAP Rate 7.39%

Year Built 2003

PIEDMONT HEALTH MOB930 Franklin Springs St, Royston, GA, 30662

4

On Market


Rentable SF 5,858

CAP Rate 7.65%

Year Built 1968

TENNESSEE ORTHOPAEDIC CLINIC961 Oak Ridge Tpke, Oak Ridge, TN, 37830

5

On Market


Rentable SF 23,698

CAP Rate 6.72%

Year Built 1998

VANDERBILT MEDICAL (NASHVILLE MSA)1670 W Main St, Lebanon, TN, 37087

8


LEASE COMPARABLES MAP


(SUBJECT)

2424 Danville Rd SW

401 Lee St NE

2506 Danville Rd SW

4

7

8

9

11

20

12

14

15

16

17

13

18

10

1

2

3

27

PROPERTY NAMEDECATUR MEDICAL CENTER

LEASE COMPARABLES

28

AVERAGE RENT PER SQUARE FOOT

Avg. $13

$0

$2

$4

$5

$7

$9

$11

$13

$14

$16

$18

Decatur

Medical

Center

2424

Danville

Rd SW

401

Lee St NE

2506

Danville

Rd SW

PROPERTY NAME

MARKETING TEAM


LEASE COMPARABLES

rentpropertyname1


rentpropertyname1


rentpropertyname1


29

Available SF 2,100

Asking Rent/SF $16.64

Year Built 2001

Occupancy 93%

Lease Type NNN


Parking Ratio 4.1:1000

DECATUR MEDICAL CENTER2349 Danville Rd SW, Decatur, AL, 35603

1

Rentable SF 15,000


Year Built 1999

Lease Type NNN

Lot Size 1.50

2424 DANVILLE RD SW2424 Danville Rd SW, Decatur, AL, 35603

2

Rentable SF 62,000


Year Built 1982

Lease Type Gross

401 LEE ST NE401 Lee St NE, Decatur, AL, 35601

PROPERTY NAME

MARKETING TEAM


LEASE COMPARABLES

rentpropertyname1


rentpropertyname1


rentpropertyname1


30

Rentable SF 24,000


Year Built 2000

Lease Type NNN

3

2506 DANVILLE RD SW2506 Danville Rd SW, Decatur, AL, 35603

offering memorandum - loopnet · landscaping $11,000 $0.31 $11,000 $0.31 pest extermination $2,500...

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