fresenius medical care - landmark investment...

27995 Halsted Road, Suite 150Farmington Hills, MI 48331

Phone: (248) 488-2620

landmarkinvestmentsales.com

OFFERING MEMORANDUM

FRESENIUS MEDICAL CARE24825 W. Eight Mile Rd, Livonia, MI

CONTACT US

KEVIN J. BAKER

[email protected]

(248) 488-2620

JASON GREENSPAN

[email protected]

(248) 488-2620

DANIEL H. KUKES

[email protected]

(248) 488-2620

2

CONFIDENTIALITY DISCLAIMER

Fresenius Medical Center • Livonia, MI

Landmark Commercial Real Estate Services, Inc. d/b/a Landmark Investment Sales (“BROKER”) has been retained by the Owner to sell the 100% fee simple title of thisasset. The Broker is the exclusive agent for the sale of this asset. The Broker has prepared the Property Information with information provided by the Owner, fromsources deemed to be reliable. The Potential Purchaser will conduct its own due diligence of The Property, independently and without reliance upon BROKER of theOwner. Information furnished herein, the Offering Memorandum (the “OM”) is intended solely for the Potential Purchaser and its affiliates (“Recipients”) for its reviewof the acquisition of Fresenius Medical Center at 24825 W. Eight Mile Rd, Livonia, Michigan (“Property”).

All information in the OM (“Confidential Information”) shall be deemed confidential. Confidential Information shall not include any information which is generallyavailable to the public or which becomes available to the Recipients on a non-confidential basis from a source that is or was under no obligation not to disclose suchinformation.

In consideration of Broker and disclosure of the confidential information, the recipient shall not at any time, attempt in any manner to deal directly in any manner orcircumvent Broker.

Unless otherwise agreed in writing or required by law, the Recipients will not use, disclose, or reveal any Confidential Information for any purpose other than inconnection with the proposed transaction to any persons or entities other than those employees, officers, directors, bankers, advisors, representatives, or agents(collectively, “Representatives”) who clearly need such access to perform their employment, fiduciary or contractual duties to the Recipient and to actively and directlyparticipate in the evaluation of the Confidential Information. Additionally, Recipients shall not directly contact anyone directly associated with the Property withoutthe express written consent of the Owner or Broker.

Recipients agree not to contact or initiate contact with the Tenants, at any time, either directly or indirectly. Unless such approval is specifically granted in writtenfrom the Owner or Broker.

This agreement shall be governed by the laws of the Michigan, and in any action brought to enforce the terms hereof, Recipients hereby irrevocably consents tojurisdiction and venue in the Circuit Court for the County of Oakland, State of Michigan, or the United States District Court, whichever the Owner may elect. Theinvalidity or unenforceability of any provision of this agreement as applied to a particular occurrence or circumstance shall not affect the validity of or enforceability ofany of the other provisions of this agreement or the applicability of such provisions as the case may be. This agreement shall inure to the benefit of and may beenforced by the Owner and its successors and assigns and shall be binding on the Recipients, its officers, directors, partners, agents, members, representatives andsuccessors in interest. If any portion of this agreement becomes the subject of litigation or arbitration, the prevailing party in such suit or proceeding shall be entitledto reimbursement for its reasonable costs, expenses and attorney’s fees incurred, including those incurred in connection with any appeals. A copy of this agreementdelivered by facsimile transmission shall be binder on both parties.

TABLE OF CONTENTS

3Fresenius Medical Center • Livonia, MI

Executive Summary 4

Investment Highlights 5

Offering Summary 10

NOI Projections 11

Tenant Profile 12

Location Map 13

Market Aerial 14

Property Outline 15

Lease Plan 16

Survey 17

Top Employers 18

Market Summary 19

Property Condition Summary 20

Demographics 21

Our Team 22

4

EXECUTIVE SUMMARY


28425 W. Eight Mile Road, Livonia, MI, commonly known as “FreseniusMedical Care – Botsford Park” was built by Botsford General Hospital as anancillary medical office building located in close proximity to BotsfordGeneral Hospital (the “Property”). In 2015, Beaumont Medical Systemmerged with Botsford Health System and Oakwood Health System.

The Property sits on over 4.00 acres of prime real estate located across thestreet from a major hospital system.

The 16,217 SF building was previously owned and occupied by BotsfordGeneral Hospital and leased to its affiliate, Botsford Kidney Center, Inc. whoused 13,216 SF and Botsford General Hospital occupied the remaining 2,601SF .

In 2009, Botford Kidney Center, Inc. sold its business and assigned its leaseto Bio-Medical Applications of Michigan, Inc., a wholly owned subsidiary ofFresenius Medical Care North America “Fresenius”.

Fresenius leases 84% of the building and pays for 84% of all operating costs,including property taxes, insurance, and common area maintenance. TheProperty is being offered based on the Net Operating Income of $162,734which includes zero value on the vacant 2,601 SF.

This unique opportunity allows an Investor to acquire a property leased to a“best in class” medical tenant, in close proximity to a major hospital. Inaddition to the location, the Tenant is paying a below market rent of$13.50/SF compared to recent area medical office rents for new constructionwhich range from $20.00-$30.00/SF.

5

INVESTMENT HIGHLIGHTSINVESTMENT HIGHLIGHTS

Value Add Opportunity – a) 2,601 SF of the building is currentlyvacant which presents an “upside component” opportunity for alandlord to lease the additional space and increase the assetsNet Operating Income; and b) building is on four acresproviding room for significant expansion of the building.

Irreplaceable Location – Subject property is situated within adense medical corridor consisting of Beaumont BotsfordHospital (330 beds), Beaumont Cancer Center, and GrifolsMedical.

Strong Performing Clinic – Fresenius is open six days a week,running three shifts, Monday/Wednesday/Friday.

Annual Rent Bumps – Rent increases annually by an amountequal to the increase in the Consumer Price Index during theimmediately preceding 12 month period.

Low Price Per Square Foot - Subject property boasts a low salesprice per square foot ($132/SF) compared to similarly situatedmedical office buildings with national credit tenants.

National Recession Resistant Tenant – As of December 31, 2015,Fresenius Medical Care (NYSE: FMS) reported total revenue ofmore than $16.73B, net income of $1.02B, and a net worth inexcess of $9.8B.

PRICINGPrice (In-Place NOI): $2,410,874

Cap Rate(on In-Place NOI): 6.75%

Price Per SF: $148.66

Rental Increases: Relative to increase in the CPI past 12 months

Substantial NOI Increase with Vacant Lease Up:

Potential to significantly increase NOIby leasing vacancy within building


BEAUMONT MEDICAL CAMPUS


VIEW NORTH


VIEW WEST


VIEW EAST


10

PROPERTY DETAILSYear Built: 1976 (renovated 1995)

Rentable Square Feet: 16,217 SF

Land Area: 4.82 acres

Ownership: Fee simple

Taxes: Tenant pays 84% of total

Insurance: Tenant pays 84% of total

Repairs & Maintenance: Tenant pays 84% of total

OFFERING SUMMARYNET OPERATING INCOME

Years Annual Base RentPresent – 2/28/2021 $162,734

Annual Increases Base rent increases based on CPI Index, not to exceed three percent (3%)

Option Period 13/1/2021-2/28/2026 Base Rent is equal to Fair Market Value

($20.00-30.00/SF medical space)

Option Period 23/1/2026-2/28/2031 Base Rent is equal to Fair Market Value

LEASE DETAILS Lease Term: 10 years

Remaining Lease Term: 4 years, 5 months

Lease Type: NN

Rent Commencement: 3/1/2011

Lease Expiration: 2/28/2021

Tenant:Bio-Medical Applications of Michigan, Inc. d/b/a Fresenius Medical Care

Landlord Responsibilities: Roof & structure


In PlaceVacant Lease Up

Year 2Annual psf Annual psf

RevenueBase Rental 197,691$ 12.19$ 230,204$ 14.20$ CAM 149,696 9.23 183,641 11.32 Real Estate Taxes 33,302 2.05 40,854 2.52

Total Revenue 380,690$ 23.47$ 454,698$ 28.04$

Operating ExpensesCAM 178,292 10.99 183,641 11.32 Property Taxes 39,664 2.45 40,854 2.52

Total Expenses 217,956$ 13.44$ 224,495$ 13.84$

Net Operating Income 162,734$ 10.03$ 230,204$ 14.20$


NOI PROJECTIONSMinimum Rent Reimbursements

Tenant NamePro‐Rata Share

Square Feet Monthly Annual psf CAM

Real Estate Taxes

Total Reimb.

Total Gross Revenue psf

Fresenius Medical Care 83.96% 13,616 16,474$ 197,691$ 14.52$ 149,696$ 33,302$ 182,999$ 380,690$ 27.96$ Vacant 16.04% 2,601 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Total 100.00% 16,217 16,474$ 197,691$ 12.19$ 149,696$ 33,302$ 182,999$ 380,690$ 23.47$ Vacant 83.96% 13,616

Occupied 16.04% 2,601

Vacant Lease Up ‐ Year 2Minimum Rent Reimbursements

Tenant NamePro‐Rata Share

Square Feet Monthly Annual psf CAM

Real Estate Taxes

Total Reimb.

Total Gros Revenue psf

Prospective Tenant 16.04% 2,601 2,709$ 32,513$ 12.50$ 29,454$ 6,552$ 36,006$ 68,519$ 26.34$ Total 2,601 2,709$ 32,513$ 12.50$ 29,454$ 6,552$ 36,006$ 68,519$ 26.34$

In PlaceVacant Lease Up

Year 2Annual psf Annual psf

RevenueBase Rental 197,691$ 12.19$ 230,204$ 14.20$ CAM 149,696 9.23 183,641 11.32 Real Estate Taxes 33,302 2.05 40,854 2.52

Total Revenue 380,690$ 23.47$ 454,698$ 28.04$

Operating ExpensesCAM 178,292 10.99 183,641 11.32 Property Taxes 39,664 2.45 40,854 2.52

Total Expenses 217,956$ 13.44$ 224,495$ 13.84$

Net Operating Income 162,734$ 10.03$ 230,204$ 14.20$

TENANT PROFILE

12

Fresenius Medical Care North America is the premier health carecompany focused on delivering the highest quality care topeople with renal and other chronic conditions.

Worldwide, more than 2.5 million patients with this diseaseregularly undergo dialysis therapy, a vital blood cleansingprocedure that substitutes the function of the kidney in the caseof kidney failure.

Through Fresenius’s industry-leading network of more than2,200 dialysis facilities, outpatient cardiac and vascular labs, andurgent care centers, as well as the country’s largest practice ofhospitalist and post-acute providers, Fresenius Medical Careprovides coordinated health care services at pivotal care pointsfor hundreds of thousands of chronically ill customersthroughout the continent. As the world’s only verticallyintegrated renal company, Fresenius also offers specialtypharmacy and laboratory services, as well as manufacturing anddistributing the most comprehensive line of dialysis equipment,disposable products and renal pharmaceuticals.

TENANT OVERVIEWFounded: 1912Headquarters Bad Homburg, GermanyStock Ticker: NYSE: ADRLocations: 2,200+Employees: 60,000 in US; 223,000 globalWebsite: www.freseniusmedicalcare.us


LOCATION

13

FRESENIUS MEDICAL CENTER24825 W. Eight Mile Rd, Livonia, MI

TRAVERSE CITY

JACKSON

DETROIT

GRANDRAPIDS FLINT

ANN ARBOR

LANSING

KALAMAZOO

NOVI

WOODHAVEN

DETROIT

ANN ARBOR

CADILLAC

BRIGHTON

SOUTHFIELD

WARREN


LIVONIA

LIVONIA

PONTIAC

MARKET AERIAL


PROPERTY OUTLINE


8 M

ILE

RO

AD

(28,

200

CPD

)

LEASE PLAN


13,616 SF

2,601 SF

SURVEY


LIVONIA’S TOP EMPLOYERS

18

COMPANY # OF EMPLOYEES

Ford Motor Company 3,553

Trinity Health 1,900

NYX, Inc. 1,850

Livonia Public Schools 1,845

St. Mary Mercy Livonia 1,688

ZF-TRW Automotive 1,323

Schoolcraft College 1,109

Roush 1,000

Mastronardi Produce USA (Sunset) 900

Comerica Bank 887


MARKET SUMMARY

19

BEAUMONT BOTSFORD MEDICAL CAMPUSBeaumont Health System recently acquired Botsford Hospital and Oakwood Healthcare Inc. for $3.8B. Since the merger, BeaumontHealth will control about 30% of the inpatient market with eight hospitals and 3,337 beds, 153 outpatient sites, 5,000 physicians, and33,093 employees. Click here for merger details.

LIVONIA, MIAs the ninth largest city in Michigan and the third largest in Wayne County, Livonia boasts over 4,000 businesses. Major localemployers include Ford Motor Company, United Parcel Services (UPS), Roush Enterprises, NYX Inc., Phillips Service Industries, Inc.,McLaren Performance Technologies, and Beaumont Health System. The city is also home to seven institutions of higher education,including the main campuses of Madonna University and Schoolcraft Community College and a recently built site for DavenportUniversity.


STRONG DEMOGRAPHICSThe area accounts for a population of over234,000 and an average household income ofover $69,000 in a five (5) mile radius.

STRONG RETAIL CORRIDORImmediate trade area showcases several nationalcredit tenants including Walgreens, AutoZone, 7-Eleven, Dollar General, Pep Boys Auto Parts,O’Reilly Auto Parts, White Castle, and severalregional tenants as well.

http://www.crainsdetroit.com/article/20140623/NEWS/140629961/-3-8b-beaumont-botsford-oakwood-merger-a-done-deal-following

20

PROPERTY CONDITION SUMMARYProperty Description: Fresenius Medical Care

Address: 28425 Eight Mile Road, Livonia, MI 48152

Building SF: 16,217 SF

Occupancy: 84%

Tax Parcel: 46-002-99-0001-001

Year Built: 1976 (renovated 1995)

Land Area: 4.82 acres

Trade Area Statistics 1 MILE 3 MILE 5 MILE

2016 Population: 11,834 82,997 234,387

2016 Households: 4,844 35,483 100,738

2016 Avg. HH Income: $53,324 $65,311 $69,472

2016 Median HH Income: $46,527 $54,339 $56,744

2016 Total Businesses: 533 3,692 12,513

2016 Total Employees: 6,870 39,186 149,257

Traffic Counts:Grand River Ave = 50,800 CPDEight Mile Rd = 28,600 CPD


DEMOGRAPHICS

21

POPU

LATI

ON

2016 Estimated Population 11,834 82,997 234,3872021 Projected Population 11,656 82,201 234,4032010 Census Population 12,147 85,029 234,8182000 Census Population 13,137 91,750 259,988Projected Annual Growth 2016 to 2021 -0.3% -0.2% -Historical Annual Growth 2000 to 2016 -0.6% -0.6% -0.6%

HO

USE

HO

LDS 2016 Estimated Households 4,844 35,483 100,7382021 Projected Households 4,885 35,927 103,0362010 Census Households 4,821 35,235 97,4152000 Census Households 5,040 37,166 103,796Projected Annual Growth 2016 to 2021 0.2% 0.3% 0.5%Historical Annual Growth 2000 to 2016 -0.2% -0.3% -0.2%

RA

CE

2016 Est. White 74.4% 64.7% 52.2%2016 Est. Black 19.3% 28.6% 40.1%2016 Est. Asian or Pacific Islander 2.3% 3.5% 4.7%

2016 Est. American Indian or Alaska Native 0.5% 0.3% 0.3%

2016 Est. Other Races 3.5% 2.9% 2.7%

INC

OM

E 2016 Est. Average Household Income $53,324 $65,311 $69,4722016 Est. Median Household Income $46,527 $54,339 $56,7442016 Est. Per Capita Income $21,905 $28,036 $29,955

BU

SIN

ESS 2016 Est. Total Businesses 533 3,692 12,513

2016 Est. Total Employees 6,870 39,186 149,257

DESCRIPTION 1 MILE 3 MILE 5 MILE


OUR TEAM

22

KEVIN J. BAKERPRINCIPALKevin Baker is a Principal and Co-Founder of Landmark Investment Sales. Kevin specializes in the sale of retail shopping centers and single tenant netlease investment properties across all property types. He currently represents some of the nation’s largest institutional funds, private equity funds, andhigh net worth investors in listing investment properties all over the country. Since 2010, Kevin has closed deals totaling over 5,000,000 SF valued at over$500,000,000. Prior to 2010, Kevin worked extensively at Landmark as a broker specializing in tenant representation and landlord representationcompleting in excess of 100 lease & sale transactions. Kevin joined Landmark in 2005 as a Sales Associate. Prior to Landmark, Kevin attended MichiganState University and University of Michigan-Dearborn where he studied finance. Kevin began his real estate career in 2001 when he founded Baker RealEstate Holdings, specializing in acquisition and management of a student housing portfolio at Michigan State University.

[email protected]

DANIEL H. KUKESPRINCIPALDaniel Kukes is a Principal and Co-Founder of Landmark Investment Sales. Daniel specializes in the sale of retail shopping centers, medical office, andsingle tenant net lease investment properties across all property types. He currently represents some of the nation’s largest institutional real estate funds,private equity group, and high net worth investors in acquiring and listing investment properties all over the country. Since 2010, Daniel has closed dealstotaling over 5,000,000 SF valued at over $500,000,000. Daniel joined Landmark in 2009 as an Associate Broker. He began his real estate career at NAIFarbman where he focused on shopping center leasing and retail tenant representation. After five years at NAI Farbman, Daniel joined DAP Investmentsas a partner responsible for retail development, acquisitions and leasing. While there, he developed several single tenant and shopping center projects inMichigan and Illinois. Daniel is a graduate of Michigan State University with a Bachelor of Arts degree in Pre-Law & Society.

[email protected]

JASON GREENSPANASSOCIATEJason Greenspan graduated from The University of Michigan in 2012 with a Bachelor of Arts degree in Political Science and Sociology. Jason alsoreceived a Juris Doctor in 2015 from Michigan State University College of Law where he concentrated in business and corporations. He passed theMichigan Bar Examination in July 2015. Starting in 2011, and while in law school, Jason interned at Landmark Investment Sales identifying, sourcing,and underwriting investment grade properties. As an intern, Jason has successfully participated in the closing of over $40,000,000 in single tenant andpower center closings all across the country. With law school behind him and four years of experience in real estate investments sales, Jason has earneda full time Associate salesman position in Landmark’s growing Investment division. Jason specializes in the representation of buyers and sellers ofinstitutional grade single tenant properties, high profile unanchored retail centers, grocery anchored centers, and power centers.

[email protected]


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