Brown Gibbons Lang & Company | Real Estate Partners has been retained by ownership to offer qualified investors the exceptional opportunity to acquire Oakland Regional Hospital (the “Hospital”, “ORH”, or “Property”). The physician-owned Hospital, totaling 93,090 rentable square feet, is owned by Michigan Surgery Specialists, P.C. (the “Practice” or “MSS”) and is located on the campus of St. John’s Providence Hospital in Southfield, Michigan. Southfield, Oakland County is located 20 miles northwest of Detroit and includes Metro Detroit’s upscale office market and the city’s marque cluster of five golden skyscrapers, known as the “Golden Triangle”, that form the contemporary 2,200,000 square feet Southfield Town Center office complex with a Westin Hotel, a conference center, and a 33-story luxury residential high-rise.
The investment has a projected year-one net operating income of $2,700,000 with 2% fixed annual rent escalations over the 15-year lease term. This is a unique opportunity to acquire an on-campus single-tenant physician-owned hospital with an established multi-specialty practice group. Furthermore, the 15-year lease will be structured as a triple-net lease, providing the investor with the ability to pass through any increases in operating expenses that may result in an inflationary environment.
Oakland Regional Hospital is the last independent physician-owned hospital in the metro Detroit region. Its board-certified physicians and highly skilled staff provide its patients with the highest quality of care in safe, state-of-the-art and friendly environments servicing Wayne, Oakland, and Macomb counties. The top rated orthopaedic surgeons of the Hospital provide the community with high quality hand, joint, shoulder, knee, hip, reconstructive surgery, spine, sports medicine and inpatient/outpatient rehabilitative services. The patient-centered healthcare facility encompasses 93,090 rentable square feet with 56 patient rooms and four state-of-the-art operating suites. ORH provides complete inpatient hospital and inpatient rehabilitation services, including outpatient surgical, diagnostic, and orthopaedic rehabilitative services.
Oakland Regional Hospital is conveniently located on the campus of Providence-Providence Park Hospital, Southfield (“Providence Park – Southfield”), a 365-bed hospital that is a part St. John Providence, the largest provider of inpatient care in southeast Michigan and one of the largest employers in metro Detroit. St. John Providence provides comprehensive prevention, primary care, and advanced treatment programs with more than 125 medical centers and four hospitals spanning four counties. Its Centers of Excellence offer expertise in cancer, heart and vascular, minimally invasive surgery, neuroscience, orthopedics, and weight loss. Providence Park – Southfield and Providence-Providence Park Hospital, Novi Campus consist of more than 1,400 physicians, 4,600 nurses and associates, 900 volunteers, and 180 medical residents and fellows. Together, the two campuses provide award-winning care in over 50 specialties. St. John Providence is a faith-based healthcare organization that is a direct subsidiary of Ascension Health (Fitch Ratings: “AA+”), the world’s largest Catholic health system and the largest non-profit health system in the United States with 131 hospitals.
ORH’s experienced team of professionals have been dedicated to providing the highest level of care since MSS acquired the facility in 2004. In 2005, Michigan Surgery Specialists completed a $30+ million redevelopment of the Hospital, adding significant state-of-the-art renovations to modernize and improve the facility’s functionality. The Hospital has 48 admitting physicians, including 14 physician-owners, and a team of full and part-time medical staff. As a result, Oakland Regional Hospital provides an outstanding caretaker-to-patient ratio that ensures individualized attention and quality care for every patient.
Opportunity Highlights
- Oakland Regional Hospital is the last remaining physician-owned hospital in the metro Detroit region.
- State-of-the-art 93,090 SF Hospital with a Year-1 NOI of $2,700,000 and fixed annual rent escalations.
- Long-term NNN net lease with an established practice group performing a diverse mix of surgical specialties.
- The Hospital board is reorganizing the practice from an S Corporation to a limited liability company, which will allow MSS and SRC to recruit additional physician-owners, increasing patient volume and profitability.
- Michigan is a Certificate of Need (CON) state that requires a state-managed need-based analysis and approval before allowing the development or establishment of a new hospital in a particular location. This barrier-to-entry limits new supply and competition.
- ORH is located on the campus of St. John’s Providence Park – Southfield Hospital and is owned fee-simple with no ground lease restrictions or loan assumption required.
Reminder – Call for Offers Date: Tuesday, October 27th, 2015
Submit Offers to: Christopher Stai | cstai@bglco.com
View the Executive Summary for more information.
Bypass the online summary and directly execute the Confidentiality Agreement
Christopher L. Stai, CPA
Managing Director
Brown Gibbons Lang | Real Estate Partners
Direct: 949.936.2665 | cstai@bglco.com
Clinton J. Parker
Managing Director
Brown Gibbons Lang | Real Estate Partners
Direct: 210.352.5832 | cparker@bglco.com
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