Kindred TCC, Phoenix
Healthcare Real Estate Insights™ has learned that Syndicated Equities, a private real estate investment firm with offices in Chicago and Washington, recently closed on the $25.16 million acquisition of the Kindred Healthcare Transitional Care Center (TCC), a three-story, 81,371 square foot, single-tenant medical office building (MOB) in Phoenix. The sale price works out to $309 per square foot (PSF).
The seller was Bioscience Development Partners / Nautica Partners. The deal closed on Jan. 26, 2016. Kindred occupies 100 percent of the facility, which was completed in 2015. Michael Bennett & Phil Mahler, co-leaders of HFF’s Healthcare Capital Markets Team were the exclusive listing agents.
The estimated capitalization (cap) rate on existing net operating income (NOI) is 6.1 percent. The estimated, unlevered internal rate of return (IRR) is 6.8 percent based on a hold period of 10 years. The cash on cash return is 7 percent.
Here are the details:
Seller: Bioscience Development Partners / Nautica Partners
Buyer: Syndicated Equities
Market Reception: This deal was generally well received given the single tenant, long-term absolute NNN lease structure. As such, the financial stability and strength of Kindred Healthcare was of major importance. Syndicated had previously dropped the deal after moving forward with the initial launch. They then picked it back up months later after a second marketing effort.
Competitive Bid Profile: Primarily private equity groups with some REIT interest as well. Five bids were submitted for this transaction.
Notes: Pre-sale of a transitional care center in the Phoenix Bioscience Cluster in downtown Phoenix. The absolute NNN lease includes annual rent escalations, and the site includes a 99-year ground lease.
- Initial 15-year master lease with Kindred Healthcare, the largest diversified provider of post-acute care in the United States
- 81,371 square feet, 3 stories, 120 beds
- Located on the campus of IASIS St. Luke’s Hospital
According to the Syndicated Equities website, the firm “provides its clients with nationwide access to institutional-quality real estate opportunities. We believe that investing in professionally managed real estate is essential to both a well-diversified portfolio and the creation of personal wealth.
“For over 25 years, our firm has generated attractive returns for its clients through our expertise in evaluating, structuring and actively managing real estate investments. These investments include stabilized retail, office, parking, government, hotel, and credit tenant net leased properties. The principals of Syndicated Equities invest alongside our clients in each property, reflecting our careful due diligence, alignment of interests, and personal commitment to the success of our investments.”
Syndicated Equities says it also works closely with investors completing 1031 Exchanges. It says it has provided more than$750 million of credit tenant, net leased properties for our investors as either replacement property or as a new equity investment.
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