CS1031 Morganton MOB, DST
Location: 814 West Union Street, Morganton, North Carolina 28655
INVESTMENT COST: $6,956,000
EQUITY RAISE: $2,956,000
- CASH-ON-CASH RETURN: 5.60%
- OFFERING LOAN TO VALUE: 57.5%
- FIXED INTEREST RATE: 4.846%
Bio-Medical Applications of North Carolina, Inc. (the “Tenant”) owns 106 dialysis facilities in North Carolina caring for 7,247 patients with 2,345 certificated dialysis stations as of June 3, 2016 according to The North Carolina Semiannual Dialysis Report, as issued by the North Carolina Department of Health and Human Services.
West Union Street, Morganton, North Carolina
Newly built-to-suit for Fresenius, this 13,132-square-foot medical office building is 100 percent leased on a long-term basis to Bio-Medical Applications of North Carolina (the “Tenant”), doing business as Fresenius Medical Care Burke County.
INVESTMENT HIGHLIGHTS
Stable, Long-Term Net Leased Health Care Investment
- 15-year net lease
- Fixed rent escalations of 10% every 5 years
Strong Tenant:
Bio-Medical Applications of North Carolina, Inc. (the “Tenant”) owns 106 dialysis facilities in North Carolina caring for 7,247 patients with 2,345 certificated dialysis stations as of June 3, 2016 according to The North Carolina Semiannual Dialysis Report, as issued by the North Carolina Department of Health and Human Services on July 1, 2016. A utilization rate of 156 visits per year (or 3 per week) with a 7,247 patient base translates to approximately 1,130,532 patient visits per year. The Tenant also enjoys other financial benefits from its vertically integrated affiliates that manufacture dialyzers, medications and supplies and operate a laboratory. These related businesses generate additional revenue from sale of medications, supplies and laboratory services.
Creditworthy Guarantor
The Guarantor of the Lease is Fresenius Medical Care Holdings, Inc. (“Fresenius Medical Care Holdings”), a wholly-owned subsidiary of Fresenius Medical Care AG & Co. KGaA, a German partnership limited by shares (“Fresenius”). Fresenius is listed on the Frankfurt Stock Exchange (FME) and the New York Stock Exchange (FMS), and is the world’s leading provider of products and services for people with chronic kidney failure.
PROPERTY DETAILS
STRUCTURE: Lease with fixed rent escalations of 10% every five years
RENEWAL OPTIONS: Three five-year renewal options
STORIES: One
LAND: 1.985 acres
LEASE: 15-year lease
Investing in Medical Real Estate
- Approximately 20 million people have obtained coverage under the Affordable Care Act, generating additional need for medical real estate.
- The aging of America has created a demand for more healthcare real estate.
- Healthcare expenditures are expected to increase to $4.8 trillion by 2021, up over 58% from 2012.
- Healthcare represents 18 percent of the U.S. gross domestic product, and is expected to increase to nearly 20 percent of GDP by 2021.
- Between 2008 and 2018, healthcare employment is projected to increase by nearly 29 percent.
- Advances in technology and research increase life expectancies, producing additional interest in healthcare assets.
Fresenius Medical Care
Fresenius Medical Care Holdings, Inc. is a wholly-owned subsidiary of Fresenius Medical Care AG & Co. KGaA (“Fresenius”) and is listed on both the Frankfurt Stock Exchange (FME) and New York Stock Exchange (FMS).
Fresenius is the world’s leading provider of products and services for people with chronic kidney failure. The company is primarily engaged in providing kidney dialysis services and clinical laboratory testing, manufacturing and distributing products and equipment for kidney dialysis treatment, and providing other ancillary medical services.
Dialysis is a vital blood cleansing procedure that substitutes for the function of the kidney in case of kidney failure. During 2014, Fresenius cared for more than 283,000 dialysis patients in 3,349 proprietary clinics in over 45 countries worldwide. Fresenius continues to develop its network of clinics – the largest and most international in the world – to accommodate the growing number of dialysis patients. The company also operates more than 40 production sites around the world, making Fresenius the world’s leading provider of dialysis products including dialysis machines, dialyzers and disposable accessories.
ABOUT CAPITAL SQUARE
Capital Square 1031, LLC specializes in the creation and management of real estate investment programs for Section 1031 exchange investors and other investors using the Delaware Statutory Trust structure. Louis J. Rogers, founder and chief executive offi cer of Capital Square, has been involved in the creation and management of more than 100 investment offerings totaling over $3 billion, including DSTs, tenant-in-common offerings, numerous real estate funds, and multiple publicly registered non-traded real estate investment trusts.