An investment in Healthcare Portfolio II DST may offer the following benefits:
• Diversified Medical Office Portfolio – The offering is comprised of three Properties, among three separate and distinct medical practices, in three geographic locations. The North Carolina Property is a cancer center in the Raleigh-Durham region, which includes three of the nation’s top research universities.The Texas Property, located in Houston, one of the fastest growing cities in the nation, is an acute care center that provides short-term treatment options for severe injuries as well as episodes of illness,urgent medical conditions or recovery from surgery. Located in West Jordan, part of the Salt Lake City metropolitan statistical area and one of the fastest-growing cities in the western United States, the Utah Property is a cancer center that has implemented an innovative approach to cancer care by partnering with specialists from a variety of backgrounds.
• Established Medical Tenants – The North Carolina Tenant and the North Carolina Guarantor are Rex Radiation Oncology, LLC and Rex Hospital, Inc., respectively. Rex Hospital was named one of 2016 “Country’s Top Hospitals” by the Leapfrog Group and received straight A’s on Leapfrog’s hospital safety score card. The Texas Tenant is Memorial Hermann Health System, the largest not-for-profit health system in Southeast Texas which was ranked as one of “America’s Best Hospitals” by U.S. News & World Report for 2016-2017. The Utah Tenant, Jordan Valley Medical Center, LP, is an affiliate of IASIS Healthcare LLC, a leading owner and operator of community-focused hospitals in high-growth markets.
• Recently Constructed Properties with Significant Tenant Improvements – The Texas Property and the Utah Property are new construction and the North Carolina Property was constructed in 2013.Both the Utah Property and North Carolina Property contain linear accelerators and other radiation and cancer treatment build-out and equipment, with the North Carolina Property having received a Certificate of Need issued by the State of North Carolina required for the operation of a linear accelerator. The Texas Property is currently receiving a significant investment by the Texas Tenant, including build-out of treatment rooms for varying levels of acuity and imaging equipment, estimated at $6 million in total.
• Long-term Leases with Rent Growth – Each Commercial Lease provides for an initial term of 15 years, with three five-year renewal options (or, in the case of the Utah Lease, five five-year renewal options). Each of the North Carolina Lease and the Utah Lease provides for annual increases in base rent, and the Texas Lease provides for increases in base rent every five years. See “Summary of the Leases” in the Memorandum.
• Net Leases – All of the Commercial Leases are “net” leases, with the applicable Commercial Tenant directly responsible for or required to reimburse the landlord for real estate taxes, insurance and other operating expenses. See “Summary of the Leases” in the Memorandum.
• Absence of Leverage – The Properties are not encumbered by permanent financing, which will allow the Trust the flexibility to hold or sell the Properties without any lender restrictions and sell at a time which maximizes value.
• Master Lease Structure – The Master Lease structure will allow the Master Tenant to operate the Properties on behalf of the Trust and to enable actions to be taken with respect to the Properties that the Trust would be unable to take due to tax law-related restrictions, including, but not limited to, a restriction against renegotiating the Commercial Leases. See “Summary of the Leases” in the Memorandum.