Posted: Monday, April 14, 2008
Medical Property Metamorphosis
In 2003 a 37,000 SF, 95% occupied medical office building was being marketed For Sale. The large brokerage house prepared a beautiful Offering Memorandum with lots of charts graphs & their favorite page filler, Demographics! The materials were emailed to hundreds of brokers and prospective buyers with an asking price of $6,250,000. The only missing ingredient was that the property had been undermanaged and the necessary due diligence materials were not in good order. Many offers were generated and all were significantly below the asking price, with Buyer demands like Rent Guaranties, Appraisal approvals and Financing Contingencies. Needless to say, the sale was never consummated.
Medical Asset Management knew this property from its 20+ years of specializing in medical properties and approached the Owner to request a One Party Listing. The Owner was astounded having just spent 12+ months struggling with the sale of this asset. The underwriting was reviewed and Medical Asset Management suggested a series of steps they would perform for the Owner to stabilize and maximize his Market Value. The Principal Broker and Director of Property Management stabilized the rent roll and operating expense histories, projected a “realistic” cashflow model including Capital Expenses for deferred maintenance and tenant improvement/leasing costs, created a tenant & vendor handbook and verified zoning, parking and other engineering and Permit issues, all of which had confounded the previous prospective Buyers. The Owner greatly appreciated this effort and rewarded Medical Asset Management with the listing they had previously requested. The Property was in Escrow 7 days later for more than $6,000,000 without any contingencies and closed 45 days thereafter as all the RISK of the acquisition had been removed and the appraisal was completed above the asking price!
Medical Asset Management was retained as the Asset Manager, handling the Financing, Capital Improvements, Leasing & Property Management in a holistic approach to the Asset’s business plan. In 3 years the property increased from a $540,000 NOI to currently over $875,000. The recent appraisal set the Market value at $11,500,000. How can we help your Assets grow?
Jeffery D. Cunningham
310.530.6060 x 860