Case Studies

The Client

Dr. Robert Adams, MD, MBA

The Assignment

To expand Dr. Adams' clinic from 2,500 sq ft to a new 8,000 to 10,000 sq ft multi-discipline medical facility in Knightdale NC, a suburb of Raleigh.

The Options

Dr. Adams not only wanted to own his own facility but also to review all options in the market. His best options included becoming a tenant partner in a new development, The REX Healthcare Hospital medical office building (MOB), or developing his own piece of land across from the new REX Healthcare Hospital.

Feasibility Review

  • Evaluation of The REX Healthcare Hospital MOB development.
  • Determination if this project matched the client's timeline return on investment and the rental structure. It was also important to review the developer's exit strategy to see the tax and leasing consequences as Dr. Adams would then become just a tenant upon sale.
  • Negotiation of the purchase of two acres of land with a due diligence period in order to perform the following evaluation:
    • Development of architectural concepts, site plan, floor plan, and sketches
    • Cost estimates for site improvements, building, and tenant suite improvements
    • Proforma of equity and debt requirements, base rents, and projected operating costs
    • Analysis of competitive medical buildings, lease rates, and services
    • Concluding recommendations for building location, size, costs, and rental rates

The Solution

After careful analysis of the options, the REX Healthcare Hospital MOB did not meet our client's long term goals. The decision was made to interview several developers to construct Dr. Adams' new building. We selected a group whose development plan was based on Dr. Adams' long term directives. The development company became equity partners with Dr. Adams.

The Property

  • 14,000 sq ft multi-tenant medical office building
  • 10-year NNN lease with CPI increases
  • Across street from new Rex Hospital
  • 15% cash on cash return and projected IRR of over 25%