Overview

Description

Investment Overview
Constructed in 2017, the 3,547 square foot grey shell condition property was initially developed as a build-to-suit facility for Texan Urgent Care, a regional 14 unit operator with locations in the Austin, San Antonio, Tomball and Waco metropolitan areas; however, prior to the commencement of development, Texan Urgent Care was acquired by FastMed, a dominant player in the urgent care sector with an extensive footprint across Arizona, California, Florida, North Carolina, and Texas.

Following the FastMed acquisition, the building remained inactive, yet the tenant maintained its lease commitments, including uninterrupted rent payments, from the onset.

In a strategic move in May 2023, FastMed was acquired by HCA Healthcare, leading to a notable enhancement of the lessee's creditworthiness. The lease is now secured by a wholly owned subsidiary of HCA, which holds an investment-grade credit rating from Standard & Poor's. This rating signifies a robust ability to meet financial obligations, translating to a secure and continuous revenue stream for the duration of the lease.


Value-Add with Stability
With 4.8 years of primary term remaining, the lease calls for 2.5% rental rate escalations annually. Given the lease's triple net structure, a new owner will benefit from the guaranteed income stream, while having the opportunity to reposition the asset through reletting and/or obtaining an early lease buyout.


About the Tenant
HCA Healthcare (S&P: BBB- Stable) is a leading global healthcare provider, operating the largest number of hospitals in the United States. With its headquarters in Nashville, Tennessee, HCA Healthcare manages a vast network of healthcare facilities, including over 180 hospitals and approximately 2,000 sites of care such as surgery centers, freestanding ERs, urgent care centers, and physician clinics, across 21 states and the United Kingdom.

The organization's commitment to the care and improvement of human life is evident through its extensive clinical services, research initiatives, and involvement in community health. In recent strategic moves, HCA Healthcare has expanded its urgent care and outpatient services footprint, further solidifying its position as a pivotal player in the healthcare industry with a focus on delivering high-quality, patient-centered care.

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Highlights

• INVESTMENT GRADE TENANT - The lease is backed by Austin Heart Cardiology MSO, LLC, a wholly owned subsidiary of HCA Healthcare. HCA’s creditworthiness is underscored by an investment grade rating of BBB- from Standard & Poor's, indicating a stable outlook. This rating reflects the tenant’s strong capacity to meet its financial commitments, ensuring a reliable income stream for the remainder of the lease term.
• RENT ESCALATIONS - Offering as a hedge against inflation, the FastMed Urgent Care lease provides for base rental rate escalations of 2.50% annually throughout the remainder of the term.
• NON-INCOME TAX STATE - Serving as a major benefit to the landlord, as of 2022, nine states: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming — levy no state income tax.
• MINIMAL LANDLORD RESPONSIBILITIES - The tenant is financially responsible for the roof repair, HVAC repair, parking lot repair, common area maintenance, landscaping, property taxes, utilities and waste management.
• STRONG DEMOGRAPHICS - The property’s location benefits from a strong demographic profile in which the total population counts exceed 37,000 (3-mile radius) and 93,000 (5-mile). Furthermore, population counts in Temple, TX are estimated to increase by 13% over the next 5 years (3-mile radius).
• HOSPITAL PROXIMITY - The subject property is within a half-mile of the Baylor Scott & White medical center, which contains a 636-bed multi-specialty teaching hospital. The group practice consists of over 800 physicians and scientists, and is the primary clinical teaching campus of Texas A&M Health Science Center College of Medicine.

Documents

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