The Bronson LakeView Outpatient Center is a 100,321-square-foot medical office building located in Paw Paw, Michigan, just southwest of Kalamazoo. It was originally constructed in 2006 as a build-to-suit development for the private practice, Starhealth Multi-Speciality Group, P.C. As the building was being constructed, Bronson Healthcare Group, Inc, acquired the practice and assumed all obligations of the lease. This operational acquisition and lease assignment significantly improved the value of the building due to the credit enhancement associated with the new lease guarantor, Bronson Healthcare Group, Inc. (Moody’s A2 credit).
Bronson Healthcare Group, a not-for-profit, community-governed healthcare system headquartered in Kalamazoo, Michigan, is the largest employer and leading healthcare system in southwest Michigan with more than 7,800 employees. The Bronson LakeView Outpatient Center provides an array of general and specialty services including trauma, stroke, and cardiac care, as well as emergency medicine, pediatrics, oncology treatment, rehabilitation, and home health care.
Medical office buildings leased to leading healthcare systems, such as Bronson Lakeview Outpatient Center, are some of the most sought-after assets in the marketplace today. Due to a sizeable prepayment penalty in excess of three million dollars, the owner had unsuccessfully marketed the facility approximately two years earlier. As we do with every assignment, we provided the client with a detailed pricing analysis and a step-by-step approach on how we underwrote the building. This analysis included an expected sales range contingent upon a prospective purchaser assuming the existing in-place loan, as well as separate pricing with a delivery of the asset free-and-clear of any debt. All assumptions made in the pricing analysis were based on current market trends and supported by real-time market data.
The multiple offers sourced during the marketing process were from investors attracted to the healthcare system’s strong credit history and dominant presence in the Kalamazoo community and surrounding area. Investors were also attracted to the minimal landlord responsibilities associated with the building. The price our team was able achieve was over $2.4 million higher than what the property was on the market for just two years earlier with another broker. The property ultimately sold to a non-traded real estate investment trust (REIT) based in New York for $30,400,000 on a free and clear, all cash basis.
Seller Profile: Developer, Private Investor – Portage, MI
Buyer Profile: Non-Traded, Private Healthcare Real Estate Investment Trust (REIT) – New York, NY