The Dermatology Associates of Wisconsin, also known as Forefront Dermatology, portfolio consisted of 10 single-tenant, net-leased medical buildings totaling 93,142-square -feet located throughout northeast Wisconsin. Every location was built-to-suit for the tenant, which is one of the largest dermatology practices in the country. The Downtown Chicago Healthcare Real Estate Group represented the physician owners that included the founder of the practice and his two partners.
Dermatology Associates of Wisconsin, launched in 2004 with one clinic in Manitowoc, Wisconsin, grew to over 40 clinics by the end of 2014. After partnering with a healthcare-focused private equity firm in 2015, they began an aggressive growth plan and now have in excess of 80 locations throughout the Midwest.
After meeting with ownership to discuss their goals and objectives with a disposition, our team presented pricing scenarios under a multitude of different sale-leaseback structures. An agreement was made to execute brand new 10-year, absolute triple-net leases at each location upon close of escrow. Those leases accounted for annual 3.00 percent increases, had zero landlord expense responsibilities, and provided the tenant three, five year renewal options.
Within two weeks on the market, our team procured over 10 offers from both private and institutional capital sources. The bidding process that was created forced buyers to submit offers at record setting price per square foot figures. The winning bidder was a privately traded Real Estate Investment Trust (REIT) that closed on an all-cash basis. During the due diligence phase of the transaction, our team was able to assist and add-value to the lease form negotiation between the attorneys representing the Buyer, Seller, and private equity partner.
Seller Profile: General Partnership of Founding Physicians – Manitowoc, WI
Buyer Profile: Non-Traded, Private Healthcare Real Estate Investment Trust (REIT) – Tampa, FL