Offering Memorandum - Constant...

Offering Memorandum

Baptist Health & American Health Network

New Albany, IN

N O N - E N D O R S E M E N T A N D D I S C L A I M E R N O T I C E

Confidentiality and DisclaimerThe information contained in the following Marketing Brochure is proprietary and strictly confidential. It is intended to bereviewed only by the party receiving it from Marcus & Millichap and should not be made available to any other person orentity without the written consent of Marcus & Millichap. This Marketing Brochure has been prepared to provide summary,unverified information to prospective purchasers, and to establish only a preliminary level of interest in the subject property.The information contained herein is not a substitute for a thorough due diligence investigation. Marcus & Millichap has notmade any investigation, and makes no warranty or representation, with respect to the income or expenses for the subjectproperty, the future projected financial performance of the property, the size and square footage of the property andimprovements, the presence or absence of contaminating substances, PCB's or asbestos, the compliance with State andFederal regulations, the physical condition of the improvements thereon, or the financial condition or business prospects ofany tenant, or any tenant's plans or intentions to continue its occupancy of the subject property. The information contained inthis Marketing Brochure has been obtained from sources we believe to be reliable; however, Marcus & Millichap has notverified, and will not verify, any of the information contained herein, nor has Marcus & Millichap conducted any investigationregarding these matters and makes no warranty or representation whatsoever regarding the accuracy or completeness of theinformation provided. All potential buyers must take appropriate measures to verify all of the information set forth herein.Marcus & Millichap is a service mark of Marcus & Millichap Real Estate Investment Services, Inc. © 2016 Marcus & Millichap.All rights reserved.

Non-Endorsement NoticeMarcus & Millichap is not affiliated with, sponsored by, or endorsed by any commercial tenant or lessee identified in thismarketing package. The presence of any corporation's logo or name is not intended to indicate or imply affiliation with, orsponsorship or endorsement by, said corporation of Marcus & Millichap, its affiliates or subsidiaries, or any agent, product,service, or commercial listing of Marcus & Millichap, and is solely included for the purpose of providing tenant lesseeinformation about this listing to prospective customers.

ALL PROPERTY SHOWINGS ARE BY APPOINTMENT ONLY.PLEASE CONSULT YOUR MARCUS & MILLICHAP AGENT FOR MORE DETAILS.

5130 CHARLESTOWN RDNew Albany, INACT ID X0260373

P R E S E N T E D B Y

Jordan Klink

Vice President InvestmentsSenior Director - National Retail GroupIndianapolis OfficeTel: (317) 218-5316Fax: (317) [email protected]: IN AB21401453, IN RB14043752

Benjamin Sullivan

AssociateIndianapolis OfficeTel: (317) 218-5333Fax: (317) [email protected]: IN RB16000227

TABLE OF CONTENTS

SECTION

INVESTMENT OVERVIEW 01Offering Summary

Tenant SummariesProperty Photos

Regional Map

Local Map

Aerial Photo

FINANCIAL ANALYSIS 02Rent Roll Summary

Pricing Detail

MARKET OVERVIEW 03Market Analysis

Demographic Analysis

BAPTIST HEALTH & AMERICAN HEALTH NETWORK

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INVESTMENT

OVERVIEW


#

EXECUTIVE SUMMARYOFFERING SUMMARY

MAJOR EMPLOYERS

EMPLOYER # OF EMPLOYEES

WW Williams Midwest Inc 1,028

Trustees Indiana University 703

Indiana University South East 700

Walmart 700

Indiana University Southeast 660

Clark Memorial Hospital 528

Essroc Cement Corp 516

Sears Roebuck and Co 500

Floyd Mem Hosp & Hlth Svcs 477

Pegatron Technology Svc Inc 413

Fireking 350

Meijer 220 327

DEMOGRAPHICS

1-Miles 3-Miles 5-Miles

2015 Estimate Pop 5,545 31,664 83,933

2010 Census Pop 5,436 30,532 81,113

2015 Estimate HH 1,815 12,384 34,137

2010 Census HH 1,777 11,902 32,914

Median HH Income $71,879 $58,861 $54,697

Per Capita Income $28,483 $28,356 $27,414

Average HH Income $85,814 $71,894 $67,020

VITAL DATA

Price $1,450,000 CAP Rate 7.50%

Down Payment 25% / $362,500 Net Operating Income $108,708

Loan Amount $1,087,500 Net Cash Flow After Debt Service 10.49% / $38,011

Loan Type New Financing Total Return 17.37% / $62,972

Interest Rate / Amortization 4.25% / 25 Years

Total Rentable SF 8,640

Price/SF $172.33

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OFFERING SUMMARY

Investment Highlights

Marcus & Millichap is pleased to present Baptist Health & American Health Network, a two-tenant medical office building in New Albany, Indiana

that is occupied by Baptist Health Floyd Urgent Care Center and American Health Network of Indiana LLC. The property sits on a one acre parcel

of land less than one and one-half miles down from Clark Memorial Hospital Diagnostic Center and less than six and one-half miles from Baptist

Health Floyd Hospital. Nearby tenants include Walgreens, CVS, Meijer, Autozone, Dollar General, Regal Cinemas, Jimmy Johns, BB&T, KFC, and

more. Less than five miles outside of Louisville, New Albany is the third largest city in the Louisville MSA boasting affluent demographics well

above the national average with 14.92 percent projected growth over the next five years.

Investment Highlights

Strategically Located Between Clark Memorial Hospital

Diagnostic Center & Major Retailers, 6.5 Miles From

Baptist Health Floyd Hospital

Only 11 Miles outside of Louisville, New Albany is the

Third Largest City in Louisville MSA

Quality Tenants including American Health Network &

Baptist Health

5 Mile Population of 83,000+

1 Mile Average Household Income of $85,000+


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OFFERING SUMMARY


TENANT SUMMARY

#

General Information

Address10689 North Pennsylvania Street Suite 200

Indianapolis, IN 46280Website www.ahni.com

Key PersonnelBen H. Park, M.D. Chief Executive Officer & President

Walt Beaver, M.D. Managing Partner of Indiana

“American Health Network (AHN) is Indiana’s largest physician-owned group practice with over 70

offices and more than 200 primary care physicians and specialists in Indiana and Ohio. The organization

is driven with the visionary purpose of providing high-quality, cost-effective care, supported by a robust

electronic infrastructure in its quest to provide exceptional care to its patients. American Health

Network aspires to be the best healthcare organization, period. The company specializes in providing

healthcare services in the areas of family medicine, bone and spine, cardiology, dermatology,

endocrinology, eye, foot and ankle, common disorders, general surgery, hematology/oncology, imaging,

internal medicine, neurology, nephrology, obstetrics/gynecology, radiation oncology, reproductive

medicine, orthopedics, pain management, pediatrics, physical therapy, plastic surgery, sleep

management, spine surgery, and urology. ”

PRICING AND VALUATION MATRIX

PROPERTY NAMECORPORATE MELLOW MUSHROOM


PROPERTY NAME

TENANT SUMMARY

American Health Network

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TENANT SUMMARY

#

General Information

Address2701 Eastpoint Parkway Louisville, KY 40223

Website www.baptisthealth.com

Key PersonnelStephen C. Hanson Chief Executive Officer

Timothy Jahn, MD Chief Medical Officer

David J Bensema, MD Chief Information Officer

Stephen R. Oglesby Chief Financial Officer

Baptist Health


PROPERTY NAMECORPORATE MELLOW MUSHROOM


PROPERTY NAME

TENANT SUMMARY

“Founded in 1924, Baptist Health has been bringing advanced medical technology, modern facilities, and

many of the region's most prominent physicians and medical professionals to the communities of

commonwealth for nearly a century. Headquartered in Louisville, the Baptist Health family of hospitals, care

centers, physician offices and health facilities has experienced tremendous growth in recent years. Baptist

Health Floyd in New Albany, IN (formerly known as Floyd Memorial Hospital and Health Services), is the

newest member, joined on Oct. 1, 2016. In 2012, Baptist Health Richmond (formerly Pattie A. Clay Regional

Medical Center) and Baptist Health Madisonville (formerly Trover Health System) were added to the fold as

well. Baptist Health’s other hospitals include Baptist Health Paducah, Baptist Health Louisville, Baptist Health

La Grange, Baptist Health Lexington and Baptist Health Corbin. They also manage Hardin Memorial Health in

Elizabethtown. Counting all nine hospitals, Baptist Health has more than 2,700 licensed beds.”

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OFFERING SUMMARY


LOCAL MAP

10

BAPTIST HEALTH & AMERICAN HEALTH NETWOR

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LOCAL MAP

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LOCAL MAP

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LOCAL MAP

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REGIONAL MAP

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LOCAL MAP

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LOCAL MAP


AERIAL PHOTO

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FINANCIAL

ANALYSIS

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FINANCIAL ANALYSIS

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RENT ROLL SUMMARY

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*

*Baptist Health-Floyd recently renewed their lease early which will take effect in September 2017.At closing, Seller will credit Buyer any differential in rent between the day of closing rental rate and the rental rate commencing in September 2017.

FINANCIAL ANALYSIS

PRICING DETAIL

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FINANCIAL ANALYSIS


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MARKET

OVERVIEW

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Louisville Metro

Market Highlights

Centralized location Approximately 60 percent of U.S. cities are within a one-day drive of the metro.

Major distribution center Louisville’s strategic location in the country has made it a hub for the logistics and distribution industries.

The Derby Every year, attention is focused on Louisville when it hosts the Kentucky Derby, the most acclaimed horse-

racing event in the world.

LOUISVILLE

The Louisville metro comprises seven counties in north-central Kentucky and five in southern Indiana. The Ohio

River passes through the region, providing a wide and vast flood plain, surrounded by hilly terrain at the

metro’s perimeter. The Knobs region, in southern Louisville, hosts the Jefferson Memorial Forest and is largely

undeveloped. With few natural barriers to limit outward expansion, the metro has recorded 21 percent

population growth since 1990.

Geography

MARKET OVERVIEW

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MARKET OVERVIEW

Interstates 64 and 65 run through Louisville, while I-71 has its southern terminus there. All three of these

highways intersect just east of downtown, in an area referred to as “Spaghetti Junction.” I-264 and I-265 are

beltways for Louisville motorists, and construction has begun on more bridges to span the Ohio River and link

the cities of Louisville and Jeffersonville.

Most air traffic in Louisville is handled at Louisville International Airport, which houses the UPS Worldport global

air hub. Additional air service is provided by Bowman Field and Clark Regional Airport. CSX, Norfolk Southern

and regional carriers operate freight rail service. On the Ohio River, the McAlpine Locks and Dam assist

maritime shipping. More than 50 million tons of cargo pass through the locks annually. Regional transportation

in and around Louisville is offered by the Transit Authority of River City (TARC), which operates the area’s bus

network.

Infrastructure

Louisville is home to nearly 1.3 million residents residing within Indiana’s Harrison, Washington, Clark, Floyd

and Scott counties, as well as Kentucky’s Jefferson, Spencer, Oldham, Trimble, Meade, Nelson, Shelby,

Hardin, Larue, Bullitt and Henry counties. Louisville in Kentucky is the region’s largest city with more than

617,400 citizens, followed by Jeffersonville, Indiana, which has 46,000 residents.

Metro

Largest Cities in Metro by Population

Louisville 617,400

Jeffersonville 46,000

New Albany 37,200

Jeffersontown 27,300

Clarksville 22,000

St. Matthews 17,800

* ForecastSources: Marcus & Millichap Research Services; U.S. Census Bureau; Experian

LOUISVILLE

The Louisville Metro is: 100 miles from Cincinnati 115 miles from Indianapolis 175 miles from Nashville 260 miles from St. Louis

Airports Louisville International Airport Bowman Field and Clark Regional Airport

Major Roadways Interstates 64, 65, 71, 264 and 265 U.S. 31, 42, 6 and 150

Rail Freight – CSX and Norfolk Southern Regional Freight – Paducah and Louisville Railway and Louisville and Indiana Railroad

Ports Port of Louisville

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MARKET OVERVIEW

Although the region’s economy has been historically dominated by the shipping

and rail industries, contemporary Louisville boasts a well-diversified economy

focused on advanced manufacturing, logistics, life sciences and healthcare,

among other industry sectors. The metropolitan area is headquarters to three

Fortune 500 companies, including Humana, Yum Brands and Kindred Healthcare.

In recent decades, the area has attracted numerous medical and healthcare

organizations. Louisville’s downtown medical research campus draws some of

the nation’s top medical talent.

In line with the metropolitan area’s legacy in the transportation industry,

Louisville’s economy still benefits from being centrally located in the United

States. It is within a one-day drive of 60 percent of U.S. cities. The UPS

Worldport global air-freight hub at Louisville International Airport makes the

region an important player in global shipping and logistics. Automotive and

appliance manufacturing are also part of Louisville’s economic fabric, as is the

spirits industry. In addition, roughly one-third of all bourbon is produced in the

area.

The Louisville economy is accelerating, with the region’s gross metropolitan

product on the rise. GMP is forecast to grow by approximately 3.1 percent this

year. Local retail sales will continue to increase this year, expanding by 4.5

percent. This figure is slightly below the national average of 5.4 percent.

Economy

LOUISVILLE

Port of Louisville Quick Facts

A Foreign-Trade Zone

Intermodal transportation transfer to rail, truck or barge

Bulk commodity transfer terminal

Can handle more than 4 million tons of dry bulk commodities per year

On-site warehousing

* ForecastSources: Marcus & Millichap Research Services; Bureau of Economic Analysis; Moody’s Analytics; U.S. Census Bureau; Port of Louisville

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MARKET OVERVIEW

The Louisville metropolitan area provides a total of 650,000 jobs and over the last five years, nonfarm

employment grew at an annual pace of 2.2 percent. Through 2020, annual employment gains are expected to

slow slightly to 1.5 percent.

Trade, transportation and utilities is the largest major employment sector in Louisville, accounting for 21

percent of all jobs, or nearly 139,000 positions. This segment of employment is expected to grow 1.1 percent

annually through 2020. Education and health services comprises the second-biggest share of local jobs with

89,200 positions, or 14 percent of total metro employment. Jobs in this field are forecast to increase 2.6

percent annually over the next five years. The professional and business services, and the government sectors,

each contribute another 13 percent of employment. Louisville is also a major manufacturer of both automotive

components and electrical appliances. Jobs in manufacturing represent 12 percent of regional payrolls.

Through 2020, jobs in construction are projected to post the most robust growth of all major employment

sectors, at an average of 4.1 percent expansion each year. All employment sectors are forecast to grow over

the next five years and nine of 11 of them will grow in excess of 1.0 percent annually during this time.

Labor

* ForecastSources: Marcus & Millichap Research Services, BLS, Moody’s Analytics

LOUISVILLE

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MARKET OVERVIEW

Louisville has evolved from a transportation- and logistics-dominated employment landscape to a more diversified economy. Still, some of the most important employers in

the metropolitan area are in transportation services. UPS’ central hub at Louisville International Airport provides a dynamic shipping and distribution industry to the region.

UPS alone employs more than 20,000 workers. Additionally, Amazon is rapidly expanding operations in the Louisville metro.

The metropolitan area’s lively healthcare industry is also a major source of Louisville residents’ income. Numerous private hospitals and health insurance providers abound

in the region. Humana, Northern Healthcare, KentuckyOne Health and the Baptist Healthcare System comprise some of the largest local names in these industries. Humana

itself provides more than 12,000 regional jobs. The continued expansion of Louisville’s downtown medical research campus will likely attract an even greater presence of

healthcare firms into the area.

Among the metro’s 75,900 jobs in manufacturing, many stem from automotive and household appliance fabrication. Ford Motor Co. employs approximately 9,000 workers

at its Kentucky Truck Plant and Louisville Assembly Plant. Meanwhile, another 6,000 local manufacturing jobs are provided by GE Appliances in Louisville, which has been

purchased by Electrolux.

Employers

Major Employers

United Parcel Services

Humana Inc.

Norton Healthcare Inc.

KentuckyOne Health Inc.

Ford Motor Co.

GE Appliances

The Kroger Co.

Baptist Healthcare System Inc.

Catholic Archdiocese of Louisville

LG&E and KU Energy LLC

* ForecastSources: Marcus & Millichap Research Services; BLS; Moody’s Analytics; Experian

LOUISVILLE

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MARKET OVERVIEW

The Louisville metro has a population of nearly 1.3 million residents, a figure that grew roughly 14 percent from 2000 to 2015. Over the next five years, the metro population

is expected to expand at a pace of 4.0 percent, adding a total of nearly 50,900 people.

The population in Louisville is slightly older than the national level. The metro’s median age, at 38.7 years, is above the U.S. median of 37.5 years. This older and more

settled workforce has helped boost Louisville’s homeownership rate above the national average. In the metro, roughly 68 percent of residents own their own homes,

compared with just 64 percent nationally.

The Louisville median household income stands at $52,400 annually, slightly below the U.S. median of $56,100 per year. That said, the metro median income is rising. By

2019, the Louisville median income level is forecast to be nearly $60,000 per year.

Although Louisville’s education attainment levels fall below the national average, these figures are trending higher. Currently, 26.4 percent of residents 25 or older have also

earned at least a bachelor’s degree, and 10 percent have earned a graduate or professional degree. The continued attraction of young professionals to Louisville’s growing

medical community will help boost these numbers in the coming years.

Demographics

LOUISVILLE

* ForecastSources: Marcus & Millichap Research Services; AGS; Experian; Moody’s Analytics; U.S. Census Bureau

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MARKET OVERVIEW

The Louisville metro offers residents a wide array of entertainment and cultural amenities. The most famous is the Kentucky Derby, which annually attracts horse-racing

enthusiasts and visitors from all over the world. The Derby itself plays a large part in Louisville’s culture, and both Churchill Downs and the Kentucky Derby Museum are

open to the public year-round.

Other popular museums in the metro include the Louisville Slugger Museum and Factory and the Frazier History Museum. Visual arts can be found at the Speed Art

Museum, which houses works by some of the world’s most famous painters. Louisville is also home to a number of renowned estates and historical houses. Louisville

Palace, Conrad’s Castle, Locust Grove and the Belle of Louisville steamboat are all popular attractions. The metro also provides a multitude of performing arts options. The

Louisville Ballet, Louisville Orchestra, Bourbon Baroque, the Kentucky Opera and other organizations stage events across the city, from the Actors Theatre of Louisville to

the Kentucky Center and Brown Theatre. The metro also has a vast independent music scene. The Louisville Zoo and Renaissance Fun Park are both popular attractions for

children. Additionally, nature lovers can spelunk in the region’s widely popular Louisville Mega Cavern, and hike or bike the many miles of trails.

Louisville prides itself as one of the best college sports towns in the world. The NCAA’s University of Louisville Cardinals are a major source of entertainment for residents,

and the metro’s other sports options include teams in minor league baseball to indoor soccer.

* ForecastSources: Marcus & Millichap Research Services; National Association of Realtors; Moody’s Analytics; U.S. Census Bureau

Quality of Life

LOUISVILLE

PROPERTY NAME

MARKETING TEAMDEMOGRAPHICS

Source: © 2015 Experian

Created on October 2016

POPULATION 1 Miles 3 Miles 5 Miles 2020 Projection

Total Population 5,678 33,176 87,328

2015 Estimate


2010 Census


2000 Census


Daytime Population

2015 Estimate 7,440 33,238 83,726

HOUSEHOLDS 1 Miles 3 Miles 5 Miles 2020 Projection

Total Households 1,855 13,080 35,714

2015 Estimate


Average (Mean) Household Size 2.85 2.52 2.42

2010 Census


2000 Census


HOUSEHOLDS BY INCOME 1 Miles 3 Miles 5 Miles 2015 Estimate

$250,000 or More 1.88% 1.33% 1.13%

$200,000 - $249,999 1.49% 0.94% 0.76%

$150,000 - $199,000 5.37% 3.41% 2.63%

$100,000 - $149,000 20.76% 15.38% 13.18%

$75,000 - $99,999 17.72% 14.71% 14.15%

$50,000 - $74,999 22.76% 22.82% 22.76%

$35,000 - $49,999 10.61% 13.21% 14.76%

$25,000 - $34,999 7.40% 9.20% 10.56%

$15,000 - $24,999 6.47% 9.54% 10.36%

Under $15,000 5.53% 9.47% 9.71%

Average Household Income $85,814 $71,894 $67,020

Median Household Income $71,879 $58,861 $54,697

Per Capita Income $28,483 $28,356 $27,414

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IncomeIn 2015, the median household income for your selected geography is$54,697, compare this to the US average which is currently $54,148.The median household income for your area has changed by 27.86%since 2000. It is estimated that the median household income in yourarea will be $64,621 five years from now, which represents a changeof 18.14% from the current year.

The current year per capita income in your area is $27,414, comparethis to the US average, which is $29,638. The current year averagehousehold income in your area is $67,020, compare this to the USaverage which is $77,468.

PopulationIn 2015, the population in your selected geography is 83,933. Thepopulation has changed by 16.96% since 2000. It is estimated thatthe population in your area will be 87,328.00 five years from now,which represents a change of 4.04% from the current year. Thecurrent population is 48.15% male and 51.85% female. The medianage of the population in your area is 38.84, compare this to the USaverage which is 37.55. The population density in your area is1,067.49 people per square mile.

HouseholdsThere are currently 34,137 households in your selected geography.The number of households has changed by 18.10% since 2000. It isestimated that the number of households in your area will be 35,714five years from now, which represents a change of 4.62% from thecurrent year. The average household size in your area is 2.42 persons.

EmploymentIn 2015, there are 37,795 employees in your selected area, this is alsoknown as the daytime population. The 2000 Census revealed that58.76% of employees are employed in white-collar occupations inthis geography, and 41.13% are employed in blue-collar occupations.In 2015, unemployment in this area is 5.19%. In 2000, the averagetime traveled to work was 22.00 minutes.

Race and EthnicityThe current year racial makeup of your selected area is as follows:86.87% White, 6.05% Black, 0.04% Native American and 1.36%Asian/Pacific Islander. Compare these to US averages which are:70.98% White, 12.77% Black, 0.19% Native American and 5.25%Asian/Pacific Islander. People of Hispanic origin are countedindependently of race.

People of Hispanic origin make up 5.71% of the current yearpopulation in your selected area. Compare this to the US average of17.53%.

PROPERTY NAME

MARKETING TEAM

HousingThe median housing value in your area was $143,494 in 2015,compare this to the US average of $185,104. In 2000, there were20,465 owner occupied housing units in your area and there were8,441 renter occupied housing units in your area. The median rent atthe time was $481.

Source: © 2015 Experian

DEMOGRAPHICS

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DEMOGRAPHICS

www.MarcusMillichap.com

Jordan Klink

Vice President Investments

Senior Director - Net Leased Properties GroupIndianapolis OfficeTel: (317) 218-5316

Fax: (317) 218-5310

[email protected]

Licenses: IN AB21401453, IN RB14043752

Benjamin Sullivan

Associate

Indianapolis OfficeTel: (317) 218-5333Fax: (317) 218-5310

[email protected]

License: IN RB16000227

P R E S E N T E D B Y

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