BLUE SPRIG PEDIATRICS INVESTMENT OPPORTUNITY...Eagle Ford, Texas where the shale outcrops at the...

BLUE SPRIG PEDIATRICS INVESTMENT OPPORTUNITY

LIVE OAK (SAN ANTONIO), TX

CONFIDENTIAL OFFERING MEMORANDUM

CONFIDENTIAL OFFERING MEMORANDUM — BLUE SPRIG PEDIATRICS

BLUE SPRIG PEDIATRICS INVESTMENT OPPORTUNITY

CONFIDENTIAL OFFERING MEMORANDUM

7608 NARROW PASS ST. LIVE OAK (SAN ANTONIO), TEXAS 78233

presented by

KEVIN CATALANI PARTNER, INVESTMENT SALES 210.841.3237 [email protected]

REATA REAL ESTATE INVESTMENT SALES 1100 NE Loop 410, Suite 400 San Antonio, TX 78209

TEL 210.930.4111 FAX 210.930.1114

REATAREALESTATE.COM

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Information contained was obtained from sources believed reliable, however, REATA Real Estate Services, LP, makes no guarantees, warranties or representations as to the completeness or accuracy thereof. The presentation of this project is submitted subject to the errors, omissions and change of price or conditions prior to lease or withdrawal. ©REATA Real Estate Services, LP


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SSECTION I .. ... ... ... ... ... ... ... ...EXECUTIVE SUMMARY

INVESTMENT HIGHLIGHTS

LEASE ABSTRACT

TENANT PROFILE

SECTION II . ... ... ... ... ... ... ... ...PROPERTY OVERVIEW MAP

AERIAL

SECTION III ... ... ... ... ... ... ... ...TRADE AREA OVERVIEW SAN ANTONIO MARKET OVERVIEW

DEMOGRAPHICS

SECTION IV ... ... ... ... ... ... ... ...AGENCY DISCLOSURE


REATA Investment Sales has been exclusively retained to offer for sale a single-tenant, free-standing Blue Sprig Pediatrics in Live Oak (San Antonio), Texas. This new Blue Sprig location is situated along Narrow Pass Street and Toepperwein Road, just south of Interstate 35, in a densely populated part of northeast San Antonio.

Blue Sprig Pediatrics, Inc. is a new and growing platform of clinics providing Applied Behavior Analysis for children diagnosed with Autism Spectrum Disorder. Blue Sprig was started by KKR (NYSE: KKR), a leading global investment firm, and is being funded through their Health Care Strategic Growth Fund. The Company intends to open new clinics and partner with existing providers to fulfill the unmet need for compassionate and high-quality interventions for ASD patients nationwide.

Blue Sprig is operating on a 5-year NNN lease that commenced in June 2018, offering secure, stable cash flow with minimal landlord responsibilities.

INVESTMENT HIGHLIGHTS

• New 5-year term

• 10% rent escalation in Year 4

• Five-year renewal option with 10% rent bump

• NNN lease structure creates minimal landlord responsibilities

• Growing concept developed to address an under-served sector of medical care

• Currently seven locations in Texas

• Institutional capital partner (NYSE: KKR)

• City of Live Oak is a rapidly growing community in northeast San Antonio

• 230,152 people within 5 miles of the site with average household income of $86,123

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PRICING

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Tenant Blue Sprig Pediatrics, Inc.

Tenant Trade Name Blue Sprig

Original Lease Term 5 Years

Lease Commencement June 15, 2018

Lease Expiration June 30, 2023

Rent Increases 10% in Year 4

Renewal Options One, 5-Year Option with 10% Rent Increase

Lease Type NNN

Roof & Structure Landlord Responsibility

Lease Years Annual Base Rent Monthly Base Rent Base Rent PSF Cap Rate

1 — 3 $82,799 $6,900 $17.75 6.50%

4 — 5 $91,080 $7,590 $19.52 7.15%

Extension Terms:

6 — 10 $100,190 $8,349 $21.48 7.87%

RENT SUMMARY

LEASE SUMMARY

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LEASE ABSTRACT

TENANT TRADE NAME Blue Sprig

LOCATION 7608 Narrow Pass St. Live Oak (San Antonio), TX 78233

BUILDING SIZE 4,665 SF

LAND AREA 0.4820 acres (approx.)

YEAR BUILT 1980 *2018: New roof, HVAC, electrical

Offering Price $1,273,000

Current Rent $82,799.04

Cap Rate 6.50%


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ABOUT BLUE SPRIG

Blue Sprig is a rapidly growing provider of high-quality ABA services to children with Autism Spectrum Disorder. Blue Sprig is committed to providing compassionate, individualized, and evidence-based behavior analytic services. Their goal is simple, to change the world for children with Autism.

COMPANY PROFILE

Company Type: PrivateFounded: 2017Number of Locations: 9Headquarters: Houston, TexasWebsite: bluesprigpediatrics.com


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“KKR FORMS BLUE SPRIG PEDIATRICS TO ADDRESS UNMET CLINICAL NEEDS OF CHILDREN DIAGNOSED WITH AUTISM”

BUSINESSWIRE.COM | JANUARY 9, 2018

KKR today announced the creation of Blue Sprig Pediatrics, Inc. (“Blue Sprig” or the “Company”), a platform of clinics providing Applied Be-havior Analysis (“ABA”) for children diagnosed with Autism Spectrum Disorder (“ASD”). The Company intends to open new clinics and part-ner with existing providers to fulfill the unmet need for compassionate and high-quality interventions for ASD patients nationwide.

Keith Jones, a proven leader in the pediatric health care services con-tinuum, will serve as Chief Executive Officer of Blue Sprig. Most re-cently, Mr. Jones served as Chief Operating Officer at PSA Healthcare (“PSA”), a pediatric home nursing business with multi-state operations. During his six-year tenure at PSA, Mr. Jones engineered a turn-around of the company that resulted in expanded access to care for patients and significant growth in the business.

“With 1 in every 68 children diagnosed with ASD, there is a large and growing population that, unfortunately, is currently under-served,” said

Keith Jones. “Our hope is that, as a scaled platform providing ABA ser-vices, we can advocate for the resources that patients need, invest in additional research to advance understanding and treatment of these children, and ultimately make a difference in their quality of life and ability to contribute to society as a whole.”

“We are excited to partner with Keith and the rest of the team at Blue Sprig on the important mission to provide critical care to millions of children,” said Ali Satvat, Member of KKR and Head of KKR’s Health Care Strategic Growth investing efforts. “We look forward to support-ing Blue Sprig with the resources and capital needed to accelerate its expansion plans and invest in clinical quality and access to care.”

For KKR, the investment is being funded through KKR’s Health Care Strategic Growth Fund, which is focused on investing in high-growth health care-related companies for which KKR can be a unique partner in helping reach scale.


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5Representative Photo (Subject Property Under Construction)


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LIVE OAK CENTER

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7608 NARROW PASS

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SAN ANTONIO MARKET OVERVIEW

San Antonio is the nation’s 7th largest city and the 24th largest metropolitan service area (MSA) in the United States. The San Anto-nio-New Braunsfels MSA (referred to as Great-er San Antonio) encompasses eight counties and is situated in South-Central Texas along the I-35 corridor with a population of nearly 2.3 million people; 200 miles west of Houston, 280 miles southwest of Dallas and 84 miles south of Austin

The MSA is centrally located between the East and West Coasts, with close proximity to Mex-ico. Due to its central location and positioning along Interstate 35, more than half of the to-tal goods flowing between the U.S. and Mex-ico travel through San Antonio before reach-ing their final destination. San Antonio is also home to a number of national landmarks and famous attractions, making it Texas’ most vis-ited city with about 20 million visitors annually.

San Antonio benefits greatly from the city’s close proximity to Mexico and the cost advan-tages of living in this unique city. The economy of San Antonio is a healthy mix of financial ser-vices, government services, manufacturing, education and health care, biosciences, com-munications, oil & gas and tourism industries. San Antonio is home to five Fortune 500 com-panies including Valero Energy, Tesoro, USAA, NuStar Energy and Clear Channel Communica-tions. In addition, other major companies call San Antonio home for their corporate head-quarters, including H-E-B and Rackspace.

According to the Council for Community and Economic Research, the cost of living is near-ly 12 percent below the U.S. average, allowing residents and companies alike to enjoy afford-able living in a cultural and business-savvy environment. Home prices in San Antonio are more than 35 percent below the U.S. median

and are less than half the cost of comparable housing in some cities in California and the East Coast.

In recent years, San Antonio has been among the top of a number of economic indicator rankings including Milken Institute’s list of top performing cities (#1 in 2011), Brookings Institution’s top-economic performer list and Forbes list of America’s Fastest Recovering Cities (#2 in 2009). The Eagle Ford Shale play that is currently taking place in South Tex-as has made significant contributions to the city’s recent success. The Eagle Ford Shale (EFS) is quite possibly the largest single eco-nomic development in the history of the state of Texas and ranks as the largest oil & gas development in the world based on capital invested. The EFS is a gas and oil producing shale rock formation in south Texas that runs from the US-Mexico border north of Lare-


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do in a narrow band extending northeast for several hundred miles to just north of Hous-ton. The EFS takes its name from the town of Eagle Ford, Texas where the shale outcrops at the surface in clay form. Approximately $30 billion was spent developing the play in 2013 and had more than a $60 billion dollar impact on the South Texas economy in 2012; over 116,000 Eagle Ford jobs were supported

in the 20 county area impacted by the play. Since the beginning of 2010 over 7% of the state’s employment gains are attributed to the EFS. It is currently the most active shale play in the world with over 200 rigs running. From record drilling levels to wells producing over 4,000 barrels per day of oil, the play is redefining South Texas as an oil industry hot-bed and bringing new wealth to the region.

CORPORATE HEADQUARTERS IN SAN ANTONIO

COMPANY BUSINESS EMPLOYED IN SAN ANTONIO

H-E-B Super Market Chain 20,000USAA Financial Services and Insurance 17,000Bill Miller Bar-B-Q Fast Food Chain 4,190Cullen / Frost Bankers Financial Services 3,982Valero Energy Oil Refinery & Gasoline Mktg. 3,777Rackspace IT Managed Hosting Solutions 3,300Southwest Research Institute Applied Research 3,046Toyota Motor Manufacturing Auto Manufacturing 2,900Clear Channel Communications, Inc. TV & Radio Stations, Outdoor Ads 2,800Kinetic Concepts, Inc. Medical Supplies 2,000Harland Clarke Check Printing 1,500Tesoro Oil Refiner & Petroleum Products 800NuStar Energy Energy 550

Source: The San Antonio Business Journal and by contact with company representatives. Updated August 2013.

MAJOR REGIONAL EMPLOYERS IN SAN ANTONIO

COMPANY BUSINESS EMPLOYED IN SAN ANTONIO

Lackland Air Force Base Military 37,097Fort Sam Houston Military 32,000H-E-B Super Market Chain 20,000USAA Financial Services and Insurance 17,000Northside Independent School District School District 12,751City of San Antonio City Government 11,731Randolph Air Force Base Military 11,068North East Independent School District School District 10,522Methodist Healthcare System Health Care Services 8,000San Antonio Independent School District School District 7,374

Source: The 2013 Book of Lists, The San Antonio Business Journal

FORTUNE 500 COMPANIES HEADQUARTERED IN SAN ANTONIO

COMPANY RANK

Valero Energy 9 Tesoro 95 USAA 139 NuStar Energy 389 Clear Channel Communications, Inc. 407

Source: Fortune Magazine


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Demographic Source: Applied Geographic Solutions 10/2017, TIGER Geography page 1 of 3©2018, Sites USA, Chandler, Arizona, 480-491-1112

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FULL PROFILE2000-2010 Census, 2017 Estimates with 2022 ProjectionsCalculated using Weighted Block Centroid from Block Groups

Lat/Lon: 29.5402/-98.3371RF1

7608 Narrow Pass St1 mi radius 3 mi radius 5 mi radius

Live Oak, TX 78233

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2017 Estimated Population 13,581 104,867 247,3962022 Projected Population 14,614 113,377 269,0802010 Census Population 12,701 95,687 218,1382000 Census Population 10,871 75,260 170,880Projected Annual Growth 2017 to 2022 1.5% 1.6% 1.8%Historical Annual Growth 2000 to 2017 1.5% 2.3% 2.6%

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S 2017 Estimated Households 4,603 36,215 85,7752022 Projected Households 4,814 38,012 90,7202010 Census Households 4,548 34,845 79,3312000 Census Households 3,729 27,063 61,663Projected Annual Growth 2017 to 2022 0.9% 1.0% 1.2%Historical Annual Growth 2000 to 2017 1.4% 2.0% 2.3%

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2017 Est. Population Under 10 Years 13.9% 14.7% 14.8%2017 Est. Population 10 to 19 Years 13.0% 13.8% 14.2%2017 Est. Population 20 to 29 Years 12.0% 13.9% 14.0%2017 Est. Population 30 to 44 Years 21.5% 21.3% 21.5%2017 Est. Population 45 to 59 Years 19.7% 18.2% 18.3%2017 Est. Population 60 to 74 Years 15.5% 13.4% 12.7%2017 Est. Population 75 Years or Over 4.4% 4.6% 4.5%2017 Est. Median Age 36.5 34.5 34.1

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2017 Est. Male Population 48.0% 48.5% 48.5%2017 Est. Female Population 52.0% 51.5% 51.5%

2017 Est. Never Married 27.0% 32.6% 33.5%2017 Est. Now Married 52.8% 44.3% 43.8%2017 Est. Separated or Divorced 15.6% 18.4% 18.1%2017 Est. Widowed 4.7% 4.6% 4.7%

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2017 Est. HH Income $200,000 or More 4.1% 3.8% 3.5%2017 Est. HH Income $150,000 to $199,999 3.8% 4.6% 4.7%2017 Est. HH Income $100,000 to $149,999 24.4% 16.6% 16.5%2017 Est. HH Income $75,000 to $99,999 19.9% 16.0% 15.7%2017 Est. HH Income $50,000 to $74,999 20.5% 22.4% 22.6%2017 Est. HH Income $35,000 to $49,999 11.5% 14.8% 13.7%2017 Est. HH Income $25,000 to $34,999 7.0% 8.3% 8.5%2017 Est. HH Income $15,000 to $24,999 3.8% 6.7% 7.2%2017 Est. HH Income Under $15,000 5.1% 7.0% 7.7%2017 Est. Average Household Income $90,242 $82,940 $78,6152017 Est. Median Household Income $78,755 $65,697 $65,3012017 Est. Per Capita Income $30,617 $28,692 $27,311

2017 Est. Total Businesses 204 2,511 6,3832017 Est. Total Employees 1,856 27,178 73,118

BLUE SPRIG DEMOGRAPHICS


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AGENCY DISCLOSUREAGENCY DISCLOSURE

TYPES OF REAL ESTATE LICENSE HOLDERS: • A BROKER is responsible for all brokerage activities,

including acts performed by sales agents sponsored by the broker.

• A SALES AGENT must be sponsored by a broker and works with clients on behalf of the broker.

A BROKER’S MINIMUM DUTIES REQUIRED BY LAW (A client is the person or party that the broker rep-resents):• Put the interests of the client above all others, including

the broker’s own interests;• Inform the client of any material information about the

property or transaction received by the broker;• Answer the client’s questions and present any offer to

or counter-offer from the client; and• Treat all parties to a real estate transaction honestly

and fairly.

A LICENSE HOLDER CAN REPRESENT A PARTY IN A REAL ESTATE TRANSACTION:

AS AGENT FOR OWNER (SELLER/LANDLORD): The broker becomes the property owner’s agent through an agreement with the owner, usually in a written listing to sell or property management agreement. An owner’s agent must perform the broker’s minimum duties above and must inform the owner of any material information about the property or transaction known by the agent,

including information disclosed to the agent or subagent by the buyer or buyer’s agent.

AS AGENT FOR BUYER/TENANT: The broker becomes the buyer/tenant’s agent by agreeing to represent the buyer, usually through a written representation agree-ment. A buyer’s agent must perform the broker’s min-imum duties above and must inform the buyer of any material information about the property or transaction known by the agent, including information disclosed to the agent by the seller or seller’s agent.

AS AGENT FOR BOTH — INTERMEDIARY: To act as an intermediary between the parties the broker must first obtain the written agreement of each party to the trans-action. The written agreement must state who will pay the broker and, in conspicuous bold or underlined print, set forth the broker’s obligations as an intermediary. A broker who acts as an intermediary:• Must treat all parties to the transaction impartially and

fairly;• May, with the parties’ written consent, appoint a differ-

ent license holder associated with the broker to each party (owner and buyer) to communicate with, provide opinions and advice to, and carry out the instructions of each party to the transaction.

• Must not, unless specifically authorized in writing to do so by the party, disclose:

› that the owner will accept a price less than the written asking price;

› that the buyer/tenant will pay a price greater than the price submitted in a written offer; and

› any confidential information or any other information that a party specifically instructs the broker in writ-ing not to disclose, unless required to do so by law.

AS SUBAGENT: A license holder acts as a subagent when aiding a buyer in a transaction without an agree-ment to represent the buyer. A subagent can assist the buyer but does not represent the buyer and must place the interests of the owner first.

TO AVOID DISPUTES, ALL AGREEMENTS BETWEEN YOU AND A BROKER SHOULD BE IN WRITING AND CLEARLY ESTABLISH:

• The broker’s duties and responsibilities to you, and your obligations under the representation agreement.

• Who will pay the broker for services provided to you, when payment will be made and how the payment will be calculated.

LICENSE HOLDER CONTACT INFORMATION: This no-tice is being provided for information purposes. It does not create an obligation for you to use the broker’s ser-vices. Please acknowledge receipt of this notice below and retain a copy for your records.

Licensed Broker/Broker Firm Name or Primary Assumed Business Name

License Number Email PhoneREATA Real Estate Services, LP 9002891 [email protected] 210.930.4111

Designated Broker of Firm License Number Email PhoneThomas C. Tyng, Jr. 0406718 [email protected] 210.930.4111

Buyer/Tenant/Seller/Landlord Initials Date

Sales Agent License Number Email PhoneKevin Catalani 590070 [email protected] 210.930.4111

Sales Agent License Number Email Phone

Sales Agent License Number Email Phone

REGULATED BY THE TEXAS REAL ESTATE COMMISSION. INFORMATION AVAILABLE AT WWW.TREC.TEXAS.GOV IABS 1-0 02/16/16

OUR MISSION is to provide excellent real estate services to both external and internal customers while building a lasting

Company committed to profitability and opportunity.

We strive for the highest standards of service, integrity and accountability to our EMPLOYEES, CLIENTS and PARTNERS.

BLUE SPRIG PEDIATRICS INVESTMENT OPPORTUNITY...Eagle Ford, Texas where the shale outcrops at the...

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