DAVITA DIALYSIS DETROIT, MICHIGAN - Constant...

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D A V I T A D I A L Y S I S

OFFERING MEMORANDUM

D E T R O I T , M I C H I G A N

11707 Whitt ier Avenue - DETROIT, MICHIGAN 48224

Investment Overv iew

• Newly Renovated DaVita Dialysis Center in Detroit | Michigan’s Largest City

• Rare 15-Year Absolute-Net Lease | Zero Landlord Responsibilities

• Strong Inflation Hedge | 2 Percent Annual Rent Increases During the Base Term and in Three, Five-Year Options

• Corporate Guaranty | DaVita, Incorporated | New York Stock Exchange (NYSE): DVA| Number 181 on Fortune 500 List (2017)

• One Off Signalized, Hard Corner Intersection of Whittier Avenue and Kelly Road | More Than 10,300 Vehicles Per Day (VPD)

• Less Than Three Miles from St. John Hospital & Medical Center | 772-Bed Facility

• Growing Demand for Dialysis Treatment | Michigan Obesity Rate Increased More Than 9 Percent from 2000 to 2016

• Ideal Demographics | More Than 20,000 People with an Average Household Income of $39,000 in One Mile

• Less Than Two Miles from Rite Aid Pharmacy

Marcus & Millichap is pleased to present this newly renovated, DaVita Dialysis center in Detroit, Michigan’s largest city.

Total Renal Care, Incorporated (Inc) signed a rare 15-year absolute net lease with zero landlord responsibilities. The lease features 2 percent annual rent increases over the base term and in the three, five-year option periods. The lease has a corporate guaranty from DaVita, Incorporated (Inc), a Fortune 500 company that did $14.7-billion in revenue across 2,350 treatment centers in 2016.

This asset is located one off the signalized intersection of Whittier Avenue and Kelly Road. More than 10,300 vehicles pass by this asset daily. The subject property is also less than three miles from Saint John Hospital and Medical Center, a 772-bed facility known for excellence in cardiology, oncology, neurosciences, minimally invasive and robotic surgery, women’s services, pediatrics, and medical education. There are ideal demographics for a dialysis center in the one-mile radius: more than 20,000 people with an average household income of $39,000. There is also a Rite Aid Pharmacy less than two miles from this asset.

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This information has been secured from sources we believe to be reliable, but we make no representations or warranties, expressed or implied, as to the accuracy of the information. References to square footage or age are approximate. Buyer must verify the information and bears all risk for any inaccuracies. Marcus & Millichap is a trademark of © 2017 Marcus & Millichap. Activity ID: Y0332342 2


Financia l Overv iew

PRICE $3,330,000

CAP RATE 6.00%

NOI $200,000

PRICE PER SQUARE FOOT $333.00

RENT PER SQUARE FOOT $20.00

YEAR BUILT/RENOVATED 1954/2017

APPROXIMATE LOT SIZE 1.73 Acres

GROSS LEASEABLE AREA 10,000

TYPE OF OWNERSHIP Fee Simple

LEASE GUARANTOR DaVita, Incorporated

LEASE TYPE Absolute-Net

ROOF AND STRUCTURE Tenant Responsible

RENT COMMENCEMENT DATEEarlier of (i) 180 Days from Possession Date or (ii) Date Tenant Opens For Business*

EST LEASE EXPIRATION DATE 15 Years from Commencement

LEASE TERM 15 Years

TERM REMAINING 15 Years

INCREASES 2% Annually

OPTIONS TO RENEW 3, 5-Year

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O F F E R I N G S U M M A R Y

*Upon determination of the Possession Date and Commencement Date, Landlord shall complete, execute, and forward a Commencement Date Memorandum to Tenant for Tenant’s approval and execution

ANNUALIZED OPERATING DATA

BASE RENT ANNUAL RENT MONTHLY RENT INCREASES

Year 1 $200,000 $16,667

Year 2 $204,000 $17,000 2%

Year 3 $208,080 $17,340 2%

Year 4 $212,242 $17,687 2%

Year 5 $216,486 $18,041 2%

Year 6 $220,816 $18,401 2%

Year 7 $225,232 $18,769 2%

Year 8 $229,737 $19,145 2%

Year 9 $234,332 $19,528 2%

Year 10 $239,019 $19,918 2%

Year 11 $243,799 $20,317 2%

Year 12 $248,675 $20,723 2%

Year 13 $253,648 $21,137 2%

Year 14 $258,721 $21,560 2%

Year 15 $263,896 $21,991 2%This information has been secured from sources we believe to be reliable, but we make no representations or warranties, expressed or implied, as to the accuracy of the information. References to square footage or age are approximate. Buyer must verify the information and bears all risk for any inaccuracies. Marcus & Millichap is a trademark of © 2017 Marcus & Millichap. Activity ID: Y0332342 3

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Tenant Overv iew - Davi ta Dia lys is

DaVita Incorporated, a Fortune 500 company, is the parent company of DaVita Kidney Care and HealthCare Partners, a DaVita Medical Group. DaVita Kidney Care is a leading provider of kidney care in the United States, delivering dialysis services to patients with chronic kidney failure and end stage renal disease. DaVita Kidney Care consistently differentiates itself from other kidney care companies and surpasses national averages for clinical outcomes. The company’s clinical outcomes for dialysis have improved for the past decade, and in many key areas measuring quality dialysis care, we lead the nation. As of December 31, 2016, DaVita Kidney Care operated or provided administrative services at 2,350 outpatient dialysis centers located in the United States serving approximately 188,000 patients. The company also operated 154 outpatient dialysis centers located in 11 countries outside the United States.

TENANT PROFILE

TENANT TRADE NAME DaVita Kidney Care

OWNERSHIP Public

TENANT Total Renal Care, Incorporated (Inc)

LEASE GUARANTOR DaVita, Incorporated (Inc)

NUMBER OF LOCATIONS 2,300+

HEADQUARTERED Denver, CO

WEB SITE https://www.davita.com/

SALES VOLUME $14.7 Billion (2016)

NET WORTH $4.6 Billion (2016)

STOCK SYMBOL DVA

BOARD NYSE

CREDIT RATING BB

RATING AGENCY Standard & Poor’s (S&P)

RANK #181 in Fortune 500 (2017)

FILE PHOTOFILE PHOTOThis information has been secured from sources we believe to be reliable, but we make no representations or warranties, expressed or implied, as to the accuracy of the information. References to square footage or age are approximate. Buyer must verify the information and bears all risk for any inaccuracies. Marcus & Millichap is a trademark of © 2017 Marcus & Millichap. Activity ID: Y0332342 4


Aer ia l Overv iew



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696696

696LathrupVillage

Southfield

Oak Park

HuntingtonWoods

Royal Oak

Berkley

MadisonHeights

Ferndale Hazel Park

Warren

Center Line

Eastpointe

St Clair Shores

Lake St Clair

Grosse PointeWoods

Grosse PointeShores

Grosse PointeFarms

Grosse PointePark

Grosse Pointe

Harper Woods

Hamtramck

DearbornDetroit

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Area Overview & Demographics

1-Mile 3-Mile 5-Mile

P o p u l a t i o n2000 Population 35,414 217,494 446,819

2010 Population 23,799 166,437 361,148

2017 Population 21,166 153,396 344,525

2021 Population 20,434 149,895 341,244


H o u s e h o l d s


H o u s e h o l d ( H H ) I n c o m e s2000 Households 10,748 72,860 158,630

2010 Households 7,763 58,300 133,330

2017 Households 6,850 53,641 127,313

2021 Households 6,601 52,412 126,212

2017 Average HH Income $39,545 $49,935 $56,747

2017 Median HH Income $28,455 $34,677 $37,728

2017 Per Capita Income $12,798 $17,462 $20,970



Market Overview - Detroit , Michigan

Detroit is located in southeast Michigan on the Detroit River between Lake Huron and Lake Erie. Detroit is the largest city in the state and the tenth-largest in the country, with around 1,000,000 residents and a metropolitan population 4 times that size. It is the oldest major city west of the original colonies. The city began as a fur-trading town in the 1700s, Detroit took full advantage of its prime geographical location in the 1800s, becoming a major shipping and manufacturing center. With an influx of workers from Europe and the American South, Detroit was an industrial juggernaut in the early 1900s. During the two World Wars, Detroit was a leading supplier to the military. The birthplace of the automobile and the home of the “Big 3” (General Motors, Ford, and Chrysler), Detroit remains the nucleus of the industry despite competition from Japan and Europe. One of the largest manufacturing cities in the country, Detroit is a leader in steel, fabricated-metal, chemicals, paper products, food, and beverages. The healthcare industry is also among the city’s leading employers.

Several major corporations are based in the city, including three Fortune 500 companies. The most heavily represented sectors are manufacturing (particularly automotive), finance, technology, and health care. The most significant companies based in Detroit include: General Motors, Quicken Loans, Ally Financial, Compuware, Shinola, American Axle, Little Caesars, DTE Energy, Lowe Campbell Ewald, Blue Cross Blue Shield of Michigan, and Rossetti Architects.

About 80,500 people work in downtown Detroit, comprising one-fifth of the city’s employment base. Aside from the numerous Detroit-based companies listed above, downtown contains large offices for Comerica, Chrysler, HP Enterprise, Deloitte, PricewaterhouseCoopers, KPMG, and Ernst & Young.

Thousands more employees work in Midtown, north of the central business district. Midtown’s anchors are the city’s largest single employer Detroit Medical Center, Wayne State University, and the Henry Ford Health System in New Center. Midtown is also home to watchmaker Shinola and an array of small and startup companies. New Center bases TechTown, a research and business incubator hub that is part of the WSU system. Like downtown and Corktown, Midtown also has a fast-growing retailing and restaurant scene.

ACTUAL PROPERTY


Marcus & Mi l l ichap hereby advises al l prospect ive purchasers of Net Leased property as fol lows:

The i n f o rma t i on con t a i ned i n t h i s Ma r ke t i ng B rochu re has been ob t a i ned f r om sou rces we be l i e ve t o be r e l i ab l e. Howeve r, Ma rcus & M i l l i c hap has no t and w i l l no t ve r i f y an y o f t h i s i n f o rma t i on , no r has Ma rcus & M i l l i c hap conduc ted any i n ves t i ga t i on r ega rd i ng t hese ma t t e r s . Ma rcus & M i l l i c hap makes no gua ran t ee, wa r r an t y o r r ep resen t a t i on wha t soeve r abou t t he accu racy o r comp le t eness o f an y i n f o rma t i on p ro v i ded .

As t he Buye r o f a ne t l e a sed p rope r t y, i t i s t he Buye r ’s r e spons i b i l i t y t o i ndependen t l y con f i rm t he accu racy and comp le t eness o f a l l ma te r i a l i n f o rma t i on be fo re comp le t i ng any pu r chase. Th i s Ma rke t i ng B rochu re i s no t a subs t i t u t e f o r you r t ho rough due d i l i gence i n ves t i ga t i on o f t h i s i n ves tmen t oppo r t un i t y. Ma rcus & M i l l i c hap e xp ress l y den i e s any ob l i ga t i on t o conduc t a due d i l i gence e xam ina t i on o f t h i s P rope r t y f o r Buye r.

Any p ro j ec t i ons , op i n i ons , a s sump t i ons o r e s t ima tes used i n t h i s Ma r ke t i ng B rochu re a r e f o r e xamp le on l y and do no t r ep resen t t he cu r r en t o r f u t u r e pe r f o rmance o f t h i s p rope r t y. The va l ue o f a ne t l e a sed p rope r t y t o you depends on f ac to r s t ha t shou l d be e va l ua t ed by you and you r t a x , f i n anc i a l and l ega l adv i so r s .

Buye r and Buye r ’s t a x , f i n anc i a l , l ega l , and cons t r uc t i on adv i so r s shou l d conduc t a ca re f u l , i ndependen t i n ves t i ga t i on o f an y ne t l e a sed p rope r t y t o de t e rm ine t o you r sa t i s f ac t i on w i t h t he su i t ab i l i t y o f t he p rope r t y f o r you r needs .

L i ke a l l r ea l e s t a t e i n ves tmen t s , t h i s i n ves tmen t ca r r i e s s i gn i f i c an t r i s k s . Buye r and Buye r ’s l ega l and f i n anc i a l adv i so r s mus t r eques t and ca re f u l l y r e v i ew a l l l ega l and f i n anc i a l documen t s r e l a t ed t o t he p rope r t y and t enan t . Wh i l e t he t enan t ’s pas t pe r f o rmance a t t h i s o r o t he r l oca t i ons i s an impo r t an t cons i de r a t i on , i t i s no t a gua r an t ee o f f u t u r e success . S im i l a r l y, t he l ease r a t e f o r some p rope r t i e s , i n c l ud i ng new l y -cons t r uc t ed f ac i l i t i e s o r new l y - acqu i r ed l oca t i ons , may be se t based on a t enan t ’s p ro j ec t ed sa l e s w i t h l i t t l e o r no r eco rd o f ac t ua l pe r f o rmance, o r compa rab l e r en t s f o r t he a r ea . Re tu r ns a r e no t gua r an t eed ; t he t enan t and any gua r an to r s may f a i l t o pay t he l ease r en t o r p rope r t y t a xes , o r may f a i l t o comp l y w i t h o t he r ma te r i a l t e rms o f t he l ease ; cash f l ow may be i n t e r r up t ed i n pa r t o r i n who l e due t o ma rke t , econom ic, env i r onmen ta l o r o t he r cond i t i ons . Rega rd l e s s o f t enan t h i s t o r y and l ease gua r an t ees , Buye r i s r e spons i b l e f o r conduc t i ng h i s /he r own i n ves t i ga t i on o f a l l ma t t e r s a f f ec t i ng t he i n t r i n s i c v a l ue o f t he p rope r t y and t he va l ue o f an y l ong- t e rm l ease, i n c l ud i ng t he l i k e l i hood o f l oca t i ng a r ep l acemen t t enan t i f t he cu r r en t t enan t shou l d de f au l t o r abandon t he p rope r t y, and t he l ease t e rms t ha t Buye r may be ab l e t o nego t i a t e w i t h a po ten t i a l r ep l acemen t t enan t cons i de r i ng t he l oca t i on o f t he p rope r t y, and Buye r ’s l ega l ab i l i t y t o make a l t e r na t e use o f t he p rope r t y.

By accep t i ng t h i s Ma r ke t i ng B rochu re you ag ree t o r e l ease Ma rcus & M i l l i c hap Rea l E s t a t e I n ves tmen t Se r v i ces and ho l d i t ha rm less f r om any k i nd o f c l a im , cos t , e xpense, o r l i ab i l i t y a r i s i ng ou t o f you r i n ves t i ga t i on and /o r pu r chase o f t h i s ne t l e a sed p rope r t y.

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D A V I T A D I A L Y S I S D E T R O I T , M I C H I G A N

B R O K E R O F R E C O R D : S T E V E N C H A B E N | M A R C U S & M I L L I C H A P | L I C E N S E : 6 5 0 2 3 8 7 9 0 3

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