A nine-story, 155,000 square foot Class A medical office tower. Attached to Good Samaritan Medical Center.
Acquisition: October 2010 (as part of a nine building medical portfolio in South Florida).
Disposition: September 2013.
IRR: 41% (as part of the portfolio)
At Acquisition:
The building suffered from deferred maintenance and had fallen from its original Class “A” level to Class “B-“. The building had original finishes from the late 1980’s. Many tenants had recently departed to newer buildings and the remaining tenants were disappointed with the deteriorating conditions and level of service. In its current condition, the building was not generating any leasing activity.
After Acquisition:
We completely reconditioned the property. We brought the property back to the market with its same historic name, but with a new reinvigorated appearance. Over a two-year period, we implemented an extensive $2 million capital improvement project. Work included replacing the roof, waterproofing the exterior envelope, renovating the cooling tower and mechanical equipment and rehabbing the common areas. We redesigned and renovated the lobby and added a new pharmacy. We Refurbished all common area restrooms and updating to ADA compliant and painting and carpeting of common area corridors. We kicked-off an aggressive marketing campaign to make local physicians aware that we had brought the property back to Class “A” level finish and service. We instituted our gold standard level of service in all facets of leasing, property management and maintenance. Our tenant retention programs include property events, one-on-one tenant meetings, web-based maintenance tracking programs.
Results:
We converted the property from Class “B-“ back to its original Class “A” level. Current tenants no longer considered relocating to newer buildings. With the exception of two retiring physicians, we maintained a 100% renewal rate. For three years after acquisition, we increased occupancy by 5% and rental rates by 15%. Among the new tenants, two practices totaling 7,390 Square feet came from a direct competitor, each signing a long term lease at the full asking rates.
