CS1031 MOB AZ I
Long-Term Net Lease.
The 15,286-square-foot property houses a growing medical practice, with a 15-year lease that commenced in May 2021. Other lease terms include two, five-year renewal options and 2.5% annual rental increases. The tenant is responsible for operating expenses, insurance and real estate taxes. The practice’s founding physician personally guarantees rental payments (subject to waiver, beginning in lease year four, based on satisfaction of operating performance goals).
Excellent In-Fill Location Situated at the intersection of West Elliot Road and North Cooper Road in the thriving town of Gilbert, Arizona, the purpose-built facility is visible to more than 45,000 cars per day.1 The location is within a five-mile radius of 400,000 residents.2 Gilbert is a suburb of Phoenix, which has been ranked as the top metropolitan area for net migration in the United States for three consecutive years.3
Growing Medical Practice. The tenant, Comprehensive Integrated Care (CIC), provides a team of endovascular and vein specialists who partner with area cardiologists and primary care doctors to provide minimally invasive procedures when traditional surgery is not an option.4 The purpose-built Gilbert facility supports CIC’s expanding practice, while serving as a flagship clinic and surgical center.
Essential Medical Asset Health spending in the United States increased by 4.6% in 2019, to reach $3.8 trillion, or 17.7% of the gross domestic product (GDP).5 As such, medical office properties are in high demand, especially in growing and thriving Sun Belt states. Medical properties benefit from multiple demographic and economic forces, including an aging population, increased medical insurance coverage and costreduction strategies by insurance companies favoring outpatient facilities.6
Sources: 1. ©2021 Kalibrate Technologies (Q1 2021), Traffic Count May – Close Up – 6/14/21
2. U.S. Census Bureau, Census 2020 Summary File Esri forecasts for 2020 and 2025, Executive Summary – 6/14/21
*“Tax-Advantaged” refers to any type of investment that is either exempt from taxation, tax-deferred, or that offers other types of tax benefits. Capital Square is a national sponsor of investment opportunities that can provide such benefits via our 1031 exchange and opportunity zone offerings, among others. Securities offered through WealthForge Securities, LLC, the managing broker-dealer for the CS1031 MOB AZ I, DST offering and member FINRA/SIPC. Capital Square and WealthForge are not affiliated.
Consider the Risks: An investment in the Interests involves substantial investment and tax risks, including, without limitation, the following risks:
- Past performance is not a guarantee of future results.
- The economic success of the Interests will depend upon the results of operations of the Property. Fluctuations in vacancy rates, rent schedules, and operating expenses can adversely affect operating results or render the sale or refinancing of the Property difficult or unattractive.
- The Master Tenant’s capitalization is supported solely by the cash flow from the underlying tenant lease. The Sponsor is not under any obligation to contribute capital to the Master Tenant.
- No assurance can be given that future cash flow will be sufficient to make the debt service payments on any borrowed funds and also cover capital expenditures or operating expenses.
- No assurance can be given that Beneficial Owners of Interests will realize a substantial return (if any) on their investment or that they will not lose their entire investment in the Trust.
- There are various risks associated with owning, financing, operating, and leasing commercial properties in Arizona.
- The Interests are not freely transferable by the Beneficial Owners.
- The Interests do not represent a diversified investment.
- Beneficial Owners must completely rely on the Master Tenant to collect the rent and operate, manage, lease, and maintain the Property.
- The Beneficial Owners have no voting rights with respect to the management or operations of the Trust or in connection with the sale of the property.
- There are various conflicts of interest among the Trust, the Sponsor, the Signatory Trustee, and their Affiliates.
- The Interests are illiquid.
- There are tax risks associated with an investment in the Interests.
- There are risks related to competition from properties similar to and near the property.
- There may be environmental risks related to the property.
- Private Placements are speculative.
Medical office clinic and surgery center with long-term triple net lease in the Phoenix MSA