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Single-Tenant Office Medical

Methodist Le Bonheur Healthcare - Investment Grade Health System

1255 S Germantown Rd, Germantown, TN 38138

Listing Price: $3,500,000

Cap Rate
6.58%
Tenant Name
Methodist Le Bonhuer Healthcare
Years Remaining On Lease
3.7
Guarantor
Corporate Guarantee
Rentable SF
9,230
Lease Type
Absolute Net
Rent Per Square Feet
$24.81

Investment Overview

Marcus and Millichap is pleased to present the fee-simple ownership interest in 1255 South Germantown Road, located in Germantown, TN. This 9,230-square foot medical facility is 100 percent occupied by Le Bonheur Children’s Hospital - Memphis Pediatrics, a wholly owned subsidiary of Methodist Le Bonheur Healthcare. Methodist Le Bonheur Healthcare boasts an “A1” credit rating according to Moody’s and is comprised of 7 hospitals, multiple outpatient and diagnostic centers, and a growing network of physician practices. This facility was delivered in 2004, with current ownership recently investing over $77,000 in tenant improvements including but not limited to: Brand new parking lot light fixtures, interior painting (waiting rooms, patient entrance, select common areas), new monument sign, carpet replacement and repair, new bathroom tile and sealing, and new flooring in select areas. Memphis Pediatrics operates the site under a rare, highly sought-after Absolute NNN lease structure with 4-years remaining and two, seven-year renewal options on the back end. The lease features annual 1.5 percent rental increases, providing an excellent hedge against inflationary pressure. The site is strategically positioned along major thoroughfare S. Germantown Road, seeing over 47,000 vehicles per day and near the hard signalized intersection of S Germantown Road and Wolf River Blvd. The subject property is situated in a strong-infill location with limited surrounding land to develop similar-like medical office buildings. The subject property is immediately adjacent to an Office Depot and Walgreens and surrounded by a plethora of other national retailers such as Starbucks, Chick-fil-A, Taco Bell; this is a dense retail corridor boasting excellent visibility, foot traffic, and ample parking. Additionally, this property is only 1.9 miles away from the Methodist Le Bonheur Germantown Hospital (319-bed facility). The subject property is located within the East Tennessee Memphis Submarket. This Submarket has some of the highest asking rents in the metro. Due to the strong market fundamentals, this submarket typically contains the highest asset pricing and sales volume in Memphis. In fact, both figures set records in 2019 thanks to more than 10 percent of the submarket's inventory trading hands. The East Submarket is one of the premier suburban office nodes in Memphis. Employers are drawn to its high concentration of 4 & 5-Star space, as well as the educated workforce that resides in the area. These factors created an environment conducive to strong vacancy compression in earlier years, which helped lure developers to this submarket. It has seen the highest level of construction in Memphis since 2015, with over 600,000 SF in deliveries. This submarket typically generates steady interest from investors looking to deploy capital in the metro thanks to its newer stock and lower vacancy rates. This property offers an investor the opportunity to acquire a rare, Absolute-NNN leased medical facility, that is bound by the parent guarantee of Methodist Le Bonheur Healthcare. The state of Tennessee is a desirable state to invest in as there are no state income taxes.

Investment Highlights

  • Methodist Le Bonheur Healthcare is the Guarantor on the Lease Investment Grade Tenant that Boasts an "A1" Credit Rating According to Moody's)
  • The Tenant Has Occupied This Property For Nearly 10 Years- Ownership Invested Over $77,000 in Tenant Improvements During The Most Recent 7 Year Extension
  • Rare Absolute-NNN Lease Structure Translating to close to ZERO Landlord Responsibilities

Exclusively Listed By

Broker of Record

  • Jody McKibben

    First Vice President/Regional Manager

    (615) 997-2800

    License(s) TN: 307629

    Tennessee

Financing By

Single-Tenant Office Medical

Methodist Le Bonheur Healthcare - Investment Grade Health System

Listing Price: $3,500,000

Cap Rate
6.58%
Tenant Name
Methodist Le Bonhuer Healthcare
Years Remaining On Lease
3.7
Guarantor
Corporate Guarantee
Rentable SF
9,230
Lease Type
Absolute Net
Rent Per Square Feet
$24.81

Investment Highlights

  • Methodist Le Bonheur Healthcare is the Guarantor on the Lease Investment Grade Tenant that Boasts an "A1" Credit Rating According to Moody's)
  • The Tenant Has Occupied This Property For Nearly 10 Years- Ownership Invested Over $77,000 in Tenant Improvements During The Most Recent 7 Year Extension
  • Rare Absolute-NNN Lease Structure Translating to close to ZERO Landlord Responsibilities

Investment Overview

Marcus and Millichap is pleased to present the fee-simple ownership interest in 1255 South Germantown Road, located in Germantown, TN. This 9,230-square foot medical facility is 100 percent occupied by Le Bonheur Children’s Hospital - Memphis Pediatrics, a wholly owned subsidiary of Methodist Le Bonheur Healthcare. Methodist Le Bonheur Healthcare boasts an “A1” credit rating according to Moody’s and is comprised of 7 hospitals, multiple outpatient and diagnostic centers, and a growing network of physician practices. This facility was delivered in 2004, with current ownership recently investing over $77,000 in tenant improvements including but not limited to: Brand new parking lot light fixtures, interior painting (waiting rooms, patient entrance, select common areas), new monument sign, carpet replacement and repair, new bathroom tile and sealing, and new flooring in select areas. Memphis Pediatrics operates the site under a rare, highly sought-after Absolute NNN lease structure with 4-years remaining and two, seven-year renewal options on the back end. The lease features annual 1.5 percent rental increases, providing an excellent hedge against inflationary pressure. The site is strategically positioned along major thoroughfare S. Germantown Road, seeing over 47,000 vehicles per day and near the hard signalized intersection of S Germantown Road and Wolf River Blvd. The subject property is situated in a strong-infill location with limited surrounding land to develop similar-like medical office buildings. The subject property is immediately adjacent to an Office Depot and Walgreens and surrounded by a plethora of other national retailers such as Starbucks, Chick-fil-A, Taco Bell; this is a dense retail corridor boasting excellent visibility, foot traffic, and ample parking. Additionally, this property is only 1.9 miles away from the Methodist Le Bonheur Germantown Hospital (319-bed facility). The subject property is located within the East Tennessee Memphis Submarket. This Submarket has some of the highest asking rents in the metro. Due to the strong market fundamentals, this submarket typically contains the highest asset pricing and sales volume in Memphis. In fact, both figures set records in 2019 thanks to more than 10 percent of the submarket's inventory trading hands. The East Submarket is one of the premier suburban office nodes in Memphis. Employers are drawn to its high concentration of 4 & 5-Star space, as well as the educated workforce that resides in the area. These factors created an environment conducive to strong vacancy compression in earlier years, which helped lure developers to this submarket. It has seen the highest level of construction in Memphis since 2015, with over 600,000 SF in deliveries. This submarket typically generates steady interest from investors looking to deploy capital in the metro thanks to its newer stock and lower vacancy rates. This property offers an investor the opportunity to acquire a rare, Absolute-NNN leased medical facility, that is bound by the parent guarantee of Methodist Le Bonheur Healthcare. The state of Tennessee is a desirable state to invest in as there are no state income taxes.

Exclusively Listed By

Broker of Record

  • Jody McKibben

    First Vice President/Regional Manager

    (615) 997-2800

    License(s): TN: 307629

    Tennessee

Financing By

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