American Renal Live Case study

Dialysis and warehouse in Augusta, Ga.

Dialysis and warehouse in Augusta, Ga.

American Renal Dialysis Centre in Augusta, Ga.

The acquisition of a single land parcel, containing two separate buildings, a Medical Office Building & Warehouse. Our medical tenant, American Renal is responsible for 86% of the project's income. The warehouse is let by The Pine Straw Store. 

American Renal Associates has an Absolute Triple-Net (NNN) lease on the medical office building facing Telfair Street in which the landlord has no responsibilities. The lease is set to expire at the end of 2025 and has one five-year option and a 10-percent rental increase in 2021. 

The warehouse located behind American Renal Associates is leased by The Pine Straw Store. American Renal Associates began leasing both the medical office and warehouse building in 2001. Upon occupying the building in 2001, American Renal Associates entered into a Moving Agreement with Georgia State Wholesale Florist, who occupied the space at the time, to cover all of its moving expenses ($120,000), emphasising American Renal Associate’s desire for the location. 

In October of 2012 American Renal Associates vacated the warehouse building and the Seller was able to recapture the space by November 2014 with a new lease to the current tenant, The Pine Straw Store. Since that time The Pine Straw Store has executed an early 5-Year renewal that commences October 1, 2017. American Renal Associates also executed an early 10-year renewal in January of 2016. As part of the American Renal Associates lease renewal, the landlord provided a $115,370 tenant improvement allowance which the tenant used to renovate the interior of the medical building. The entire parking lot that serves both buildings was also replaced in 2016.

Deal Parameters:

  • $1.916 MILLION ACQUISITION PRICE

  • 9 YEARS REMAINING ON NNN LEASE (AR)

  • 10% BASE RENT ESCALATIONS IN 2021

  • $147 000 2018 ANNUAL RENT

  • 7.4% - 9.9% INVESTOR CASH ON CASH OVER 5 YEARS

  • EARLY LEASE EXTENSIONS, REFLECTING TENANT DEMAND