Cleveland Clinic Family Health & Surgery Center Ground Lease

Strongsville, OH

Cleveland Clinic Family Health & Surgery Center Ground Lease

16761 Southpark Center, Strongsville, OH 44136

Offering Summary

  • Status: active
  • Price: $15,740,000
  • CAP Rate: 5.00%
  • GLA: 166,254 SF
  • Net Operating Income: $787,053
  • Price/SF: $94
  • Year(s) Built: 1998
  • Lot Size (Acres): 9.53 Acres
  • Lease Type: Absolute NNN Ground Lease
  • Cleveland Clinic Health & Surgery Center with 7 Years Remaining on Original 30-Year Absolute NNN Ground Lease in Strongsville, OH (Cleveland MSA)
  • Premier Healthcare Credit Tenant: Cleveland Clinic Foundation – High Investment-Grade Credit Rating of S&P “AA” and Moody’s “Aa2”
  • Built-to-Suit in 1998 – 23 Year Operating History at Site
  • Cleveland Clinic is Consistently Ranked the #2 Hospital System in the World – Internationally Known Healthcare Brand and One of the Top Names in Healthcare, Period
  • 15% Rent Increase in Two Years Takes CAP Rate to 5.75% at List Price
  • Offered Well Below Replacement Cost – Value of the Leasehold Improvements Far Exceeds Offering Price Which Equates to $94/SF on Building GLA
  • Huge 15% Rent Increases Every 5 Years Throughout Base Term and In Options Provide Meaningful NOI Growth and Inflation Hedge
  • Strong Operational Commitment to Location – Outpatient Surgery, Advanced Imaging (CT/MRI), Oncology Pharmacy & Infusion, Pharmacy, Urgent Care & Numerous Medical Specialties Offered On-Site Making Facility Mission-Critical to Tenant’s Business
  • Tenant’s Massive Investment in Leasehold Improvements, Fixtures & Equipment as well as Control of 9.53 Acres of Prime Highway-Adjacent Real Estate Afforded via the Purchase Option Gives Tenant Strong Incentives to Continue to Renew Ground Lease for Decades to Come
  • Ongoing Tenant Investment into Upgrading Facility to Keep it Modern/Class “A”: Major Renovations Over the Past 8 Years in Adding New Units (Allergy, Urgent Care, Oncology Infusion), Relocating or Expanding Existing Units, General Renovations, and Replacing Capital Items
  • Ideal Convenience-Oriented Location – Highway Exit Real Estate (I-71, 80,000 VPD) with Direct Frontage & Visibility to Route 82 (50,000 VPD) and Multiple Access Points
  • Infill Location with Significant Barriers to Entry to Any New Large-Scale Development or Redevelopment Mitigating Any Relocation Risk
  • Located within Primary Commercial Corridor Serving the Cleveland West-Side Suburbs of Strongsville, North Royalton, Broadview Heights, Brecksville, Berea, Columbia Station, and More
  • Key Geographic Location for Cleveland Clinic – Nearest Facilities of Comparable Size/Scope of Services are in Brunswick (6.8-Mile Drive South) and Independence (18.2-Mile Drive Northeast)
  • Absolute NNN Lease with Minimal Landlord Operational Responsibilities – All Operating Expenses Reimbursed, Landlord Only Responsible for Coordination of CAM but Compensated with 15% Admin Fee
  • Shadowed by 1.65 Million SF SouthPark Mall with 7.8 Million Annual Customer Visits (#2 Busiest Retail Destination in Cleveland) – Mall Anchors the Larger Route 82 Commercial Corridor
    Cleveland MSA – Home to a Population of Over 2 Million, Part of the Larger Cleveland-Akron-Canton CSA with a Population of 3.5 Million

Craig Fuller

Senior Managing Director