JLL is pleased to offer for sale the fee simple interest in Oak Hill Medical Building in Pawtucket, Rhode Island (the “Property” or “Buildings”). The Property is located just north of Providence, the third largest MSA in New England, and within six miles of two Lifespan Health ("Lifespan") hospitals.
Ideally situated along East Avenue, just off the heavily trafficked Interstate 95, the Property consists of two buildings that total 46,645 rentable square feet. 407 and 409 East Avenue were fully renovated in 1998 and share a wall, totaling 37,020 rentable square feet (the “MOB”). 425 East Avenue is a standalone CVS built in 1997 with 9,625 rentable square feet (the “CVS”). The buyer will have the opportunity to subdivide the parcel between the MOB and the CVS to potentially execute an arbitrage sale of one of the two buildings.
The Property offers stable income with 96 percent occupancy and 5.0 years of WALT remaining at below market in-place rents. Lifespan, the dominant health system in the state of Rhode Island, directly occupies or is affiliated with tenants that occupy 87 percent of the MOB. The Property features a synergistic mix of specialties including cardiology, neurology, OB/GYN, rheumatology, geriatrics, psychology, and primary care. Other tenants at the Property provide essential services and have proven to be resilient through the COVID-19 pandemic such as a laboratory, CVS and Citizens Bank.
The offering provides investors stabilized medical office product with desirable health system tenancy and a unique value creation opportunity. The Property is available fee simple and free and clear of any mortgage debt.
Desirable Lifespan and Essential Service Tenancy
- 87 percent of MOB tenants at the Property have a strong affiliation with Lifespan, the dominant health system in Rhode Island with 59.1 percent inpatient market share
- Sought-after and complimentary specialties including cardiology, neurology, OB/GYN, primary care, rheumatology, geriatrics and psychology
- Lifespan had net patient service revenues of $2.1 billion in FY 2019 and is affiliated with the Warren Alpert Medical School of Brown University
- CVS Health (NYSE: CVS) is the largest pharmacy health care provider in the United States by total prescription revenue and maintains an investment grade credit rating of ‘Baa2’ from Moody’s Investors Service
- CVS provides essential services and has seen strong demand for prescriptions and products throughout the COVID-19 pandemic
- East Side Clinical Laboratory is owned by Sonic Healthcare Limited (ASX: SHL), the world’s third largest pathology/laboratory medicine company whose testing expertise has been vital during the COVID-19 pandemic
- Citizens Bank is the 13th largest retail bank in the US and holds an investment grade Baa1 credit rating on its long-term debt from Moody’s Investors Service
Durable Income with Unique Value Creation Opportunity
- 95.6 percent occupancy provides stable income with 5.0 years of WALT remaining
- Value creation opportunity through subdividing the parcel between the CVS and the MOB to achieve terminal cap rate compression
- Opportunity to add value through the lease up of vacant space and the mark-to-market of rents upon rollover
Exceptional Healthcare Demand Drivers in the Local Market
- Growing healthcare and education focused economy representing 30.8 percent of overall employment
- $229.5 million in NIH funding in the Providence region in 2020 alone
- The share of the population 55 years and older is expected to grow from 26.7 percent to 28.0 percent, a desirable demographic shift for the healthcare industry