Terrace Park Professional Center - Stan Johnson Company

NET LEASED INVESTMENT OFFERINGCONFIDENTIAL DISCLAIMERThis Confidential Memorandum has been prepared by Stan Johnson Company (“SJC”) and is being furnished to you solely for the purpose of your review of the commercialproperty located at 4480 Utica Ridge Road, Bettendorf, IA (the “Property”). The material contained in this Offering Memorandum shall be used for the purposes of evaluating theProperty for acquisition and shall not be used for any purpose or made available to any other person without the express written consent of Stan Johnson Company (“Broker”).By accepting the Confidential Memorandum, you acknowledge and agree that: (1) all of the information contained herein and any other information you will be receiving inconnection with this transaction, whether oral, written or in any other form (collectively, the “Materials”), is confidential; (2) you will not reproduce the Confidential Memorandumin whole or in part; (3) if you do not wish to pursue this matter, you will return this Confidential Memorandum to SJC as soon as practicable together with all other materialsrelating to the Property which you may have received from SJC; and (4) any proposed actions by you which are inconsistent in any manner with the foregoing agreements willrequire the prior written consent of SJC.This Confidential Memorandum has been prepared by SJC, based upon certain information pertaining to the Property and any information obtained from SJC to assistinterested parties in making their own evaluation of the Property is offered on a no representation or warranty provision other than customary warranties of title and is soldon an “as-is, where-is” basis and with all faults. The material and transaction does not purport to be all inclusive. This Confidential Memorandum contains descriptive materials,financial information and other data compiled for the convenience of parties interested in the Property. The Materials are being delivered by SJC to prospective investors withthe understanding that it is not all inclusive and that it is qualified in its entirety by independent investigation by prospective investors of those matters which they deemappropriate in evaluating this offering without reliance upon SJC, the Broker or any of their respective affiliates or any of the information set out in the Materials. Neither SJC, theBroker, nor any of their respective affiliates have independently verified any of the information contained herein or in any of the Materials, and no representations or warrantiesas to the accuracy or completeness thereof or of any other kind whatsoever are made or intended and none should be inferred.SJC, for itself and its affiliates of the Property, expressly disclaim any and all liability for statements or representations, express or implied, contained herein or for omissions fromthe Materials or for any other written, oral or other format of communication transmitted to a prospective investor in the course of its evaluation of the proposed transaction. Allsummaries and discussions of documentation and/or financial information contained herein are qualified in their entirety by reference to the actual documents and/or financialstatements, which upon request may be made available. The terms and conditions described herein are subject to change without notice.This Confidential Memorandum does not constitute an offer to accept any investment proposal but is merely a solicitation of interest with respect to the investment describedherein. The Confidential Memorandum does not constitute an offer of security. The investment described herein may be financed or withdrawn from the market, without priornotice. By accepting this Confidential Memorandum you agree to release SJC and hold it harmless from any kind of claim, expense, or liability arising out of your discovery orpurchase of the Property. SJC reserves the right to request the return of the Materials at any time. Ownership of the Property reserves the right to negotiate with one or moreprospective investors at any time.Stan johnson company | Tulsa office | 918.494.2690 | PAGE 2

NET LEASED INVESTMENT OFFERINGInvestment overviewSection IInvestment Highlights | Rent Roll | Cash Flow | Lease AbstractStan johnson company | Tulsa office | 918.494.2690 | PAGE 3

NET LEASED INVESTMENT OFFERINGINVESTMENT HIGHLIGHTSSubject PropertyOFFERED EXCLUSIVELY BYToby Scrivner | Directortscrivner@stanjohnsonco.comJeff Matulis | Directorjmatulis@stanjohnsonco.comKaren Vinsko | Associatekvinsko@stanjohnsonco.comStan Johnson Company6120 S. Yale Ave | Suite 813Tulsa, Oklahoma 74136P: 918.494.2690 | F: 918.494.2692www.stanjohnsonco.comPurchase Price: $13,435,000Cap Rate: 7.25%Stan Johnson Company is pleased to offer for saleto qualified investors an attractive medical officeproperty attached to Trinity Bettendorf Hospital, theonly short term acute care hospital in Bettendorf, IA.Trinity and its affiliated entities occupy 74% ofthe leased space. Trinity is part of the Iowa HealthSystem, which consists of 15 acute care hospitals, 200physician clinics, 12 community network hospitals,7 home care locations throughout Iowa. The IowaHealth System carries an “A” Rating with S&P.The subject property is located adjacent to Interstate74 at the cross streets of Utica Ridge Road and CrowCreek Road (48,010 VPD).Bettendorf is located within the Quad CitiesMetropolitan Area. This metropolitan area has anestimated population of 381,342 as of 2011.• Over 92% occupancy in an attractive 59,615SF medical office building attached to TrinityBettendorf Hospital• Triple Net Leases - Landlord shall be responsiblefor the roof and structure and reimbursed formanagement, taxes, insurance and common areamaintenance• Attractive annual 2.82% rental increases• Iowa Health System reported a credit rating of “A”with S&P.• 74% occupancy by Trinity Medical Center/IowaPhysicians• Synergistic tenant mix including OBGYN, Cardiac,Nephrology, Pediatrics and General PracticeStan johnson company | Tulsa office | 918.494.2690 | PAGE 4

NET LEASED INVESTMENT OFFERINGrent rollLease TermRental RatesSuite Tenant Square Feet Pro Rata Begin End Begin Annual PSF Lease Type108 Iowa Physicians 1,871 3.14% Jun-05 Oct-16 Current $33,659 $17.99 NNNNov-2013 $34,595 $18.49Nov-2014 $35,568 $19.01Nov-2015 $36,578 $19.541120 Iowa Physicians 4,544 7.62% Jul-11 Aug-17 Current $91,107 $20.05 NNNSep-2013 $93,652 $20.61Sep-2014 $96,287 $21.19Sep-2015 $99,014 $21.78Sep-2016 $101,786 $22.391140 Iowa Physicians 8,469 14.21% Jun-09 Jun-18 Current $156,677 $18.50 NNNMay-2013 $161,080 $19.02May-2014 $165,569 $19.55May-2015 $170,142 $20.10May-2016 $174,885 $20.66May-2017 $179,712 $21.24May-2018 $184,709 $21.832230 Iowa Physicians 5,710 9.58% Jul-12 Feb-14 Current $121,452 $21.27 NNNMar-2013 $124,878 $21.872236 Iowa Physicians 3,248 5.45% May-12 Apr-16 Current $48,720 $15.00 NNNApr-2013 $56,840 $17.50Apr-2014 $58,464 $18.00Apr-2015 $60,088 $18.50120 Metro MRI Center L.P. 2,931 4.92% Apr-04 Apr-14 Current $62,313 $21.26 NNNMay-2013 $64,072 $21.862240 Orthopaedic Specialist 3,190 5.35% Nov-04 Oct-13 Current $65,969 $20.68 NNN1130 Quad Cities Kidney Center 1,864 3.13% Nov-04 Oct-14 Current $39,629 $21.26 NNNNov-2013 $40,747 $21.86102 Trinity Medical Center 4,611 7.73% Jul-12 Feb-14 Current $98,076 $21.27 NNNMar-2013 $100,843 $21.87Stan johnson company | Tulsa office | 918.494.2690 | PAGE 5

NET LEASED INVESTMENT OFFERINGrent roll (Continued)Lease TermRental RatesSuite Tenant Square Feet Pro Rata Begin Lease End TermBegin Annual Rental Rates PSF Lease Type140 Trinity Medical Center 1,745 2.93% Jul-07 Jul-15 Current $35,040 $20.08 NNNAug-2013 $36,017 $20.64Aug-2014 $37,064 $21.22160 Trinity Medical Center 3,530 5.92% Dec-06 Dec-16 Current $61,775 $17.50 NNNJan-2013 $63,505 $17.99Jan-2014 $65,270 $18.49Jan-2015 $67,070 $19.01Jan-2016 $68,941 $19.54110 Trinity Medical Center 4,648 7.80% Mar-09 Feb-14 Current $98,863 $21.27 NNNMar-2013 $101,605 $21.862222 Trinity Medical Center 2,239 3.76% Feb-06 Dec-17(Pending)Current $42,541 $19.00Jan-2014 $43,728 $19.53Jan-2015 $44,959 $20.08Jan-2016 $46,213 $20.64Jan-2017 $47,512 $21.22NNN2224 Trinity Medical Center 3,658 6.14% Mar-04 Feb-14 Current $77,806 $21.27Mar-2013 $80,000 $21.871124 Trinity Surgicals Partners 2,950 4.95% Jun-08 Dec-17 Current $51,625 $17.50 NNNJan-2014 $53,071 $17.99Jan-2015 $54,546 $18.49Jan-2016 $56,080 $19.01Jan-2017 $57,643 $19.541100 VACANT 2,222 3.73%2232 VACANT 2,185 3.67%Occupied SqFt 55,208 92.61%Available SqFt 4,407 7.39%Total SqFt 59,615 100.00%Stan johnson company | Tulsa office | 918.494.2690 | PAGE 6

NET LEASED INVESTMENT OFFERINGCash FlowPer SQ. FT.Year 1Dec-2013Year 2Dec-2014Year 3Dec-2015Year 4Dec-2016Year 5Dec-2017Year 6Dec-2018Year 7Dec-2019Year 8Dec-2020Year 9Dec-2021Year 10Dec-2022INCOMEBase Rental Revenue $18.58 $1,107,423 $1,091,208 $1,150,326 $1,228,243 $1,269,127 $1,307,791 $1,340,762 $1,376,503 $1,417,136 $1,455,434Absorption & Turnover Vacancy (0.09) (5,184) (39,035) (2,983) (8,974) (14,517) (31,067) (44,294) (7,695) (14,529) (16,472)Total Base Rental Revenue 18.49 1,102,239 1,052,173 1,147,343 1,219,269 1,254,610 1,276,724 1,296,468 1,368,808 1,402,607 1,438,962Expense Reimbursements 11.80 703,255 699,125 771,261 817,297 834,736 845,478 858,968 905,721 924,552 947,191GROSS RENTAL INCOME 30.29 1,805,494 1,751,298 1,918,604 2,036,566 2,089,346 2,122,202 2,155,436 2,274,529 2,327,159 2,386,153General Vacancy Loss (93,096) (93,303) (90,676) (76,596) (65,693) (106,416) (102,555) (103,659)TOTAL INCOME 30.29 1,805,494 1,751,298 1,825,508 1,943,263 1,998,670 2,045,606 2,089,743 2,168,113 2,224,604 2,282,494EXPENSESUtilities 1.86 111,028 113,870 116,785 119,775 122,841 125,986 129,211 132,519 135,912 139,391Maintenance 2.59 154,494 158,449 162,505 166,665 170,932 175,308 179,796 184,399 189,119 193,961Janitorial 0.41 24,214 24,834 25,470 26,122 26,790 27,476 28,180 28,901 29,641 30,400Insurance 2.61 155,488 159,468 163,551 167,738 172,032 176,436 180,953 185,585 190,336 195,209Gen & Admin 0.18 10,724 10,999 11,280 11,569 11,865 12,169 12,480 12,800 13,127 13,464Taxes 3.81 227,000 232,811 238,771 244,884 251,153 257,582 264,176 270,939 277,875 284,989Management Fee 1.13 67,491 69,219 70,991 72,808 74,672 76,584 78,544 80,555 82,617 84,732Office Expense 0.00 249 255 262 269 275 283 290 297 305 313Unrecoverable Expenses 0.07 4,341 4,452 4,566 4,683 4,803 4,926 5,052 5,181 5,314 5,450Tenant Direct Expenses 0.13 8,040 8,246 8,457 8,673 8,895 9,123 9,357 9,596 9,842 10,094Ground Rent 1.15 68,366 68,366 68,366 68,366 68,366 68,366 68,366 68,366 68,366 68,366TOTAL EXPENSES 13.95 831,435 850,969 871,004 891,552 912,624 934,239 956,405 979,138 1,002,454 1,026,369NET OPERATING INCOME 16.34 974,059 900,329 954,504 1,051,711 1,086,046 1,111,367 1,133,338 1,188,975 1,222,150 1,256,125CAPITAL COSTSTenant Improvements 0.35 20,735 156,049 100,797 123,232 57,929 100,443 186,551 45,053 43,027 80,729Leasing Commissions 0.19 11,348 85,455 20,671 33,169 31,779 55,133 102,459 24,759 23,659 44,417Capital Reserves 0.10 5,962 6,111 6,263 6,420 6,580 6,745 6,914 7,086 7,264 7,445TOTAL CAPITAL COSTS 0.64 38,045 247,615 127,731 162,821 96,288 162,321 295,924 76,898 73,950 132,591OPERATING CASH FLOW $15.70 $936,014 $652,714 $826,773 $888,890 $989,758 $949,046 $837,414 $1,112,077 $1,148,200 $1,123,534Stan johnson company | Tulsa office | 918.494.2690 | PAGE 7

NET LEASED INVESTMENT OFFERINGTenant OverviewTerrace Park Professional Center is physically connected to the 139-bed Trinity Bettendorf Hospital,connecting the region’s top doctors, diagnosis services and treatment facilities in one place. The 59,615 SFthree-story medical office building, where many of the physicians keep medical offices, allows Iowa patientsto coordinate visits to one location, providing a unique level of convenience and professional resources inBettendorf. Intentionally planned to deliver the highest quality healthcare in a patient-centered environment,the medical office building has direct access to the hospitals services and amenities, such as: urgent care,ambulatory surgery, a cardiopulmonary facility, cancer treatment center, radiology, laboratory and pharmacy.Trinity Bettendorf - the newest hospital in the Quad-Cities, was built in 2004, and is licensed for 139 beds. TrinityBettendorf offers spacious rooms and upscale amenities to aide in the patient healing process. The campus offersthe following services and diagnostics to the community: five state-of-the-art surgical suites for inpatient and outpatient medical services, Medical/Surgical Intensive Care Unit,outpatient diagnostic services such as endoscopy, IV infusion and pain clinic, full service emergency department, cardiac cath lab for diagnostic and interventional procedures,women’s imaging center including digital mammography, occupational physical and speech therapy, Sleeping Disorders Lab, Trinity BirthPlace with 24-hour neonatal coverage,wound care and hyperbaric medicine center and Pathway Hospice residential facility with 11 beds. For more information please visit: www.trinityqc.com.Trinity is a regional integrated health care delivery system including four full-service hospitals in Rock Island and Moline, Illinois and Bettendorf and Muscatine, Iowa with a totalof 584 licensed inpatient beds. Trinity’s hospitals, clinics, home health care agency, mental health center, health sciences college and residency program employ more than3,000 employees. Together, Trinity is working toward physician-driven, patient-centered care to achieve the vision of delivering the best outcome for every patient, every time.Trinity is a senior affiliate of Iowa Health System, the state’s first and largest integrated health system that serves the health care needs of one-in-three Iowans. Trinity’s leadershipin quality and service excellence has helped earn Trinity top industry awards for patient safety, excellent outcomes and cost-control. For the second time, Trinity was selected2011 as a Thomson Reuters 100 Top Hospital, the only Quad-City hospital to earn this distinction. Trinity was the first in the region to offer the most advanced technology totreat cancer and spine disorders including its True Beam radiotherapy and spine navigation systems. Year-in and year-out, Trinity is recognized nationally for excellence in heartcare. Trinity was recently named one of the 2013 Healthgrades America’s 100 Best Hospitals for Cardiac Care and Coronary Intervention. The Moline campus was also rated a2012 Consumer Choice Best Hospital for Overall Quality, Best Doctors and Best Nurses. For more information please visit: www.trinityqc.com.Stan johnson company | Tulsa office | 918.494.2690 | PAGE 10

NET LEASED INVESTMENT OFFERINGTenant Overview (Continued)Iowa Health System is one of the nation’s most integrated health systems. Throughrelationships with 26 hospitals in metropolitan and rural communities and more than200 physician clinics, IHS provides care throughout Iowa and Illinois.Iowa Health System entities employ more than 24,000 employees, working towardinnovative advancements to deliver the Best Outcome for Every Patient Every Time. IHSalso provides a multitude of community benefit programs and services to improve thehealth of people in its communities.IHS is also the sole corporate member of IPCMF d/b/a Iowa Health Physicians, a grouppractice which employs approximately 335 full time equivalent physicians in severalmarkets in which the System operates Hospitals. IHS has been the sole corporate memberof IPCMF since 1993, however, as a part of the consolidation of the System’s employedphysicians into IPCMF and as a part of IHS becoming a physician driven organization,IPCMF is also recognized as a Senior Affiliate.ST. LUKE’STRINITYMETHODISTWESTALLENFINLEYST. LUKE’S/JONESST. LUKE’STRINITY MOLINETRINITY BETTENDORFTRINITY MUSCATINETRINITY ROCK ISLANDMETHODISTLUTHERANBLANK CHILDREN’SIHS is the sole corporate member of InTrust d/b/a Iowa Health Home Care, which provideshospice and palliative care, home medical equipment, nursing services, pharmacy andskilled home infusion services, and emergency response services from locations in themarket areas of Iowa Health - Des Moines, TRHS (Quad Cities), Allen Health Systems, Inc.(Waterloo), Trinity Health Systems, Inc. (Fort Dodge), and St. Luke’s Health System, Inc.(Sioux City).Each year, through more than 3.1 million patient visits, IHS hospitals and clinics providea full range of care to patients and families. With annual revenues of $2.8 billion, IHS isthe fifth largest nondenominational health system in America and provides communitybenefit programs and services to improve the health of people in its communities. Formore information please visit: www.ihs.org.Senior AffiliateHospital LocationsCommunityNetwork HospitalsCommunity Served bymore than 160 PhysicianClinicsStan johnson company | Tulsa office | 918.494.2690 | PAGE 11

NET LEASED INVESTMENT OFFERINGLOCATION OVERVIEWBettendorf is a city in Scott County, Iowa, UnitedStates. Bettendorf is the fifteenth largest city in theU.S. state of Iowa and the fourth largest city in the“Quad Cities”. As of the 2010 United States Census thepopulation grew to 33,217.saving hundreds of thousands of dollars for localcitizens. Two K-12 school districts, as well as an areacommunity college, link within their own systems andto the internet using the city owned fiber network,again saving significant tax dollars.Bettendorf, is one of the Quad Cities (population381,342), and is within 175 miles of Chicago andDes Moines, within 360 miles of Kansas City andMinneapolis, 300 miles from Omaha and 250 milesfrom St. Louis. In 2011, Bettendorf was namedAmerica’s 95th Best Town by CNNMoney.Bettendorf is one of a few cities in the world to havea city-wide fiber optic network available for businessuse.Bettendorf is a proud recipient of the IntelligentCommunity Forum’s - Smart21 IntelligentCommunities Award for 2007. This honor recognizesBettendorf as one of the world’s top communities forusing broadband telecommunications as a meansfor enhancing economic development and socialprogress.Businesses have access to multi-redundant gigabitethernet boasting the ability to deliver fiberdirectly into their buildings. All City buildingsare interconnnected via the fiber optic networkSome of the medical care providers in Bettendorfincuded: Trinity Medical Center - Terrace, GenesisPhysical Therapy, Trinity Internal Medicine, RadiationTherapy Center, Trinity Hospital Emergency Roomand Genesis Medical Center.Trinity BettendorfBettendorf, IARanking Employer Number ofEmployees1 Alcoa 19002 Isle of Capri Casinos 5983 Bettendorf Community 594School District4 Pleasant Valley School 435District5 Eastern Iowa Community 402College District6 Hy-Vee 3757 Genesis Health System 3158 City of Bettendorf 3139 Sivyer Steel 30910 Trinity Bettendorf 25511 Mississippi Bend Area 222Education Agency12 Schebler 15613 The Lodge Hotel andConference Center76Stan johnson company | Tulsa office | 918.494.2690 | PAGE 13

NET LEASED INVESTMENT OFFERINGArea mapInternal MedicinePhysical TherapyRadiation TherapyCenterIllini CampusStan johnson company | Tulsa office | 918.494.2690 | PAGE 14

NET LEASED INVESTMENT OFFERINGAerial mapI-74 ( 32,700 VPD)Utica Ridge Road ( 12,000 VPD)NTanglefoot Lane ( 7,7000 VPD)Crow creek road ( 3,310 VPD)Stan johnson company | Tulsa office | 918.494.2690 | PAGE 15

NET LEASED INVESTMENT OFFERINGDemographics4480 UTICA RIDGE RD, BETTENDORF, IA 52722 0 - 1 Miles % 0 - 3 Miles % 0 - 5 Miles %Population2018 Projection 6,128 56,808 135,1642013 Estimate 6,098 54,928 131,5792010 Census 6,084 53,664 129,2132000 Census 6,173 51,255 126,945Growth 2000 - 2010 -1.44% 4.70% 1.79%Households2018 Projection 2,325 24,534 56,1992013 Estimate 2,293 23,533 54,0772010 Census 2,271 22,827 52,5392000 Census 2,229 21,258 50,660Growth 2000 - 2010 1.88% 7.38% 3.71%2013 Est. Population by Single Classification Race 6,098 54,928 131,579White Alone 5,699 93.46 48,245 87.83 107,367 81.60Black or African American Alone 93 1.53 2,877 5.24 11,548 8.78American Indian and Alaska Native Alone 7 0.11 142 0.26 403 0.31Asian Alone 116 1.90 1,539 2.80 2,996 2.28Native Hawaiian and Other Pacific Islander Alone 0 0.00 35 0.06 58 0.04Some Other Race Alone 55 0.90 673 1.23 4,392 3.34Two or More Races 128 2.10 1,418 2.58 4,814 3.662013 Est. Average Household Income $95,022 $78,781 $63,8262013 Est. Median Household Income $77,709 $57,502 $45,195Stan johnson company | Tulsa office | 918.494.2690 | PAGE 16

NET LEASED INVESTMENT OFFERINGOFFERED EXCLUSIVELY BYToby Scrivner | Directortscrivner@stanjohnsonco.comJeff Matulis | Directorjmatulis@stanjohnsonco.comKaren Vinsko | Associatekvinsko@stanjohnsonco.comStan Johnson Company6120 S. Yale Ave | Suite 813Tulsa, Oklahoma 74136P: 918.494.2690 | F: 918.494.2692www.stanjohnsonco.comSubject PropertyStan johnson company | Tulsa office | 918.494.2690 | PAGE 17