In late 2013, Flagship Healthcare Real Estate Fund acquired Swain Medical Park, an 11,160 square foot medical office building. The property is located adjacent to Swain Medical Center in Bryson City, North Carolina and is 100% leased by Swain Community Hospital.
As capital allocation became increasingly important, the hospital was forced to prioritize various strategic initiatives, including repurposing space once occupied by a pharmacy for additional outpatient services.
Grasping the client’s longer term needs and goals, Brackett Flagship Properties proposed to restructure the lease and fund the renovations to repurpose the unused space to accommodate a new specialty practice.
The hospital’s capital was preserved for a host of planned patient-centric initiatives introduced when Duke LifePoint acquired the hospital shortly after Brackett Flagship Properties’ purchase of the property.
CaroMont Professional Office Building
Gastonia, North Carolina
In 2015 The Flagship team was selected by CaroMont Health to provide space planning, development and construction management services for a new professional office building. The project is planned for the corner of New Hope Road and Court Drive near CaroMont Regional Medical Center. The ±48,000 SF, 2-story facility will be owned by CaroMont Health and 100% occupied by various corporate operations including Finance, Human Resources, and Public Affairs. The building was completed in August of 2017.
The project involved a complex conditional site plan amendment process and the addition of a new signalized intersection.
Flagship Healthcare Properties needed to free up valuable space on the hospital campus for more clinical expansion by bringing multiple departments under one roof in a much more efficient work environment.
Flagship Healthcare Properties was charged with researching, recommending and implementing general office upfit standards for the hospital system and “right size” the new building based on future operations and growth expectations.
Flagship Healthcare Properties managed the land purchase and entitlement process for CaroMont, including negotiations of a complex set of declarations with the seller and neighboring land owners as well as working through a conditional site plan amendment process with the local planning authority.
We successfully assessed more than 10 separate departments in multiple locations on and off the hospital campus to understand each group’s optimal use of space, growth expectations, and interdepartmental synergies. The result was to design a flexible office environment with low operational costs that would improve the employee work environment and satisfaction metrics.
“Brackett Flagship is a very well qualified office development company. However, what really sets them apart is their depth of healthcare knowledge and awareness of sensitivities unique to planning for, and implementing change within the healthcare/hospital culture.” Lee Nester, Director of Property Management for CaroMont Health
Starwood Capital Group
Through an industry contact, Flagship was introduced to Starwood Capital Group, one of the largest institutional real estate investors in the country with assets under management exceeding $60 billion. When Starwood decided to invest in medical real estate, it called on Flagship to assist its efforts in the southeast formulating a bid to purchase an MOB portfolio exceeding $825 million.
We performed cash flow projections, identified and analyzed sales and leasing comps, generated capital spending and replacement cost estimates, modeled operating expense projections, coordinated property tours, and conducted market studies. Particularly helpful to Starwood was the development of a SWOT analysis of each portfolio property and providing an overall understanding of the medical office sector. We revealed six properties with risks that exceeded Starwood’s underwriting standards, resulting in their removal from the portfolio bid.
Upon winning the bid, Starwood selected Flagship to provide property and asset management services for its Southeast U.S. medical real estate assets. Our responsibilities include property management and leasing oversight, property accounting, tenant improvement capital spending management and identifying creative ways to maximize the cash flows and values of each property. For example, through our efforts and supported by local brokers, we successfully leased space beyond one of the property’s static vacancy assumption, thereby creating additional value.
RiverCrest Medical Park
Granite Falls, North Carolina
Since 2013 beginning with the Laurel Park Medical Office Building, Flagship Healthcare Properties has engaged with Caldwell UNC Health Care as a strategic real estate advisor and development partner, and has become a key partner in assisting the Hospital with evaluating and executing on various growth opportunities. In 2014 FHP entered into a development agreement with Caldwell UNC for the phased development of a new satellite campus in Granite Falls, NC. The 6+ acre property will ultimately include roughly 60,000 SF of medical office space anchored by a 20,000 SF surgery center. The first phase, a 25,000 SF medical office building will be anchored by Caldwell UNC Health Care and come online in 2nd quarter of 2017.
Identify a site in southern Caldwell County ideal for the new satellite campus to include outpatient offices and an ambulatory surgery center.
FHP provides capital funding, allowing the hospital to preserve capital and avoid real estate ownership at their preference. Here, FHP was able to structure a multi-parcel ground lease arrangement that allows the hospital to keep long term control of the strategic location while FHP develops, owns and manages new Caldwell UNC Health Care leased buildings.
Provide real estate advisory and support services throughout the hospital’s Certificate of Need process to relocate two operating rooms and one procedure room.
Manage various land entitlement processes including negotiating a declarations agreement with adjacent owners, municipal presentations and conditional site plan approvals.
Flagship Healthcare Properties has successfully assisted Caldwell UNC Health Care with their strategic initiative to enhance market share while contributing to the quality of care in the community.
Flagship Healthcare Properties has worked on behalf of Caldwell UNC Health Care to identify, contract and purchase land for the Hospital to expand into two new territories within their market.
FHP has laid the framework, created a financial plan, and acquired the entitlements for Caldwell UNC to grow their new satellite campus over the next several years.
Carolina Orthopaedic & Sports Medicine
Gastonia, North Carolina
Brackett Flagship Properties was hired on a fee basis to complete this 29,000 square foot development project. Carolina Orthopaedic and Sports Medicine Center is a class A medical office facility representing the first of a 3-phase, 12-acre medical park near CaroMont Health’s main hospital campus. Occupied entirely by Carolina Orthopaedic and Sports Medicine Center, a premier orthopaedic practice, the building consists of exam rooms, administrative offices, classroom, digital X-ray services, physical therapy studio and a psychiatrist suite. Additionally, Brackett Flagship Properties was awarded the property management assignment at project completion.
Prior to BFP becoming involved, the initial project concept and design drawings resulted in a prohibitively high project development cost.
The project required a conditional use permit, potentially creating additional risk and project delays.
BFP conducted a thorough value engineering exercise, reducing project costs without sacrificing scope. Ownership realized total project cost savings in excess of 20%.
We managed the rezoning process including neighborhood meetings to mitigate resistance to the project.
We delivered the project on time and under budget, allowing Carolina Orthopaedic a smooth and predictable relocation from their former leased offices.
Physician’s Plaza of Hendersonville
Physicians Plaza of Hendersonville is an approximately 35,000 SF medical office building located at 100 Springhouse Court in Hendersonville, Tennessee. Flagship Healthcare Properties was engaged as Property Manager by Starwood Capital Group.
The ability to cultivate strong tenant relationships and ensure timely responses to their needs is critical to the overall success of the property. Assuring the client of Flagship’s ability to overcome these challenges as well as those presented by the asset’s location and proximity to the firm’s other managed properties was critical in successfully securing this assignment.
Paramount for our client to ensure success of the asset, Flagship is tasked with reducing building expenses while maintaining the critical services required by the tenants.
Flagship engaged a third party sub-manager local to the area. Under Flagship’s oversight, this local manager interacts with the tenants on a day-to-day basis. Flagship’s regional manager makes quarterly visits to the property cultivating relationships with each tenant. Additionally, Flagship conducts regular practice manager meetings, which promotes a partnership with the tenants and provides essential feedback for improving their tenancy experience.
Expanding on our relationship with national and regional service providers assists with reducing overall expenses of the asset. Flagship also partners with local management companies to leverage their resources and further enhance our efforts.
Lange Eye Institute Medical Office Building
The Villages, Florida
The Lange Eye Institute is a 21,384 square foot medical and professional office building located in The Villages, Florida. The Institute’s prominent location within the surprisingly active retirement community attracts a variety of medical and professional tenants. The Lange Eye Institute is owned fee-simple which is a rarity in the master-planned community of The Villages.
The building was previously owned by an owner-occupant and extensive deferred maintenance was uncovered during the due diligence process.
The Brackett Flagship Properties team worked diligently before the acquisition to identify and reserve for all necessary capital expenditures at the property. Immediately after closing, BFP began to repair and renovate the building, maintaining compliance with both the local authority and ensuring that the building remains an attractive asset for years to come.
North Carolina & South Carolina
Flagship Healthcare Properties was originally engaged by OrthoCarolina in 2011 to manage a medical building they acquired in Matthews, North Carolina. Through excellent service and the hard work and diligence of Flagship’s property management and facility maintenance teams, our relationship with OrthoCarolina expanded to nine properties when they awarded Flagship with additional property management assignments in 2014, 2016 and 2017. Across these facilities, Flagship handles all property management, maintenance, and accounting services. Flagship was also retained on an ongoing basis to collaborate with OrthoCarolina on the regulatory facility compliance oversight and maintenance for the ambulatory surgery center they own and operate.
OrthoCarolina has continued to experience significant growth and expansion. In 2018, Flagship approached OrthoCarolina with the opportunity to become its facility management partner, growing our relationship to 32 properties across both North and South Carolina, a portfolio exceeding 500,000 square feet. With this new, expanded relationship, Flagship has assigned a dedicated property manager, property administrator, and three maintenance engineers.
We are grateful to serve OrthoCarolina as they continue to grow and expand. We are bringing a level of professional facility management to all of their locations that they either lease or own. Our goal is to be their one point of contact for everything facilities related, allowing them to focus their attention on quality patient care.
Lee’s Hill Medical Plaza
In 2014 the Flagship Healthcare Real Estate Fund and its joint venture partner acquired Lee’s Hill Medical Plaza. The 72,098 square foot facility includes a freestanding emergency department operated by Mary Washington Healthcare, a two-hospital, 537-bed acute care system; a diagnostic imaging center; physician office space; and a Department of Veterans Affairs (VA) outpatient clinic.
The building was suffering from low occupancy (only 68% leased), a need for professional property management, and a comprehensive leasing strategy.
The relationship between the radiology group as both landlord and imaging center JV partner with the hospital was limiting the property’s leasing success and complicating the group’s relationship with its co-tenant, Mary Washington Healthcare.
Flagship Healthcare Properties rebranded the property and partnered with a local team to communicate the new ownership’s vision and approach to the market. In less than 12 months, we increased occupancy to 84% with the addition of complementary medical tenants.
Occupancy by the VA will supplement the hospital’s services, driving improved community awareness and higher patient volumes.
Central Piedmont Surgery Center
Asheboro, North Carolina
The Flagship Healthcare Real Estate Fund acquired this state-of-the-art, 7,341 square foot facility in December 2015. Central Piedmont Surgery Center, the building’s sole tenant, is a wholly owned operation of Randolph Hospital. The center has two operating rooms (ORs) and is equipped to handle procedures for general surgery, orthopedics, otolaryngology, urology, podiatry, ophthalmology and gynecology.
The surgery center was designed and built four years prior to acquisition.
The HVAC system was creating excessive humidity and was running inefficiently, thereby generating excessive energy bills and causing surgery cancellations and lost patient revenue.
During due diligence, Flagship observed the system and met with Randolph to better understand their issues.
Randolph waived its right to acquire the property, placing its trust and confidence in Flagship to help them address its issues.
Upon closing, Flagship’s property management team worked expeditiously with a team of engineers to identify, price and recommend a set of alternatives that would meet Randolph Hospital’s strict OR specifications and create a reliable and efficient operating environment.
Harrison Street Capital
Harrison Street Capital acquired three Class A medical office buildings totaling 157,000 square feet in the Midlothian, Virginia market, anchored by a dominant Catholic-based healthcare system. The buildings were acquired from the original development firm, which was retained as property manager.
The original developer subsequently decided to exit the healthcare real estate market, leaving Harrison Street Capital and its properties without qualified staff to properly manage and maintain them.
Harrison Street Capital requested a proposal from Flagship to provide property management, vendor management, operating and capital budget planning, financial reporting and facility maintenance services. Upon selection, we created a 30-60-90 day plan, outlining and prioritizing our transition plan.
Within 30 days, Flagship:
Performed an operational assessment of each property and gained familiarity with the properties’ operating and capital budgets;
Met with each tenant and vendor to fully understand their needs, issues and expectations;
Met with Harrison Street Capital to gain familiarity with its processes and procedures; and
Established our web-based work order entry system, familiarized each tenant with our work order portal and entered all vendor contracts and building information into our system.
Flagship completed a seamless transition that implemented a hands on, day-to-day approach to building operations by hiring a new property manager, employing the existing building engineer and assuming all of the existing vendor contracts
9550 Rocky River Road
Harrisburg, North Carolina
Completed in 2013, 9550 Rocky River Road is a 14,000 RSF two-story multi-tenant medical office building in Harrisburg, North Carolina. The property is phase I of a III phase medical office park on a 4.134 acres of land, which is adjacent to a newly constructed free-standing emergency department operated by Carolinas Healthcare System.
The project involved meeting NCDOT and local municipality demands regarding road improvements and site accessibility.
The Brackett Flagship Properties team worked closely with the NCDOT, the town of Harrisburg, and adjacent property owners to negotiate a shared driveway and shared maintenance agreement. These efforts produced an ideal entrance for the property, satisfying the NCDOT and allowing for more buildable area on the property.
Brackett Flagship Properties delivered the project under budget, saving the ownership entity 6% of the total project cost.
Laurel Park Medical Office Building
Lenoir, North Carolina
Flagship Healthcare Properties formed a joint venture relationship with Caldwell Memorial Hospital, part of UNC Heath Care, to complete the 15,000 square foot Laurel Park Medical Office Building. Laurel Park Women’s Health and Mulberry Pediatrics, two of Caldwell UNC Health Care’s outpatient practices, are located in the facility. Built on an urban infill site in downtown Lenoir, the property is situated less than half a mile from the main Caldwell UNC Health Care hospital campus.
The required building envelope and small site created design, development, construction and staging issues throughout the project period.
The Flagship Healthcare Properties team worked closely with city planning officials to reuse an infill site donated to the hospital and negotiated a shared parking agreement.
Both the building and parking were designed around an existing sculpture park on the property.
Flagship delivered the project under budget, saving the ownership entity 6% of the total project cost.
DePaul Medical Plaza
In June 2016 Flagship Healthcare Properties, in conjunction with its joint venture partner, USAA Real Estate Company acquired DePaul Medical Plaza, a 99,236 square foot, LEED Silver certified, Class A medical office building located on the campus of Bon Secours DePaul Medical Center, north of downtown Norfolk, VA. The building, developed in 2014, was Flagship’s first acquisition in the Hampton Roads region and strengthened our relationship with Bon Secours Health System, one of the leading Catholic healthcare providers in the Southeast. The acquisition represented our 10th transaction for our partnership venture with USAA Real Estate Company.
For a two-year old building, its leasing pace was behind schedule, despite its proximity to the hospital’s front door and its superior quality and finishes over competing facilities.
The seller identified additional lease prospects and required recognition of value for their tenancy, but struggled to secure them with lease commitments leading into our purchase and sale negotiations, creating a moving target right through to the closing date.
Flagship is employing an aggressive leasing strategy in conjunction with the local brokerage community to increase occupancy by identifying and signing tenants that complement DePaul Medical Center’s care delivery strategy. We also employ an enhanced property management and tenant relations strategy to improve the tenant and patient experience.
Flagship Healthcare Properties negotiated a rent support agreement with the seller with burn-off provisions as permanent tenants were secured and leases signed.
John’s Creek Medical Office Building
John’s Creek, Georgia
John’s Creek Medical is an approximately 95,000 SF medical office building located at 6300 Hospital Drive in John’s Creek, Georgia. Flagship Healthcare Properties was engaged as Property Manager by Starwood Capital Group.
The client had reservations about Flagship possessing the tools to manage a multi-tenant medical facility of this size and with the number and variety of specialty groups in occupancy. Our ability to provide consistent and superior customer service is important to our client and the tenants who rely on us.
Building and nurturing tenant relationships for successful lease renewals/expansions efforts can be arduous due to the asset’s proximity to our Charlotte office. Our client entrusts us with fiduciary responsibilities and relies on our commitment to perform them.
Flagship’s core focus and dedication to medical facility management provides us the depth of experience and specialized expertise to overcome the challenges of managing large, multi-tenant facilities. Our broad knowledge and full service approach to serving the healthcare real estate industry provides a leading edge in successfully managing these types of assets. The advantages of Flagship’s experience provided our client with the comfort of knowing their asset is in excellent hands.
Utilizing economies of scale through the many assets we own and/or manage, Flagship is able to obtain the best costs and exceptional service our tenants rely on. Our clients rely on this buying power and dedication to improving their return on investment. Our success in this area provides the requisite feedback to our client.
Harnett Health Medical Park
In 2014, Brackett Flagship Properties acquired Harnett Health Medical Park, an 18,623 square foot medical office building on the campus of Betsy Johnson Hospital, one of Harnett Health’s acute care facilities. The medical office building houses multiple practices to serve as the hospital’s primary outpatient facility, both for its permanent physicians as well as those who travel between Harnett’s other hospital locations.
Harnett desired a more significant partnership with the building owner, and one that has the capability to expand the facility as the hospital executes its future outpatient and recruitment strategies.
Harnett was undergoing transition in its governance and desired a landlord who understood the challenges of rural hospital systems.
Brackett Flagship Properties gained the trust of hospital administration by offering to implement property upgrades that enhanced the facility’s efficiency and, thus, improved care quality.
Harnett Health hired Cape Fear Valley Health System to manage the day-to-day operations of its hospitals. Through flexible and creative lease negotiations and changes to our accounting and reporting, we accommodated this important transition.
Boynton Beach Medical Pavilion
Boynton Beach, Florida
Boynton Beach Medical Pavilion is an approximately 33,500 SF medical office building located at 2800 S. Seacrest Boulevard in Boynton Beach, Florida. Flagship Healthcare Properties was engaged as Property Manager by Starwood Capital Group.
As Flagship was building this new relationship with the institutional property owner, the ownership expressed concerns regarding the location of this property as it relates to Flagship’s oversight operations in Charlotte. Cultivating trust and adding value is critical to the success of our new partnership with this client.
This property’s location poses weather related challenges due to the possibility of hurricanes. Staying abreast of weather conditions and working with vendors in an off market location are potential complications to protecting the asset and instilling confidence in our client.
Flagship’s extensive knowledge and experience in the management of medical office facilities played a large role in successfully overcoming the concerns of our client. Flagship’s property management team continues to cultivate trust with the client through hard work and dedication to the success of the asset. We manage this facility as if it were our own property.
Flagship utilizes national and regional master vendor agreements to ensure the proper resources are in place in the event of inclement weather. With proper monitoring of weather conditions in the geographic areas we serve, the Flagship team is able to proactively manage and protect the property, exceeding our client’s expectations.