Property Management

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

SUMMARY

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.

CHALLENGES

• 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.

SOLUTIONS

• 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.

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.

SUMMARY

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.

CHALLENGES

• 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.

SOLUTIONS

• 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.

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.

SUMMARY

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.

CHALLENGES

• 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.

SOLUTIONS

• 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.