Dean Clinic
Fort Atkinson
2019 CBG Deal of the Year Winner
Investment/Multi-Family $10 Million +
In 2017, Key Commercial Real Estate began negotiations with SSM Health represented by Broadwing Advisors to expand an existing clinic building they were leasing from a client in Fort Atkinson. The existing clinic was constructed in 2007 and consisted of 22,000 SF providing family practice, ophthalmology and optometry. The new addition was planned to be 10,000 SF and would integrate additional specialties of orthopedics, general surgery, oncology and chemotherapy infusion. The owner/developer of the clinic wanted a new 10 year lease negotiated with SSM to incorporate the existing clinic as well as the new construction portion of the project.
The cost to construct the build to suit, turnkey clinic was extremely expensive due to the proprietary and technical requirements of the use. Negotiations began in earnest in mid-2017 with every intent to have negotiations wrapped up by the end of the year to allow ample time to complete the new addition and have SSM occupying by their hard deadline. However, the lease negotiations took over a year to finally bring together construction cost and rent with a lease finally signed in July of 2018.
The owners of the building decided that they would like to sell the property immediately upon completion of construction which coincided with the commencement of the new 10 year lease. The property was listed by Key Commercial in early 2019 while construction was underway. Within the first few weeks of listing, multiple strong offers were received from prospective buyers across the country. These offers were negotiated and ultimately, an offer accepted in March scheduled to close upon completion of construction in August. Multiple inspections were required by the out of state Buyer due to the construction underway throughout the contract period. There were also a significant number of documents to be signed off on by SSM Corporate which proved to be extremely time consuming and difficult to achieve, including a first right of refusal to purchase. A holdback escrow agreement also was negotiated to cover any post-closing issues that may arise with the new construction. With the new construction and proprietary infrastructure of the clinic, tens of thousands of pages of construction related documents were included in the due diligence. Lastly, a covenant and restriction document was uncovered that needed to be signed off by multiple adjacent property owners. One of the adjacent property owners even attempted unsuccessfully to extort funds from the seller in exchange for his signature. However, the transaction finally closed in late 2019 for $10,600,00, nearly 3 years after starting the lease negotiation.