In September of 2021, I had the opportunity to work with Cory Barrett (Barrett Family Trust) on our acquisition of the DaVita Dialysis facility located in Cheltenham, PA.
Based in California, the Barrett Family purchased this property as part of a 1031 Exchange up-leg in 2014. At that time, the Barrett Family was looking to place the proceeds from their sale into a property with a creditworthy tenant on a stabilized, long-term lease. In addition, the NN-lease structure provided a mostly hands-off opportunity for passive income.
I connected with the seller, Cory Barrett, periodically over the course of a year prior to moving forward with this transaction. As we entered into a 1031 Exchange and discussed potential up-leg opportunities, The Barrett Family and this DaVita property quickly came to mind.
I followed up with Cory to explain Ocean Block’s current situation and interest in acquiring the property to satisfy our exchange obligations. He explained that it was now a more opportune time for his family to entertain the possibility of a sale and clearly laid out the goals they were looking to accomplish: to simplify their portfolio and liquefy their assets located outside of California.
We were drawn to this site for a number of reasons. Cheltenham is a densely populated Philadelphia sub-market with solid demographics. This property is positioned at a signalized corner with a lot size that is approximately 1-acre, demonstrating strong, fundamental real estate—the core of our acquisition criteria. In addition, DaVita Dialysis is a national, creditworthy tenant with over 2,800 locations across the US. While most net lease investors seek passive investment vehicles in properties with absolutely zero landlord responsibilities, we are comfortable assuming the maintenance management and expenses associated with this site’s NN lease structure.
This transaction was a win-win scenario for both parties. Since we acquired this property as part of a 1031 Exchange, we were able to be more aggressive with our terms and ultimately meet the financial goal of the seller. In addition, we executed a quick close, finalizing the transaction less than 60 days after the Purchase and Sale Agreement was executed.
We are excited to add the Cheltenham DaVita Dialysis facility to our portfolio and remain focused on expanding our presence in the Northeast. This was our third DaVita Dialysis acquisition in the past 5 months, as we continue to target dialysis and medical office acquisition opportunities nationwide.