The Primior Medical Centre in Diamond Bar, CA, showcases the power of strategic management and investment acumen, transforming a challenging property into a high-return asset.
+148%
$4 Million
+45%
The Challenge
In 2015, the Primior Medical Centre, a 36,360 sq. ft. medical office building, was acquired for $6.7 million. At the time of purchase, the property presented significant challenges: it was only 50% occupied, with half of the tenants failing to pay rent, and the average rent was a mere $1.5 per sq. ft. The acquisition was financed with $2.7 million in cash and a $4 million bank loan at 4% interest.
The Approach
Primior implemented a multi-faceted strategy to turn around the property:
- Tenant Restructuring: In 2016, non-paying tenants were evicted, and short-term tenants were brought in to stabilize cash flow.
- Renovation: A complete renovation was carried out in 2017 with a $500,000 budget, modernizing the facility and increasing its market appeal.
- Leasing: By 2018, long-term medical tenants were secured at an average rate of $2.5 per sq. ft., and existing tenant rates were increased upon renewal.
- Refinancing: In 2019, the property was refinanced with a CMBS loan at 4.25% interest, allowing for a $6.4 million cash-out, reducing the remaining equity to $300,000.
In December 2023, the property was sold, netting a $2.8 million profit after commissions and closing costs. This sale marked the culmination of a carefully executed investment strategy that nearly recovered all principal within four years and generated over $4 million in total profit since 2019.
The Outcome
The sale of the Primior Medical Centre exemplifies Primior’s ability to turn challenging properties into highly profitable investments through strategic planning and effective management. Despite the robust performance of the medical office market, the decision to sell was driven by a desire to hold more cash and prepare for future opportunities, with a keen interest in the high-potential data center market.
- 148% Realized ROI
- $4 Million Total Profit
- $300,000 Annual Net Cash Flow
- 45% Property Value Increase
- 50% to 100% Occupancy Rate Improvement
- $1.5 to $2.5/sq. ft. Rent Increase
