Tenant of the Quarter – DaVita® Dialysis Clinics

Aug 15, 2019

At Westwood Net Lease Advisors, our team celebrates DaVita® as they help those with chronic kidney disease and end-stage renal disease live better lives, and for their business model that allows them to add locations and help even more patients by partnering with NNN lease investors. Their forward-thinking, caring mission, solid financials, and calculated growth strategy make DaVita our NNN Investment Tenant of the Quarter.

Who Is DaVita?

DaVita is a Fortune 500® worldwide health care provider and the largest provider of kidney care and dialysis services in the United States, with 2,723 outpatient centers. DaVita, which means “to give life” in Italian, has over 20 years of in-depth experience and continues to grow with exemplary care at the forefront of their mission as they work to improve mortality rates and the quality of life for their patients and families.

This company has spent 12 consecutive years on Fortune’s World’s Most Admired Companies list and is one of only six companies in the Health Care Providers and Services Industry on the Dow Jones Sustainability Index (DJSI) World Index. They continue to add centers and progressive services to address the ever-growing chronic kidney disease (CKD) health crisis, which not only helps patients but offers necessity-based investment opportunities for both emerging and seasoned NNN investors.

DaVita has spent 12 consecutive years on Fortune’s ‘World’s Most Admired Companies’ list.

Strong and powerful

Financially Strong & Growing

According to 2019 second-quarter financial reports, DaVita provided dialysis services to 231,700 patients at 2,971 of their global outpatient centers. In Q2, they opened 33 new U.S. dialysis centers and acquired three, with $11.254 billion in total revenue for the twelve months ending June 30, 2019. They have a twelve-month operating income of $1.48 billion, and total assets for the quarter of $22.61 billion, a 19.34% increase year-over-year.

Along with strong financials and a Moody’s Ba1 Investment Grade rating, their growth projection has no end in sight – the National Kidney Foundation estimates 37 million Americans have CKD, and 1 in 3 adults (approximately 80 million people) is at risk. The American Journal of Kidney Disease also estimates an increase in diagnosed adults from 13.2% today to 14.4% in 2020 and 16.7% in 2030. Growth in this sector is imminent.

Approximately 37 million Americans have CKD and 80 million people are at risk. – National Kidney Foundation

healthcare spending

Economic Staple & Reliable NNN Investment

The U.S. Bureau of Labor Statistics puts health care spending at nearly 20% of annual U.S. gross domestic product (GDP) and in the fastest-growing category at 5.5% annually. Additionally, medical office buildings (MOBs) represent approximately 39% of U.S. real estate value. It’s abundantly clear that health-related businesses, like DaVita, are critical economic staples and make for reliable triple net lease investments.

Other DaVita NNN investment benefits include:

  • Reasonable price points start at $1.5 million.
  • A strong yield with cap rates around 5.5% to 7.0%.
  • 10-15-year corporate-backed leases.
  • Little-to-no landlord responsibilities and predictable monthly income.
  • Incremental rent increases of 5-10% every 5 years.
  • Necessity driven service with frequent required visits mean reliable sales growth.
  • High-end buildouts and specialty medical equipment/fixtures make renewals more likely.
  • Immediate and long-term tax benefits for capital preservation.
  • Because there are few, if any, landlord responsibilities, it’s convenient to own anywhere in the nation.

Piggy Bank and Stethoscope with Selective Focus on a Gradated Background.

To Wrap it Up – DaVita Complements NNN Investment Portfolio

Just like stocks, bonds, and other investments, it’s best to have a selection of assets in your portfolio that perform differently to meet your short-term and long-term goals. Different asset classes within net lease investments, for example – fast food, health care, banks, pharmacies, and industrial – offer predictability not found in many other investments and offer less risk when it comes to market fluctuations. DaVita would be a great complement to your current mix of NNN properties or as a first-time NNN investment.

If you’re interested in buying a DaVita property, it’s important to note that these centers rarely make it on the open market. The best way to find one is to partner with a reputable Westwood Net Lease Advisor who knows the national market and is well-known in the market. We have decades of experience and will help you from the property search to closing – all at no charge to you. Contact us today for your no-obligation consultation. 314-997-5227

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