MMAC credentials 9:7:16

CREDENTIALS PACKAGE & REFERENCE INFORMATION

1

ABOUT MONTECITO MEDICAL

• Please see the official website at www.montecitomac.com

• Formed in 2005, Montecito has acquired morethan $1.2 billion in medical office real estate,including 76 medical office buildings and over 4million square feet of real estate in 22 states. Theprivately owned company has offices in Nashville,Austin and Orange County, California.

• Montecito currently has a joint venture withHeitman and a joint venture with State Board ofAdministration (“SBA”) of Florida to acquire Class-A medical office buildings throughout the UnitedStates. Since inception of the joint ventures, theteam has acquired or has under contract $375million in assets anchored by some of thenation’s top health systems and physician groups.

• Montecito Partners have an average of 22 yearsexperience investing in and operating real estate.

• Montecito specializes and invests exclusively inmedical office buildings.

2

http://www.montecitomac.com/

LARGE PHYSICIAN GROUPS AND HEALTHCARE SYSTEM RELATIONSHIPS

3

• Holston Medical Group

• State of Franklin Healthcare Associates

• OrthoCarolina

• Virginia Urology

• Johns Hopkins

• UCLA Health

• University of Cincinnati Health

• EmergeOrtho

• Union Hospital

• Akron General

• Cleveland Clinic

• Bon Secours

• Concord Hospital

• Carolinas Healthcare System

4

ABOUT STATE BOARD OF ADMINISTRATION OF FLORIDA

• The State Board of Administration (SBA) of Florida is an agency of Florida state government that provides a variety of investment and trust services to various governmental entities.

• Total assets under SBA management as of June 30, 2015, were approximately $180 billion.

• A key responsibility is to manage the assets of the Florida Retirement System (FRS) Pension Plan, which is the fifth largest public pension plan in the U.S.

• Please see its website at www.sbafla.com

http://www.sbafla.com/

5

ABOUT HEITMAN

$38billion managed

across three complementary business units

50years investing

on behalf of clientswith an exclusive focus

on real estate

6

CASE STUDY

The ChallengeRoughly 150 primary-care physicians and providers of Holston Medical Group (HMG) occupy six office buildings comprising 311,945 square feet in the Tri-Cities market of eastern Tennessee.

• The trophy asset, HMG Med Plaza – adjacent to Wellmont’s 505-bed Holston Valley Medical Center – had a short-term ground lease that required lengthy discussion with the land owner and hospital.

• The seller was challenged by a very punitive defeasance on the loan.

• The seller preferred Montecito acquire the entire six-building portfolio, but only close on three initially and delay the closing on the remaining three buildings for 12 months.

• Physicians voiced concern about the rents increasing, which was hindering support for the sale.

The SolutionMontecito Medical took the lead in negotiating an agreement satisfactory to all parties – the tenant/owners, the lender, the landowner and the hospital.

• Montecito acquired the entire portfolio while agreeing to close on three buildings at a later date.

• Physicians were relieved when Montecito actually lowered rents at this building.• Montecito not only paid top-dollar prices, but created an investment vehicle whereby sellers could re-invest back into the asset. Many doctors now

have ownership in the buildings where they work and enjoy a quarterly distribution plus proceeds based on their share of equity.

The ResultHMG voted to support the sale because of the unique deal structure Montecito offered, and the physicians elected to reinvest back into the entity. HMG master-leased all buildings on an NNN lease.

“Working with Montecito was a pleasure. They were very proactive and supportive of all solutions to the complexity of the deal. They made it all very simple.”

Scott Fowler, MD, FACOGPresident, Holston Medical Group

7

CASE STUDY

The ChallengeThe region’s dominant independent orthopedic practice, OrthoWilmington, was in the process of merging with three other practices to form EmergeOrtho. At the same time, its 23 physicians were maintaining extremely high patient volume and operating out of multiple facilities. Plus, OrthoWilmington was in the process of building a third 14,500-square-foot facility 30 miles away. Finally, they had concerns that not all physicians would benefit from the sale.

The Solution• Montecito assisted OrthoWilmington during the merger by arranging the sale so that the new entity could assume all

leases. Now, EmergeOrtho is one of the largest physician-owned orthopedic practices in the country.

• Montecito bought the entire portfolio and agreed to close on the third building still in development once completed.• Montecito worked very closely with OrthoWilmington to create an agreement allowing all doctors to reinvest in the new

LLC, which encouraged them to favor the sale.

The ResultMontecito was able to serve as a partner in helping OrthoWilmington grow in its real-estate development and acquisitions. Plus, in addition to helping structure an amenable long-term lease, Montecito presented a unique and creative way for all of the physicians in the practice to “stay in” the deal, so physicians could invest and receive frequent distributions, as well as participate in the future equity event when the building trades again.

“The experience with Montecito was a seamless and hassle-free transaction that allowed us to monetize the assets, re-invest in the acquiring entity and keep all property management. Clearly a win-win, which was why our physician group ultimately voted in favor of the sale.”

James RouseChief Administration Officer

8

CASE STUDY

The ChallengeState of Franklin Healthcare Associates (“SOFHA”) is the leading physician-owned primary care group in the Tri-Cities market of Tennessee. The group was looking to monetize two of their campus-adjacent assets to take advantage of favorable market conditions, but was worried about relinquishing total control and management of the assets to an institutional buyer with little interest instructuring a deal that would accommodate needs of physicians.

The SolutionMontecito Medical made several trips to meet with SOFHA executives and listened intently to their reservations in order to draft a deal structure that would accommodate physicians. To keep all physicians’ interests aligned, Montecito personally presented its proposal to a group of 65+ SOFHA doctors. The proposal included:• SOFHA physicians could re-invest up to 10% of the required equity back into the deal and hold a passive non-voting position in the

impending joint venture.• SOFHA physicians would receive a quarterly distribution and participate in disposition proceeds based on their pro-rata share of

equity contributed.• SOFHA physicians would be able to trade equity shares internally, allowing retiring doctors the option to cash out and new doctors

the opportunity to buy in.• SOFHA would be able to maintain all property management duties at the assets to ensure the current standard of operational care and

maintenance continued.

The ResultSOFHA physicians voted to sell the assets to Montecito Medical under the proposed deal structure. The group re-invested 10% of its proceeds back into the assets alongside Montecito, with both parties’ interests closely aligned. In exchange, SOFHA master-leased both buildings on a NNN lease for a 15-year term.

“We were able to maximize our return on the building by selling to Montecito Medical and to do so where we were able to re-invest back into the new entity buying it. It was important to many of our physicians to continue to have some level of ownership in the properties where they practice.”

Richard PanekChief Executive Officer

9

REFERENCES

Montecito Medical acquired our building at the agreed-upon purchase price, and did not try and re-trade us whatsoever. It was also important to our company that Montecito allow us to continue to manage the property to ensure our strong relationship with the hospital, which we have had for over 15 years. Furthermore, their executives were available to discuss the transaction when needed, and communicated efficiently and effectively.

David P. Wilson, CCIMExecutive Vice President, Lockard CompaniesCedar Falls, Iowa

We were able to maximize our return on the building by selling to Montecito Medical and to do so where we were able to re-invest back into the new entity buying it. It was important to many of our physicians to continue to have some level of ownership in the properties where they practice.

Richard PanekCEO, State of Franklin Healthcare AssociatesJohnson City, Tennessee

Montecito Medical was very experienced with complex negotiations involving a large health system like UCLA, and they were helpful in working closely with my company and UCLA (the only tenant in the building) in getting the deal closed…. I look forward to doing more transactions with Montecito in the future.

Randy MillerPresident, Nautilus Group, Inc.Berkeley, California

10

REFERENCES

Montecito did not re-trade any part of the Letter of Intent or contract, and they closed the deal on the exact terms of the contract. With their knowledge and experience of health systems, Montecito Medical was helpful in negotiating an extension to the leases with the hospital.

Gary A. Stewart, Jr.President, Stewart PropertiesYork, Pennsylvania

Montecito played a critical role in getting the hospital to amend their leases to allow me to sell both buildings and to capture the best possible economic terms. They actually negotiated with the hospital and allowed the hospital to make changes that they felt important to the existing leases.

Kevin MattsonManaging Partner, Dirigo Capital AdvisorsHallowell, Maine

I highly recommend Montecito Medical as a buyer of medical office real estate. In all, the sale was a seamless and hassle-free transaction that enabled our company to monetize the asset, re-invest in the entity that purchased the building, and keep the existing hospital relationship intact for future business opportunities.

Clay CorwinPresident, StoneCreek CompanyRancho Santa Margarita, California

11

MONTECITO/HEITMAN/SBA TRANSACTIONS SINCE 2015Montecito, Heitman, and SBA have closed 25 transactions sinceearly 2015 comprising 1.142 million square feet with a collectivevalue of $327 million. As of September 2016, twelve other assetsare under LOI or contract, collectively totaling $119.5 million.

Asset State Price SFSouthern Maine Healthcare MOB Maine $15,000,000 51,333

Union Hospital MOB (Principio) Maryland $13,400,000 48,000

Carolinas Health System - Abbey Place

North Carolina $10,599,000 37,196

D1 Portfolio Multiple $23,248,000 108,098

Concord Hospital Portfolio

New Hampshire $32,125,000 104,187

Loma Linda Outpatient California $9,000,000 37,621

SOFHA Portfolio Tennessee $65,688,000 169,655

HMG Portfolio Tennessee $66,379,000 276,823

EmergeOrtho Portfolio North Carolina $26,438,000 76,903

Terrace Park Iowa $16,800,000 59,615

Akron Portfolio Ohio $48,415,000 173,420

12

SELECT RECENT TRANSACTIONSSouthern ME Healthcare MOB

Location: Biddeford, Maine Year Built: 2007SF: 51,333 Price: $15,000,000 ($292 SF)

Less than a mile from 110-bed Southern Maine Medical Center,the building is 100% occupied by Southern Maine Health Carewith 13 years remaining on the lease.

Principio Health Center

Location: Perryville, Maryland Year Built: 2008/2013SF: 48,000 Price: $13,400,000 ($279 SF)

Outpatient facility is 100% leased to Union Hospital of Cecil County on a new 15-year lease, with 3% annual rent escalations.

Concord Hospital Portfolio

Location: Concord, NH Year Built: 2004 - 2010SF: 104,187 Price: $32,124,650 ($308 SF)

Three buildings are 54% leased to Concord Hospital; the majorityof remaining tenants are Concord Hospital affiliated. Thebuildings include a complementary mix of specialties and housethe area’s largest ASC and Imaging Center.

13

SELECT RECENT TRANSACTIONSUCLA Outpatient Services Building

Location: Santa Monica, CA Year Built: 2012SF: 51,342 Price: $54,576,000 ($1,063 SF)

Located across from UCLA Medical Center, the building is 100%leased to UCLA on a 30-year lease. The building has wonnumerous awards for design and contains the West Coast’s firstfully automated parking garage.

D1 Portfolio Location: Denver, Charlotte, Memphis, and Winston-SalemYear Built: 2014-15 SF: 108,098 Price: $23,248,000 ($215 SF)

Newly constructed orthopedic/sports training facility is 100% leased on a new 15-year lease to D1 and the area’s largest private orthopedic practice. Several NFL and NBA players hold ownership interest in the D1 operations at this location.

Carolinas Health – Abbey PlaceLocation: Charlotte, NC Year Built: 1993/2008SF: 37,196 Price: $10,598,820 ($285 SF)

Two interconnected buildings are 100% leased to Carolinas HealthCare System, in a high-traffic retail setting near Park Road Shopping Center.

SELECT RECENT TRANSACTIONSHMG Portfolio

Location: Kingsport, TN Year Built: VariousSF: 276,823 Price: $66,379,000 ($240 SF)

Six-building portfolio is 100% leased to HMG on a 15-year NNN lease with 2% annual rent escalations. 75% of the portfolio is adjacent to campus. HMG is the Tri-Cities’ largest independent multi-specialty physician practice with more than 150 physicians.

14

301/303 Med Tech (SOFHA)Location: Johnson City, TN Year Built: VariousSF: 169,655 Price: $65,688,040 ($387 SF)

Two-building portfolio is 100% leased to State of Franklin Healthcare Associates on a 15-year NNN lease with 2.0% annual rent escalations. Both buildings are located adjacent to campus.

OrthoWilmington (EmergeOrtho) PortfolioLocation: Wilmington, NC Year Built: VariousSF: 76,903 Price: $26,438,000 ($343 SF)

Two building portfolio is 100% leased to EmergeOrtho on a 15-year NNN lease with 2.50% annual rent escalations.

15

SELECT RECENT TRANSACTIONS

Terrace Park Professional CenterLocation: Bettendorf, Iowa Year Built: 2004SF: 59,615 Price: $16,800,000 ($282 SF)

Three-story medical office building located on the campus of, and directly connected to, Trinity Medical Center. 83% of the rentable area is leased to subsidiaries of UnityPoint Health.

Akron PortfolioLocation: Akron, Ohio Built: VariousSF: 173,420 Price: $48,414,779 ($279 SF)

Four-building portfolio has a weighted average lease term of 9.0 years and a strong tenant mix consisting of large/dominant physician practices and investment-grade health systems. Health systems include Summa (Baa1), Cleveland Clinic (Aa2), University Hospital (A2), and Akron Children’s (A1).

16

MONTECITO’S REPRESENTATIVE PROPERTIESPhoto Property Location / System City State Year Built Square Foot

ClevelandClinic

Campus AlignedCleveland Clinic

Columbus OH 2008 40,000

Harbour View(2 Buildings)

Campus AlignedBon Secours

Suffolk VA 1999 - 2007 111,084

Valley Parkway Campus AdjacentPalomar Pamerado

Health System

Escondido CA 1990 70,058

Rockwall MOB Off-Campus Rockwall TX 2006 85,117

Escondido Medical Arts

Off-Campus Escondido CA 1994 49,302

El Dorado On CampusTucson Medical

Center

Tucson AZ 1976 / Renovated 2006

186,281

MONTECITO’S REPRESENTATIVE PROPERTIES

La Terraza at the BiltmorePhoenix, AZ224 Units

Photo Property Location / System City State Year Built Square Foot

John C. Lincoln Medical Building(3 Buildings)

On-CampusJ. C. Lincoln Health

Center

Phoenix AZ 1994 73,656

Hilo Medical AlignedState of Hawaii Health System

Hilo HI 1996 22,356

Hillcrest Medical

Campus AdjacentScripps

San Diego CA 1990 31,605

Premier MOB Off-Campus New Port Richey FL 2006 20,760

Crestwood MOB On-CampusCommunity Health

Huntsville AL 2005 47,386

Alta Vista MOBAtlee

On-CampusCommunity Health

Las Vegas NM 2005 14,157

17




San Angelo #1Atlee


San Angelo TX 2004 21,292

San Angelo #2 Atlee


San Angelo TX 2005 21,292

Schertz MOBAtlee


Schertz TX 2005 19,825

Warsaw MOBAtlee


Warsaw IN 2006 18,954

Gwinnett MOB Campus AdjacentGwinnett Hospital

Gwinnett GA 1984/Renovated 2005

81,345

Conroe MOB Off-Campus Conroe TX 2004 68,832

18




LeawoodPortfolio(3 Buildings)

On-Campus Leawood KS 1991, 2001, 2002 58,947

Vero Medical Suites

Off-Campus Vero Beach FL 2004 39,966

Columbia Medical Suites

Campus AlignedJohns Hopkins

Columbia MD 1982/ Renovated 2005-2006

155,314

Summit MOB Off-Campus Hudson FL 2000-2004(3 Phases)

49,925

19

20

Montecito Medical Real Estate109 West Park Drive, Suite 260

Brentwood, TN 37027Chris Conk, Partner

[email protected]

Office: 615-921-3850Cell: 805-403-8862

mailto:[email protected]

http://www.montecitomac.com

Documents

MMAC credentials 9:7:16