Case Study

TUSCAN PROFESSIONAL BUILDING: LAS COLINAS, TEXAS
HEALTHCARE FACILITY DEVELOPMENT EXCEEDS
OWNERSHIP EXPECTATIONS

PM Realty Group was contacted by Texas Digestive Disease Consultants (“TDDC”), a leading group of gastroenterologists and colo-rectal surgeons in Dallas, regarding their desire to build a combination office and surgery center.

The physicians knew their combined space requirements, inclusive of surgery center, was approximately 18,000 square feet. TDDC wanted to locate somewhere in the Las Colinas area, but they needed a full service developer to identify prospective sites, arrange the financing for the construction and permanent loan, select the architects, engineers and contractors and assume all other tasks involved in the turn-key development and construction of their facility.

PM Realty Group was selected because of its extensive healthcare experience and reputation for building projects on time and on budget. Shortly after being awarded the assignment, PM Realty Group’s development team identified an exceptional site for the project near a major hospital. After completion of a market demand study, PM Realty Group recommended that TDDC build approximately 60,000 square feet, rather than the 18,000 square feet originally planned, based on medical office space supply and demand, economy of scale associated with construction costs and most importantly, the larger building’s appeal to the institutional investor upon the project’s ultimate sale.

After numerous meetings, TDDC determined their investment objectives were best met through full ownership, so PM Realty Group structured the assignment as a turn-key fee developer rather than as the general partner. This resulted in TDDC becoming the anchor tenant in the building and co-owners of the project.  Shortly thereafter, PM Realty Group negotiated a 90% construction loan at prime rate with limited liability to the physician partners. Construction began immediately after the engineering and construction documents were prepared and by the time the shell building was complete, all but 3,000 square feet had been leased.

TDDC now enjoys the benefit of the project’s cash flow acting as a buffer to rising rents, while future appreciation provides the opportunity for the physicians to build a secure retirement account as tenant- owners. 

Boasting a state-of-the-art design, the Tuscan Professional Building, was built on time and under budget.  Unlike typical office buildings, PM Realty Group’s development team had to consider other unique features associated with medical use, including patient drop off areas and canopies, additional building entrances and exits, vibration isolation, hospital-size elevator cabs, redundant power requirements, isolation of HVAC supply and return, and above-standard parking with underground parking for the physicians.

Tuscan Professional Building has exceeded the expectation of the ownership and consistent with PM Realty Group’s original underwriting, the project has increased in value over $3MM while producing attractive yearly cash flows.

The project’s success has caused Dr. Steven Katzman, Managing Partner of the physicians group, to offer his personal testimony to other physicians considering independent ownership or a joint venture arrangement with PM Realty Group.

Tuscan Professional Building has recently been submitted for various architectural and development awards.

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