Oak Street Health | 14.3 YR NNN Lease | CVS-Owned Tenant
Net Lease Medical Investment | 6.75% Cap | Scheduled Rent Bumps
Marketing description
Matthews™ Healthcare Division is pleased to offer the opportunity to acquire a ±8,400 square foot freestanding, single-tenant Oak Street Health clinic located at 700 Nebraska Avenue in Kansas City, Kansas. Originally constructed in 2012, the property is leased to Oak Street Health under a 17-year NNN lease that commenced in 2023 and includes scheduled rent increases and two 5-year renewal options. The site is positioned just off I-70 in Kansas City's Strawberry Hill neighborhood, offering excellent visibility, strong accessibility, and close proximity to regional medical infrastructure and underserved patient populations.
The tenant, Oak Street Health MSO, LLC, is a wholly owned subsidiary of CVS Health (NYSE: CVS). Oak Street Health operates more than 230 primary care centers across the country, focused on delivering value-based care to Medicare patients. Its model is designed to reduce hospitalizations and improve long-term health outcomes. Backed by CVS, Oak Street plans to grow its footprint to more than 300 clinics nationwide by 2026, continuing its mission to expand access to high-quality, preventative care in underserved communities.
The property benefits from its strategic urban location near the government district, county courthouse, and University of Kansas Medical Center. The surrounding area is densely populated and medically underserved, aligning well with Oak Street Health's mission to improve care access for older adults. With strong tenant backing, a long lease term, and essential healthcare use, this investment offers stable cash flow and a compelling opportunity to own a healthcare asset leased to a nationally scaled, recession-resistant operator.
Investment highlights
- Backed By CVS Health - In 2023, Oak Street Health was acquired by CVS Health (NYSE: CVS) for approximately $10.6 billion and now operates as a wholly owned subsidiary. This relationship with one of the nation's largest healthcare companies provides strong financial backing and enhances the tenant's credit profile.
- Strategic National Expansion - Oak Street Health currently operates more than 230 centers nationwide and continues to expand, with plans to exceed 300 clinics by 2026.
- Mission-Critical Healthcare Use In Underserved Area - This Kansas City location provides essential outpatient care to an aging, Medicare-eligible population in a medically underserved area, supporting Oak Street Health's value-based care model.
- Long-Term Lease With Rent Growth - The property is subject to a 17-year NNN lease commencing in 2023, with scheduled rent escalations and two 5-year renewal options.
- Ideal 1031 Exchange Opportunity - This asset generates passive income through a long-term NNN lease with built-in rent growth, minimal landlord responsibilities, and a nationally recognized tenant—making it well-suited for 1031 exchange investors seeking stable, growing cash flow.
- Established Multi-Clinic Presence In The Kansas City Market - Oak Street Health operates three clinics across the Kansas City metro, reinforcing its scalable care model and long-term commitment to the region. This footprint enhances brand visibility, supports referral synergies, and reflects confidence in continued market growth.
- Proximity To Major Medical Infrastructure - The site is positioned near key regional assets including Kansas City Hall, Memorial Hall, and Interstate 70, a major east-west corridor providing strong connectivity across the metro area and access to civic, healthcare, and transportation networks.
- Ongoing Downtown Revitalization - Kansas City continues to invest in its downtown core, including the $200 million South Loop "Roy Blunt Luminary Park," expected to catalyze additional residential and commercial development.
- Housing And Renter Demand Remain Resilient - Home values in Kansas City are projected to increase by 5.6% in 2025, supported by steady population growth and a strong local employment base, according to the Kansas City Home Builders Association.
- Opportunity Zone Tax Incentives - The property is located within a federally designated Opportunity Zone, offering potential tax benefits including capital gains deferral, partial basis step-up, and long-term gain exclusion. Investors should consult a qualified tax advisor to determine eligibility.
- $1.9 Million Tenant-Funded Renovation - In 2023, the tenant invested $1.9 million to renovate and upgrade the facility for its own use, demonstrating strong commitment to the location and significantly improving the property's infrastructure and buildout.
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