Cypress Exchange Launches $5.5M DST Backed by Wisconsin Surgery Center

Cypress Exchange Properties has acquired a newly constructed orthopedic and spine ambulatory surgery center in Middleton, Wis., for $10.22 million at a 6.5% capitalization rate, the company said. The acquisition backs a Delaware statutory trust offering, the CXP Orthopedic Surgery Center DST, structured as a Regulation D, Rule 506(c) private placement for accredited investors seeking 1031 exchange or cash transactions.

The roughly 12,000-square-foot facility, developed at a total cost of approximately $10 million, according to the company, includes three operating rooms and is operated by Orthopedic & Spine Centers of Wisconsin, a physician-led specialty group serving the greater Madison market. The property is fully leased under a new 15-year triple-net lease with 3% annual rent increases, guaranteed by individual physicians at the practice and by Healthcare Outcomes Performance Company, known as HOPCo.

The offering is financed with 55% loan-to-value debt at a 5.94% interest rate on a seven-year term. The DST has a $50,000 minimum investment and targets a 5% distribution rate and cash-on-cash return for investors, according to the sponsor.

The offering has raised more than $2 million of its $5.5 million target since it began raising capital July 9, a representative of Cypress Exchange Properties told AltsWire.

“This acquisition reflects our continued focus on high-quality healthcare properties that are supported by experienced operators, long-term leases and strong demand for outpatient medical services,” Christopher Cumella, chief executive officer of Cypress Exchange Properties, said. “We believe the property’s specialized improvements, physician alignment and location within the Madison healthcare market make it an attractive investment.”

Cypress Exchange Properties, based in Rancho Santa Margarita, Calif., specializes in the acquisition, development, and management of medical office buildings, ambulatory surgery centers, and other purpose-built outpatient healthcare facilities. The company and its affiliates have acquired or developed more than 50 healthcare facilities across 11 states, representing more than $1 billion in gross asset value, according to the company.

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