Office Property Leased to University of Wisconsin Health in Middleton, Wisconsin Sells for $39.11 Million

The property offered rare Credit Tenant Lease zero cash flow financing to accommodate buyer's 1031 exchange

SRS Real Estate Partners announced today it has completed the $39.11 million sale of a four-story, single-tenant, 197,860-square-foot office property located at 7954-7974 UW Health Court in Middleton, WI. A tenant since 2008, University of Wisconsin Health Administrative Services occupies the entire property and recently signed a new 20-year lease. The property serves as one of UW Health's administrative service office buildings and plays a crucial role in various areas, including medical management, information services, compliance, and patient billing services.

SRS Capital Markets Senior Vice President & Principal John Redfield, and John Battle, Principal and Managing Director with Lee & Associates, represented the seller, a California-based private owner. The buyer was ASG Equities.

The property is strategically located less than six miles northeast of the University of Wisconsin-Madison and UW Health University Hospital, a 505-bed facility that serves as a key component of the UW Health System and has recently earned a top ranking among all Wisconsin hospitals according to U.S. News and World Report. The site is ideally positioned just off Highway 12, an arterial thoroughfare that serves over 57,000 vehicles daily.

"The property offers the new ownership minimal landlord responsibilities and included rare, beneficial Credit Tenant Lease (CTL), zero-cash-flow financing with excess cash flow above the loan payment to accommodate the buyer's 1031 exchange while also minimizing phantom income," said Redfield.

CTL zero cash flow financing is often beneficial to investors because it allows them to acquire a property with minimal equity while relying on the strong credit of the tenant to support highly leveraged financing. Although the rental income is largely used to service the debt, the investor benefits from long-term equity buildup through loan amortization, potential property appreciation, and tax advantages. The strategy is typically aimed at maximizing long-term returns and preserving capital rather than generating current cash flow.

This year, SRS Capital Markets has completed more than $1.6 billion in deal volume comprised of more than 400 transactions across the nation. SRS currently has in excess of 900 properties actively on the market with a market value surpassing $4.3 billion.

About SRS Real Estate Partners

Founded in 1986, SRS Real Estate Partners is celebrating 40 years of going the extra mile for its clients. A leader in consumer-driven real estate, SRS provides commercial real estate solutions across retail, industrial, and capital markets. Headquartered in Dallas with 29 offices nationwide, the firm measures its success by the achievement of its clients' objectives, satisfaction, and trust. For more information, please visit srsre.com.