UI Health Care lays out three outpatient leases: Tiffin clinic, CDD relocation and Des Moines oncology space

UI Health Care officials told the Board of Regents’ property and facilities committee on April 23 that they have negotiated three substantial outpatient clinic leases and asked the committee to recommend approval to the full board.

David Keft, presenting the lease portfolio for UI Health Care, said each location was selected after an extensive search and represents sites intended to improve access to outpatient care across eastern and central Iowa.

Key lease summaries:

- Tiffin, Iowa: A new‑construction 10,000‑square‑foot family and community medical clinic will be built on 1.2 acres near Highway 6 and Kimberlite Street. The design includes 12 exam rooms, a lab and faculty/staff support space; the site will initially have 5 to 6 clinical providers with room to expand. The initial lease term is 15 years with four 5‑year renewal options (maximum 35 years). Keft estimated developer hard/soft costs for design, construction and equipment at roughly $7 million to $8.5 million. The lease formula sets the initial base rate as the higher of an 8.75% cap rate or 450 basis points above the 5‑year treasury at substantial completion; UI Health Care will pay operating expenses and real estate taxes.

- Center for Disabilities and Development (CDD) relocation: Because the existing CDD building sits in the footprint of the planned hospital tower, UI Health Care negotiated a 58,000‑square‑foot office building on Northgate Drive, with a landlord‑constructed addition of 15,000 to 25,000 square feet and a large outdoor play area. The proposed initial lease term is 20 years with four 5‑year renewals (maximum 40 years). UIHC would pay interior renovation and addition costs — estimated at $35 million to $40 million — upon substantial completion; the landlord will pay for a new roof, air‑handling replacement and surface parking improvements. Keft said the lease requires competitive bidding for major components and that UIHC would provide monthly construction cost updates to the board office.

- Des Moines oncology clinic (Mission Cancer & Blood relocation): UIHC plans to occupy roughly 40% of a 41,000‑square‑foot building at 110 East Court Street with an initial 10‑year term and renewal options totaling 30 years. Initial base rent is $25 per square foot with a 2.5% annual increase; operating expenses are estimated at $3 per square foot. UIHC will pay the estimated $12 million to $14 million of interior renovation costs upon substantial completion; the landlord will modernize lobby/exterior elements. The lease includes a right of first refusal should the owner put the building up for sale.

Keft told the committee UI Health Care would not exceed the outlined design and construction costs without returning to the board for approval. Regent Hensley asked how UIHC planned to pay large renovation costs; staff said funds would come from hospital operating cash, reserves and other operating sources rather than capitalizing landlord financing. The committee recommended the leases for general consent.

Speakers: David Keft (UIHC) led the presentation; Brad Hawes (UIHC CEO) was present; Regents asked procedural and funding questions.