ERE Healthcare Real Estate Advisors (“ERE”) is pleased to announce the successful sale of a 16,075 SF Portfolio consisting of a leading comprehensive ophthalmology clinic and a 2-OR ASC serving Southern California. The practice is operated in partnership with a vertically integrated ophthalmic services company with more than 30 locations nationwide.

Having sold their practice to a private equity backed MSO, the physician-partners remained owners of the real estate and enjoyed the rental income for several years. As partnership objectives evolved, the partners sought to strategically exit their long-term investment, but had only 7 years remaining on their lease, impairing its potential value and interest from prospective buyers.

ERE was engaged to assist in restructuring the lease to unlock value in anticipation of a sale.  To ensure a viable solution, ERE conducted a market rent analysis and evaluated the practice’s historical financial trends. Leveraging a thorough understanding of the financial impact of various lease modifications, ERE collaborated with the client’s private equity partner to create a winning outcome for the platform, while also satisfying the needs of the physician owners.   With a properly structured lease, ERE identified the most aggressive prospective buyers, ultimately guiding the physician partnership and their counsel through a successful transaction, including a creative financing solution that overcame unexpected interest rate shifts.

By orchestrating a competitive bidding process, ERE generated multiple offers, creating leverage to negotiate pricing and terms with prospective buyers. The advisory and execution by ERE yielded a sale price 18% higher than the anticipated sale price without a restructured lease.

The transaction was led by Collin Hart and Chase Jarrett.

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Investment demand, sale transaction volume, and valuations for healthcare real estate have reached historic highs. Even if a real estate sale doesn’t meet your current objectives, addressing potential partnership challenges early will maximize the value and security of your investment.