ERE Healthcare Real Estate Advisors (“ERE”) is pleased to announce the successful sale of a 29,901 SF Portfolio consisting of 3 highly specialized medical facilities in Georgia and Alabama that were monetized with the goal of strategically exiting a long-term real estate investment to facilitate various partner succession plans.

The practice is a dominant regional nephrology group composed of 5 board certified physicians focused on treating patients with kidney-related conditions. The practice operates in parallel to DaVita Dialysis, providing synergy in operations through the diagnosis, treatment, and delivery of dialysis services.

The portfolio consisted of one multi-tenant asset occupied by the practice and DaVita Dialysis, and two single-tenant DaVita locations.  The nephrologists acted as Medical Directors in the DaVita run centers, so had strong purview and influence into the operations, but were still beholden to the decision making of their corporate partner.  Having structured their leases with DaVita many years ago, the documents were not properly suited to provide long-term security and cashflow.  With short remaining lease terms and limited control in real estate decisions, the nephrologists were faced with the challenge of how to optimize their properties for sale, which would allow them to maximize the value of the assets they’d built, while also continuing to operate their practice uninterrupted.

ERE was engaged to explore a partial sale and leaseback transaction while simultaneously interfacing with DaVita to effectuate a lease extension.  Though DaVita had engaged a corporate real estate advisor, ERE leveled the playing field by representing the best interests of the physicians.  This included conducting a fair market rent analysis to validate/increase rents, extend the lease term, and reduce any brokerage fees that might normally be payable by a Landlord.  With newly stabilized assets, a result of the extended/restructured leases, the physician’s understood that the value of their buildings had reached a peak and opted to move forward in a sale of their real estate portfolio.

By orchestrating a competitive bidding process, ERE generated 6 purchase offers in only 3 weeks, creating leverage to negotiate the best possible pricing and terms.  The advisory and execution by ERE yielded a sale price 15% higher than original client expectations, equating to more than $1M in additional value and resulting in very satisfied clients.

The transaction was led by Collin Hart and Chase Jarrett.

Share the article

Ready to talk?

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.