ERE Healthcare Real Estate Advisors (“ERE”) is pleased to announce the successful sale of a comprehensive gastroenterology facility serving the surrounding Northeast Georgia region.

In 2019, ERE was engaged by the practice to structure a sale-and-leaseback of their flagship facility for purposes of partnership succession planning. Shortly after the successful closing of the initial transaction, the practice’s executive team re-engaged ERE to strategize on a de novo location, expanding the practice’s footprint into Braselton to support continued growth.

The physician partnership had already acquired the land for their new location, but required guidance on building size, rent comparable analysis, lease structuring, and projected sale-leaseback value.  All of these variables would guide their project towards a worthwhile endeavor, not only supporting patient care long term, but also to ensure it made financial sense.  Simultaneous with the new development, the practice was exploring a partnership with USPI, introducing a highly regulated third party into the transaction process.  This additional layer stressed the importance of striking a fair market value rent and lease while still maintaining the viability of the project.

ERE worked with the practice over the course of 2 years to support, and in some cases lead, their real estate endeavor.   Given Georgia is a CON state, few ASC rent comparables are publicly available for new construction facilities, so ERE took a regional approach to validate the rental rate necessary to make the project pencil.  51% of this rental obligation would ultimately be borne by USPI, helping to ease any burden on the practice’s bottom line due to increased occupancy expense.

Once the new development and USPI lease were complete, ERE conducted a proprietary Call for Offers process, generating 8 competitive offers, and resulting in a premium value for the facility.  Leveraging the experience and guidance of the ERE Team, the Practice more than doubled the value of their investment over the course of a 2-year development and sale process.

The transaction was led by Collin Hart and Marc Flynn.

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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.