To sell your Ambulatory Surgery Center (ASC) real estate, you should prepare the property and its lease, determine the market value, engage a specialized broker to attract national buyers, obtain competitive bids, and complete a sale-leaseback transaction.
Key Steps to Maximize Value
Prepare the Lease and Property:
Prior to marketing, ensure your lease terms maximize the real estate’s value. Set the rent at fair market value (typically $30-$40/sq. ft. NNN, sometimes higher). Many ASC owners undercharge themselves, which limits the real estate’s sale price.
Establish a long-term, triple-net (NNN) lease (10-to-15 years plus renewal options) to ensure stable, long-term income for the buyer. Make these changes before selling a controlling interest in the ASC business, as you may lose control over lease negotiations after the sale.
Determine Market Value:
Get a clear understanding of your property’s worth. Valuation is often based on the income approach: Net Operating Income (NOI) divided by the capitalization rate (cap rate), which is typically around 7% for medical properties today.
Engage a Specialized Broker:
Avoid using local residential or general commercial brokers. Work with a broker who specializes in medical properties and has a national network of qualified buyers (e.g., real estate investment trusts, national ASC organizations, private equity firms).
These specialists understand the nuances of ASC real estate value and can solicit competitive offers, which drives up the price.
Solicit Competitive Bids:
A competitive sales process is crucial to ensure you are receiving the best possible offer and terms for your property.
Structure a Sale-Leaseback:
This is the most common transaction structure. You sell the real estate to an investor for cash and simultaneously sign a long-term lease to continue operating the ASC, allowing you to maintain operational control while accessing immediate capital.
Time the Sale Appropriately:
The optimal time to sell is when the market is favorable (high buyer demand, low interest rates) and you have sufficient time left on your lease term to offer buyers long-term security.
Learn how to prepare your Ambulatory Surgery Center (ASC) real estate for sale by focusing on lease terms, market value determination, and specialized brokerage services:
Navigating the complexities of an ASC real estate sale can be a once-in-a-lifetime event for physicians. To ensure you’re making the most informed decisions, you should explore the potential tax implications of a sale-leaseback transaction, such as capital gains and the use of a 1031 exchange?
Physicians can obtain more information about ASC strategic transactions and sales of ASC and MOB real estate by contacting Jon Vick at 760-291-7745 or JH Winokur Inc.
Since 1984 we have advised ASC physician-owners on business matters relating to physician-owned ASCs, endoscopy centers (ECs) and surgical hospitals. ASC/MOB real estate expert and broker JH Winokur, Inc. specializes in ASC & MOB real estate sales and sale-leasebacks, expansion capital, property valuations and 1031 exchanges.