In a medical office building (MOB) with multiple business lines that all controlled by the same group of physicians, a master lease allows for flexibility. In the sale of the Middle Georgia Orthopaedic Group, the 34,697 square foot building contains their clinic, physical therapy, MRI, imaging and a surgery center. By having one master lease and subleasing to their other entities, they are able to have operational control over the building post sale-leaseback.
This provides the option to modify sublease rental rates, modify uses and sublease entities. For example, the single lease allows the expansion of the ASC or clinic without losing control of the operations of the facility to the purchaser of the real estate. If the tenant decides it is in their best interest to relocate an ancillary service to expand one of the other services, they can do so without having to change the master lease or seeking landlord approval.
By having a master lease, the tenant remains in charge of the facility and decisions on capital improvements and renovations. The physician group sells the real estate for market value and continues to run the facility according to their needs providing operational flexibility.
Original Case Study:
SOLD – Georgia Orthopaedic MOB/ASC Real Estate
ASC Realty Advisors. and JH Winokur, Inc. are pleased to announce the closing of a healthcare real estate sale-leaseback transaction for the Houston Orthopedic Surgery & Sports Medicine, Middle Georgia Orthopedics and Houston Orthopedic Surgery Center building located in Warner Robbins, Georgia. The 34,697 square foot building is home to the county’s dominant orthopaedic practices.
The facility is home to an ambulatory surgery center, physical therapy, MRI, imaging, clinic space and pharmacy. The building has 29 exam rooms in 5 clinic PODS, 1 EMG room, 2 X-ray rooms, 1 Fluoroscopy room, 2 cast room, 7 bays and 2 Operating Rooms.
The real estate was sold under a single long-term absolute NNN master lease. The master lease allows the tenant to have future flexibility for its many business entities and separate business lines within the building.
“One of the most important considerations for physician-owners of healthcare real estate is the impact that the sale, lease and rent rates will have on the on the total value of the organization’s assets, which in this case include interests in the group practice, surgical facility and ancillary services,” states Jon Vick, ASC Realty Advisors. Founder and Managing Partner.
“By creating an exceptional marketing packaging and introducing the opportunity to a large number of real estate buyers on a local, regional and national level, we were able to create an auction-like process that enabled the physician-owners to get maximum value for the real estate” states broker Jason Winokur.
Many ASC owners are considering the sale-leaseback of their ASC real estate to provide liquidity, diversify their assets or simply to take advantage of the high premium prices medical real estate buyers are paying for quality medical buildings under long-term leases.
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