Physician Sale-Leaseback Services

Unlock the Dormant Capital in Your Medical Real Estate

What is a Sale-Leaseback?

A sale-leaseback transaction takes place when the owner/occupant of a property sells the real estate asset and concurrently negotiates a lease with the buyer(s) of the property. In this situation, the seller becomes the tenant and the buyer becomes the landlord. The rental rate, duration or term, and conditions of the lease are all negotiated at closing, which allows the practice and their advisor to obtain the most favorable terms possible, or no deal occurs. For this reason, our Avison Young Physician Sale-Leaseback Team begins every transaction collaborating with our clients and tailoring the process to their priorities, such as confidentiality, sale proceeds versus rent obligation and minimizing guarantees.

Sale-leaseback transactions unlock a practice’s equity from its real estate holdings in order to:

  • Reinvest cash proceeds from the sale back into the business
  • Pay-off existing debt
  • Scale up or grow the practice
  • Facilitate the buyout of partners
  • Make cash available to partners for a variety of personal needs

Sale-leaseback strategies are extremely common in other sectors of the commercial real estate market and have become especially popular amidst the Covid-19 epidemic due to liquidity needs of business owners and attractiveness to investors. The Avison Young Sale-Leaseback Team advises medical practices on their sale-leaseback strategies and advocates for their interests. Our clients can attest that our collaborative approach results in successfully executed sale-leaseback transactions. We can help you extract 100% of the equity you have created through the practice’s investment and occupancy of the property.

Why Execute a Sale-Leaseback?

The primary reason that a medical practice should execute a sale-leaseback is to extract 100% of their equity from their real estate asset under terms that are nearly always more favorable than traditional mortgage financing.

Avison Young’s Physician Sale-Leaseback Team’s greatest value-add is advising and representing our client’s interests when it is time to execute, ensuring the most favorable price and lease terms of a sale-leaseback.

We collaborate with our clients to formulate asset and practice specific solutions. When it comes to converting equity in your real estate holding into cash, there is often no better solution than a sale-leaseback. A sale-leasebacks ensures 100% of your equity is converted into cash proceeds, most-importantly under terms you control. Across the country, many medical practices are facing new challenges which have been created by the COVID-19 pandemic as well as other strategic and personal priorities; these business owners are taking advantage of the market’s interest in investing in long-term “fixed income” investments that are created when the buyer leases the property back to the seller for a fixed and period under proscribed terms. These investors think of the investment as “real estate wrapped in a bond.”

The Physician Sale-Leaseback Team

Jim Kornick, Principal
Co-Practice Leader U.S. Medical Office Sales
Direct Line: 202.644.8681

Michael Wilson, Principal
Co-Practice Leader U.S. Medical Office Sales
Direct Line: 312.273.9487

Benefits of a Sale-Leaseback

  • Extract 100% of your equity from your real estate asset as compared with traditional mortgage financing which often caps loans at 50-70% of the fair market value;
  • There is a “ready to transact” market for long-term essential real estate assets, like physician-leased buildings;
  • Converting equity to cash allows your medical practice to sure up your balance sheet and enhance practice’s liquidity;
  • Sale-leasebacks do not result in material changes to the operation or control of the real estate or your practice. Buyer’s specifically target these investments because they provide passive income and the tenant (seller) continues operating the property seamlessly;
  • Transaction terms are almost always more favorable than traditional mortgage financing; the seller can avoid personal guarantees and the risk of refinancing in unknown future markets.
Amanda WillisPhysician Sale-Leaseback Services