Case Studies

OGDEN PORTFOLIO

LOCATION

 

Ogden, UT

SERVICE PROVIDED

 

Seller Advisory &

Portfolio Monetization

SIZE

 

105,592 SF

CHALLENGE

 

Ogden Clinic, a dominant, independent physician group that has the capacity to serve patient needs all along the healthcare continuum, occupies a four-property, recently constructed portfolio comprising 105,592 rentable SF. Ogden Clinic’s real estate partnership consists of 76 members including physicians and some members of administration. The goal of the ownership, through a monetization of its real estate holdings was twofold: to capitalize on favorable market conditions and to maintain the controls they have enjoyed as owners.

 

ACTION

 

The NKF Healthcare team led a controlled marketing process, which garnered the interest of 15 reputable, potential buyers in the first round of bidding. A review of the initial offers provided a great cross-section of the buyer pool: public and private, traded and non-traded healthcare REITS, private equity funded buyers – some relatively new to the healthcare capital markets, other not so much. The fervor for the portfolio grew immensely as the NKF team spent time with the REITs and private equity groups telling the story of the clinic with its strong position within the market place and the potential for growth with the practice as they increase market share. Three rounds of bidding resulted in three very astute buyers vying for the opportunity in the final round (two public REITs and a private equity funded buyer) with a high bid at a 5.95 cap rate. As buyers pushed the price up and the spread between competitors became very slim, the partnership turned their attention to tax mitigation and the potential to reinvest sales proceeds. This narrowed the field to two buyers and two reinvestment options: an UPREIT or a tax-deferred reinvestment into the new ownership entity.

 

RESULT

 

After a candid discussion with 60+ physician owners, the partnership voted to accept Montecito Medical’s offer of $42,750,000, which represented a 6.12% cap rate and a $5mm premium over the seller’s pricing expectations. The seller structured the leaseback piece of the deal as a 12-year absolute net master lease of the portfolio at market rental rate. The practice will continue to self-manage their facilities and control space utilization

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