CHALLENGE

The Newmark Knight Frank Global Healthcare Services team recently represented MBRE Healthcare, a national owner/operator of medical office buildings, in their steadfast pursuit of Rainier Orthopedic Institute in Puyallup, WA. Anchored by Proliance Orthopedic Associates, a dominant provider of orthopedic care in the Puget Sound region, the 31,921 SF Medical Office Building (MOB) includes a state-of-the-art outpatient ambulatory surgery center and imaging suite. Seller structured the disposition as a sale-leaseback with each tenant signing long-term leases commencing upon sale. The seller entity consisted of seven practicing physicians and a development partner.

ACTION

Represented by NKF, MBRE Healthcare won a quiet marketing process that resulted in a very aggressive sales price. The final two participants in the marketing process were MBRE and a dominant, public healthcare REIT. As both groups pushed their respective limits on price and deal terms, reinvestment of sales proceeds quickly became a deal point of great importance.

RESULT

Working closely with Seller’s broker, Newmark Knight Frank's Global Healthcare Services team structured a JV agreement with Buyer and Seller, which awarded the physicians a strong preferred equity return, multiple options to divest, and limited risk exposure. The seller’s equity contribution to the new JV was substantial with the seven physician members choosing to reinvest all of their equity from the sale back in the new ownership entity.