To execute this strategy , a client will need to control the decision-making for both the medical practice , as well as the real estate . Typically , the client will have separate ownership entities for these assets . In the case of an extensive practice with several physician owners , you may be dealing with more than one decision-maker or the group as a whole .
Timing considerations for a sale and leaseback strategy
Most physician owners would likely tell you that they are so focused on running their practice that their real estate ownership does not often get the attention it deserves . We often hear that it is “ too early ” to think about selling their real estate . However , with the average age of physicians at 53.9 years and typical lease terms running between 10 and 15 years , now could be the best possible time to consider a sale and leaseback as a real estate exit strategy .
If a client waits too long , past the point of being able to execute a long-term lease , it could cost them hundreds of thousands , if not millions , of dollars in value . Practically speaking , a lease with three to five years of cash flow has substantially less value ( a greater inherent risk to the buyer ) than one with 10 to 15 years . Educating your client that it is important to start thinking about how a sale could fit into their retirement strategy , sooner rather than later , will benefit them in the long run .
Practice sales and lease structuring
With the financial markets beginning to rebound from recent interest rate hikes , we have already begun to see a more robust year of investing . Not only does this trend apply to real estate but also to private equity-backed Management Service Organizations ( MSOs ) seeking to acquire and pool together independent physician practices .
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