Case Study

Industry: Healthcare Syndication

Region: Pacific Northwest United States

Assignment:

1. Assess the real estate value of an existing hospital in a tertiary market with no comparable local healthcare facilities.
2. Determine fair-market lease rate to offer hospital's tenants (syndicated healthcare partners).

Approach:

• Travel to meet with all involved parties (including representatives from both the hospital and the syndicate partners) in order to gain a thorough understanding of the actual costs that went into the construction, development and ongoing operation of the facility.
• Conduct comprehensive analysis of comparable facilities in other tertiary markets within a 150-mile radius. Draw on SRC's global network to contact several real estate agencies in each comparable market and identify any local factors that might skew the data collected. Contact local taxing authorities in each market to understand any property tax variations that might impact the operating expenses of the facilities in question.
• Complete financial analysis including a cost-segregation review. Analyze the relative values of comparable facilities in similar tertiary markets. Present findings to the client along with a summary of data and analysis.
• Negotiate lease between the hospital management and the prospective tenants.

Outcome:

Both parties gained favorable terms, with the syndication signing a 10-year lease at a 10% capitalization rate and the hospital able to reduce its operating costs by 30%, allowing them to turn a profit for the first time in 4 years.