Healthcare Sale-Leaseback

Sell the building. Keep the practice. Put your equity to work.

If you own the building your practice operates in, you are running two businesses: the practice you built, and a piece of commercial real estate that has quietly grown in value. A sale-leaseback separates the two. You sell the building to an investor, sign a long-term lease, and keep operating exactly as you do today. Same address, same patients, same staff, with the equity turned into cash.

It is one of the most common ways healthcare owners fund growth without adding debt or giving up ownership of the practice itself. Surgeons and physician groups use it to open a second location or buy out a retiring partner. Dentists and veterinarians use it ahead of a practice sale. Surgery center and specialty operators use it to put capital back into equipment, people and new sites.

Why Owner-Operators Do It

You unlock the full value of the building. A bank loan against your building lends only a portion of its value and puts more debt on your balance sheet. A sale-leaseback turns the building’s full market value into cash, and what replaces it is a lease whose terms you help write from day one.

Your capital earns more in your practice. Every dollar tied up in walls and a roof is a dollar not working in staff, technology or a new location, and for most successful practices those investments earn far more than the building ever will.

Investors want what you own. Well-leased healthcare buildings are in steady demand from private investors, 1031 exchange buyers, family offices and REITs. Across the 487 single-tenant healthcare properties we track for sale today, the median asking cap rate is 6.76%, with most between 6.04% and 7.44%. Most are priced between $1.8 million and $4.1 million, with a median of $3 million. Buyers pay the most for long leases, established operators and essential locations, which describes most successful practices.

It can make a practice sale cleaner. Buyers of a practice, whether a private equity platform, a health system or a younger physician, often prefer to rent the real estate rather than buy it. Selling the building separately lets you capture its value on your own terms and your own timeline.

How Your Rent Sets Your Price

In a sale-leaseback you are both the seller and the tenant, so you help write the lease that sets the price. Investors value a net-leased building by dividing its annual rent by a cap rate. A higher rent means a higher price today, and a higher expense for your practice every year after.

The right rent is one your practice can comfortably carry through a slow year. For surgery centers, investors typically look for the center’s earnings to cover rent at least two times over. Term matters as much as rent: investors pay more for a 15-year lease than a 5-year one, and renewal options and annual increases shape the price too. A lease that is too aggressive can cost you more over its life than it brings in at closing.

Try it yourself. Choose your property type and enter the annual rent your practice could comfortably pay.

How the Process Works

1. A confidential conversation and valuation. We review the building, the financial strength of your practice and what you need the proceeds to do, then estimate a value range based on comparable healthcare properties and current investor demand.

2. Structuring the lease. Together we set the rent, term, renewal options, annual increases and who pays taxes, insurance and maintenance. Most healthcare sale-leasebacks use a net lease, where the tenant covers those costs, because that is what investors pay the most for.

3. Finding the right buyer. We take the property to qualified buyers, including private investors, 1031 exchange buyers, family offices, REITs and institutional funds. Some owners want the widest market for the best price. Others want a quiet sale to a single buyer. You choose, and you approve the buyer and every term before anything is signed.

4. Closing. You receive the proceeds and the lease begins. Nothing changes for your patients or your staff.

What to Weigh Before You Sell

A sale-leaseback is not right for everyone. You give up future appreciation on the building and the ability to sell or redevelop it yourself. Rent becomes a fixed commitment for the length of the lease, so if you expect to relocate in a few years, a long lease may not fit.

There are taxes to plan for. Selling the building generally triggers capital gains tax, and depreciation you have already taken is recaptured. Some owners reinvest the proceeds through a 1031 exchange into other real estate, and others take the cash and plan around the tax. Bring in your CPA and attorney early, because how the sale and the lease are structured can change the result.

If you want cash without selling, a refinance or cash-out loan may be the better tool. Our sister company, Healthcare Real Estate Fund, arranges financing for healthcare property owners, so we can lay out both paths side by side.

Sources: Colliers, Ambulatory Surgery Center Valuation: Understanding Risk, Rent Structure and Returns. Market pricing reflects single-tenant healthcare listings tracked by Investment Grade Research and updates automatically. Estimates are for discussion only and are not an appraisal, an offer, or tax or legal advice.