A Cash-Raising Healthcare Real Estate Strategy
If it stands, the new rule would require businesses to declare leased properties as assets and liabilities on their balance sheets. The boards are accepting comments through Sept 13, and will likely issue a final rule in 2014, if they decide to proceed with the accounting changes.
"We have put on hold our strategy of monetizing future properties as we evaluate the new proposed lease accounting rules and determine if there are any other structures that get us to the same place as did [this] monetization," Gombar says.
Jeff Calk, a partner at Nashville-based law firm Waller, says hospitals are smart to look at selling office buildings as a way of accessing capital.
"They could do something better with that money than let it sit in real estate… It's a good chunk of change that they could reinvest in their business," he says. "They can use that money to pay debt or invest in one of their core businesses. They take the money out of a low-yield asset to invest in a higher-yielding asset."
The biggest downside to selling a medical office building is the loss of control over the structure, which is a concern for many hospitals when their outpatient physician practices remain in place as tenants, Calk says.
"A lot of hospitals are nervous that the third-party investor won't be as sensitive as they are to the needs of the physicians renting the space. For example, if the power goes out, the new owner might not rush to fix the problem… Once you sell a building, you don't have the control that you once had."
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