Following years of dedication to their businesses, medical practitioners are increasingly researching financially flexibility when it comes to property. Practitioners require capital to grow the business and cement their future and releasing the capital tied up in real estate can provide many valuable benefits. As simple as it may seem, the best way to achieve this is via a standard ‘leaseback’ arrangement.
Redeploying capital back into the growth of your core business through leaseback is increasing in popularity. The key benefits astute business owners choose this option are to:
- increase financial flexibility to the practice itself.
- retire debt and/or sell at an opportune time without fear of settling for a low value when retirement arises. create cash liquidity for expansion equity or investment in equipment.
- create carry-on capital.
- provide a level of protection under a formal lease agreement for the continued use of the premises as long as the practitioner desires and/or his/her successors.
- release capital without affecting the ongoing business practice of providing medical/services to patients. spread risk among other investment types including equities and term deposits and eliminate the risk of fluctuating property values.
- eliminate disputes between existing and incoming partners relating to ownership value of freehold interests. If comprehensive succession planning is in place, alternative options such as leaseback agreements will eradicate this.
- remove capital commitment to the property for new business partners to negotiate (other than the lease rental sum); consequently the outgoing partner would not have any ongoing liability to manage.
Traditionally property ownership was viewed as less expensive and provided a sense of control for the company however business owners are rapidly realising that strategically this is a costly way to progress forward. Moving real estate off the balance sheet allows capital to be injected back into the core business along with transferring property ownership risk. Leaseback arrangements are an intelligent way to continue business ensuring the best value through the sale of property and the acquisition of a secure lease – which outgoing partners may assign to new partners.
Our highly experienced team at FVG have worked with many clients to advise, implement and manage leaseback agreements. Conducting due diligence within the medical industry, our expertise achieves valuable outcomes in this specialist area and allows us to be pioneers in identifying trends. One such trend is salaried practitioners apathetic about any form of ownership with somewhere between 30-50% expecting to retire in the next 5-10 years; this trend will have a significant impact on the direction of medical real estate.
As a company at the forefront of medical property FVG methodically analyses investment potential of specific markets. Our ability to identify untapped markets provides a strategic advantage to our clients; the general superannuation funds market for example, has an interest in investments specific to the medical industry and would be considered ‘AAA’ rated.
The FVG team are passionate about property and are achieving valuable outcomes for our clients in the medical industry. Extensive research and analysis confirms the sale and leaseback option should be considered by any general practice owner committed to strategic business planning, growth and success.
For a no obligation discussion, please contact Mark Ruttner – 0411 419 674 or 03 9690 1112.