Proper Planning is Key When Expanding
Before any healthcare real estate development or expansion project, there is a lot of upfront planning to ensure it’s the right move for the hospital or health system. What goals are trying to be achieved by expanding? How will it get funded? Will we lease or own? These are just a few questions that need to be asked during the planning process that set the foundation for your strategy.
This article will provide health systems with an overview of how they can structure real estate development projects to maximize their returns by using a developer and how it can benefit their pockets.
The Expansion Has Been Approved, Now What?
Coming up with a strategy of how your approved expansion or consolidation will be implemented can be very time consuming and tricky to navigate at times. The use of a healthcare real estate development partner can assist in the decision making process. A flexible partner is able to outline and build proformas for your leadership to compare, from using third party capital to joint venturing to using your own capital. These proformas help your leadership come to an informative decision based on your needs. The goal is to make sure that you are using a model that benefits your organization in the long term as well as the short.
It Pays to Look Around
When it comes time to chose a healthcare real estate development partner the task again may seem a bit daunting. Talking to your counterparts at other hospitals and health systems is a great place to start. You may have relationships built or a pile of information that was sent to you from firms throughout the years. When looking to choose a partner a great place to start is to make sure that they check the box in terms of experience, transparency, cost and culture. In many cases you are looking for a partner that will help shape your organization for years to come, so finding a firm that can flex with your needs is essential.
Developers Can Provide Low Rates
Whether your organization’s strategy is to use its own capital or uses third party capital can change from time to time. Speed to market, cap rates, debt capacity issues can all play a role in whether to use your own capital or not. Many healthcare real estate developers have competitive rates that are close to the bond market. But, there are few developers that are able to develop a project that offers tax exemption, no property management fees, no annual escalations, ownership reversion options and low cap rates.
Conclusion
While the process of expanding your healthcare real estate can be time consuming, it is an extremely important part of many hospital and health systems future strategies. Looking at all options is an important part of the process in assuring the right partnerships are forged now and in the future.
Boldt has the extreme flexibility to fit whatever your organizational goals are and also has the ability to change hats throughout the process. If you would be interested in further conversations, please don’t hesitate to reach out, (844) 44-BOLDT or boldt.development@boldt.com.