Case Study

Applying specialized, multi-disciplinary expertise to establish a sophisticated, high-return real estate vehicle



The client

A long-established private equity firm with a focus on investments in healthcare had earned a reputation for successfully creating a number of physicians’ service organizations in markets across the country. Building on this expertise, they sought to form a private REIT to provide existing property owners in the healthcare space enhanced returns on their real estate holdings without having to shoulder the traditional responsibilities associated with real estate ownership.

The challenge

Establishing a successful healthcare-focused REIT requires a distinct combination of highly specialized skill sets, with a deep understanding of finance, real estate, healthcare markets, the legal and regulatory landscape, the projected business environment and more. E78 was challenged to:

  • Structure the vehicle efficiently, optimizing external legal resources, finance partners and internal staff members
  • Source, market and acquire properties
  • Maintain and manage the REIT per IRS requirements
  • Manage the financing needs of the REIT, balancing cash flow and ensuring that sufficient capital is maintained on the balance sheet
  • Manage back-office staffing and accounting for acquisitions, financing and day-to-day operations

The solution

The lead private equity firm called on E78 Partners to help form, structure and administer the REIT, providing a range of services that went well beyond the standard scope of services provided by traditional fund administrators:

    • Worked with the lead PE firm and third-party legal advisors to design an UPREIT vehicle that incorporated a partnership structure within the REIT
    • Negotiated with multiple lenders to find the optimal fit with a national presence, scalability and favorable terms
    • Marketed directly to current partners and property owners
    • Recruited and directed a national brokerage and property management firm
    • Prepared valuations, produced written offers and delivered cash flow analyses
    • Provided all accounting, finance operations and analysis for the REIT
    • Prepared all financials for investors and lenders
    • Managed cash needs for investors, acquisitions and operations
    • Utilized its proprietary investor portal to provide all unit holders real-time, 24/7 information access
    • Ensured compliance with all RET filing and regulatory requirements

The result

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