Published May 11, 2012

MOB Ownership – Which Healthcare Real Estate Ownership Model is Best for You?

Joint Venture or Partnership Ownership

Physician tenants and the owner create a new company or LLC to jointly own a medical office building, ambulatory surgery center, or other facility.
Pros:
•    Achieves real estate investment desires of physicians
•    Offers relatively easy financing & structure
•    Allows for professional real estate oversight for management, capital improvements, leasing & financing
•    Aligns interest of physicians & owners
Cons:
•    Requires consensus for decision making
•    Creates relatively illiquid investment of shares or units
Condominium Ownership
Physician tenants own the suites they occupy in a medical office building and pay condominium association fees.
Pros:
•    Achieves real estate investment desires of physicians
•    Provides tangible asset ownership
Cons:
•    Creates illiquid investment
•    Raises potential fraud & abuse law issues if owned by hospital
•    Increases difficulty of obtaining external financing
•    Increases set-up costs & complexity

Direct Ownership

Physician tenants wholly own a medical office building. This model is generally best suited for a smaller, single-tenant building.
Pros:
•    Achieves real estate desires of physicians
•    Provides full control of real estate to the extent not restricted by a ground lease to the hospital
Cons:
•    Raises risk due to fluctuating real estate values
•    Threatens asset ownership if physician/hospital relationship changes

Our team of healthcare real estate professionals can help you answer questions about medical office building ownership and other topics. For more information, contact the expert listed below at (800) 270-9629.

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