MultiCare issued an RFP for the expansion, yielding responses from several for-profit national owners of healthcare real estate. The proposed transactions included MultiCare’s giving up long-term control of the facilities and paying higher leasing costs.
In the end, however, MultiCare chose Centurion, another non-profit, to structure a four-building sale-leaseback. The structure of the 20-year self-amortizing lease offered the lowest rent compared to for-profit alternatives and included a reversion of the facilities at the end of the term to MultiCare.
The transaction resulted in the following terms:
- Significant annual rent savings
- $800,000 annual savings through property tax exemption
- 20-year self-amortizing lease terms
- Ownership of the facility at the end of the lease term
”Centurion brought a unique and creative solution to MHS that enabled us to save in excess of $40 million over the life of the transaction through reduced rent, elimination of property taxes and reversion of the facilities vs. what we were being offered by the rest of the developer/landlord market. They partnered with us in a collaborative and transparent process and the results significantly exceeded our expectations.”
Jim McManus, Chief Financial Officer, MultiCare Health System
