If you own the building your medical or dental practice occupies, you have two connected investments: the practice and the real estate. A sale-leaseback separates those investments by allowing you to sell the property while the practice remains as a tenant under a negotiated lease.

The transaction may provide capital for equipment, technology, expansion, marketing, hiring, or paying down debt. It also creates an ongoing rent obligation and changes how much control you have over the property.

Before proceeding, evaluate how the sale and lease would affect your practice today and your plans for the future.

How Does a Medical Office Sale-Leaseback Work?

You sell the real estate to a buyer and arrange for the practice to lease the space back as part of the transaction. The buyer becomes the landlord, and the practice continues operating under the new lease.

The proceeds available to you depend on the sale price, loan payoffs, transaction costs, applicable taxes, and other closing adjustments.

If separate entities own the property and operate the practice, identify which entity will sell, which will sign the lease, and whether additional guarantees or financial support will be required.

Start With What You Want the Sale to Accomplish

A sale-leaseback should address a specific ownership or business objective. Accessing capital is one consideration, but the use of that capital and the cost of the new lease deserve equal attention.

Questions to consider include:

• Are you raising capital for equipment, technology, additional staff, marketing, or expansion?
• Do you want to reduce the capital tied up in the real estate?
• Are you preparing for retirement, bringing in a partner, or considering a practice sale?
• How long does the practice realistically expect to remain at this location?
• Would continued ownership or another financing option better support your plans?

The answer should guide both the sale strategy and the lease you are willing to accept.

Protect the Practice’s Ability to Operate in the Space

Remaining at the same address may help avoid the disruption of relocating patients, staff, equipment, and practice operations. Continued occupancy, however, needs to be supported by the lease terms.

Review the practical requirements of the practice, including:

• Patient and staff parking
• Building access and operating hours
• Signage and visibility
• Use of exam rooms, treatment areas, and specialized improvements
• Installation, maintenance, and replacement of equipment
• Responsibility for HVAC, plumbing, electrical systems, and other building components
• Approval requirements for future alterations

Have the appropriate advisors review how those needs are addressed in the documents before committing to the transaction.

Plan for a Future Practice Sale or Ownership Change

The lease should be evaluated alongside your plans for the practice. A future buyer, new partner, or successor may need to occupy the space under that agreement.

Discuss lease assignment, changes in control, renewal options, guarantees, and any conditions affecting a future transfer with your attorney. Understand whether you could remain responsible for obligations after selling the practice.

If retirement or a practice sale is part of your plan, coordinate the real estate decision with that process. Negotiating the property sale without considering the practice’s future occupancy needs can create avoidable complications.

Evaluate Specialized Improvements From the Buyer’s Perspective

Your medical or dental buildout may be essential to your practice without having the same usefulness to another occupant. Buyers will consider the property’s condition, location, layout, and potential leasing options alongside the proposed lease.

Prepare available floor plans, information about improvements, maintenance records, and details about equipment ownership. Clearly distinguish the real estate and building improvements from equipment or other assets that are not included in the sale.

Buyers will also evaluate the financial capacity of the entity responsible for paying rent. Be prepared to discuss what business information can be provided and how sensitive materials will be handled.

Compare Net Proceeds With the Ongoing Occupancy Cost

A proposed purchase price is only one part of the transaction. Review the estimated proceeds alongside the rent and other obligations the practice would assume.

• Starting rent and scheduled increases
• Initial lease term and renewal options
• Taxes, insurance, maintenance, and repair responsibilities
• Potential costs for major building systems
• Deposits, guarantees, and required improvements
• Flexibility to expand, reduce space, relocate, or transfer the practice

A higher price may come with lease terms that are less attractive for the practice. Evaluate the full arrangement rather than maximizing proceeds without considering the commitments attached to them.

Review the Tax and Accounting Treatment

A sale-leaseback should not be presented as an automatic tax saving, a guaranteed reduction in financing costs, or a way to remove all occupancy obligations from the balance sheet.

Ask your CPA to review the potential tax consequences of the sale, estimated after-tax proceeds, treatment of lease payments, and financial statement effects. Your attorney should review the sale and lease documents and the obligations of the entities involved.

Compare the proposed transaction with continued ownership and other available options before deciding which approach fits your circumstances.

Discuss Your Medical Office Property

If you own a medical or dental office property in Hillsborough, Pinellas, or Pasco County, I can help you evaluate potential marketability and discuss how a sale could fit your practice and ownership plans.

For a broader explanation of the sales process, visit my page on selling medical office property.

Call John Milsaps at (813) 279-1366 or send a message to discuss your property.

For a starting point on potential value and sale options, request a confidential property value review.