To date, 37 properties have been signed for $253 million.
Broadstone Net Lease has decided to divest its clinically oriented healthcare assets to focus on industrial, retail and restaurant net lease assets. To date, the company has signed 37 properties for $253 million and a weighted average cash cap rate of 7.9%. In total, we identified 75 healthcare assets for sale.
Assets identified for sale generally are not included in single-tenant net lease portfolios and include clinical, surgical and traditional medical office properties. Broadstone is candid about their challenges, stating that leases are typically shorter, increasing landlord responsibilities, potentially increasing downtime at lease expiration, and in some cases potentially creating conflicts with tenants. He pointed out that the difficulties could become even greater.
“Tenant insolvency, on-site property management, landlord responsibilities and costs, and the complexity of messaging in these properties are unnecessary distractions from our smart and successful capital allocation.” says John Moragne.
For example, Broadstone recognized a $26.4 million impairment charge during the quarter and is currently selling Green Valley Medical Center after the tenant was behind on rent since October 2023.
The anticipated sale of 37 assets is expected to be completed this quarter for a gain of $800,000 over the original purchase price.
When Broadstone sells these holdings, the remaining assets in its healthcare portfolio are typically consumer-focused medical properties held by many publicly traded net lease REITs. These include plasma, dialysis, and veterinary services. An asset with real estate fundamentals that are important to the tenant's business and with little or no regulatory risk.
