Heartland Clinic and Ambulatory Surgery Center (ASC) is a two-tenant, 34,020-square-foot medical office building in Moline, Illinois. This facility includes gastroenterology practice and endoscopy center that recently partnered with a national surgery center management company.
Heartland Clinic provides with high-quality, comprehensive healthcare with an on-site lab, a state-of-the-art multi-specialty surgical center and a staff of physicians from diverse specialties. The building is operating under an original 20-year absolute triple net lease with 16 and a half years of base term remaining with the tenant responsible for roof and structure.
This assignment was an umbrella partnership real estate investment trust (UPREIT) transaction, in which the property owners contributed their property in exchange for ownership units in the operating partnership (“OP Units”).
An “umbrella partnership REIT” (“UPREIT”) is the common name for a joint venture formed by a REIT to partner with existing owners (sellers) of real estate. Instead of purchasing a property for cash in a taxable sale, REIT can instead cause its operating partnership to issue OP units to the owner(s) as consideration for a contribution of the property to the REIT’s operating partnership. Operating Partnership (“OP”) units allow a REIT to acquire properties from owners who have substantial built-in gain without triggering a recognition of that gain by the owners for tax purposes. The percentage of the owner’s interest that is contributed to the REIT’s operating partnership in exchange for OP units is treated as being contributed in a tax-deferred transaction. Owner receives OP units equal in value to the contributed interest, based on then-current market value of the REIT’s common stock, and owner defers recognition of its built-in gain for tax purposes until the REIT causes the operating partnership to sell the property or the owner redeems its OP units in exchange for REIT common stock or cash.
Seller Profile: Physician Partnership
Buyer Profile: Publicly Traded Umbrella Partnership Real Estate Investment Trust (UPREIT)