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IPA Brokers $11.6 Million Medical Office Building Sale

December 14, 2017
Heartland Clinic
MOLINE, Ill., Dec. 14, 2017 – Institutional Property Advisors (IPA), a division of Marcus & Millichap, (NYSE: MMI) announces the sale of Heartland Clinic and Ambulatory Surgery Center, a 34,020-square-foot medical office building located in Moline, Illinois. The asset traded for $11.6 million, which equates to $341 per square foot.

Scott Niedergang and Gino Lollio, senior directors of IPA’s Healthcare Division, represented the physician partnership that built the building and has been providing care to patients at the facility since 1995.

Heartland Clinic is a multi-specialty practice that includes gastroenterology, pain management, otolaryngology (ENT), urology, and nutrition. The physicians affiliated with the clinic perform their surgeries at the on-site Regional SurgiCenter, an ambulatory surgical center (ASC) that is majority owned and operated by Covenant Surgical Partners Inc. Covenant is a privately held owner of ASCs, anatomic pathology laboratories, anesthesia entities and physician practices across the country. Covenant was recently acquired by private equity firm Kohlberg, Kravis & Roberts, a global investment firm with over $148 billion in assets under management.

“Upon our team’s initial meeting with the physician partnership that developed and owned this facility, it was voiced that there would be a significant tax liability if the building were sold,” says Niedergang. “As a unique solution to this problem, our team proposed pursuing an umbrella partnership real estate investment trust (UPREIT) transaction that allows a seller to defer paying capital gains taxes upon sale.”

“Upon completing the sale as an UPREIT transaction, our clients deferred paying capital gains taxes and diversified their portfolio by receiving ownership in a healthcare REIT portfolio that consists of more than 40 assets,” adds Lollio.

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