Should You Sell or Keep Your Healthcare Real Estate When Exiting Your Business?

Should You Sell or Keep Your Healthcare Real Estate When Exiting Your Business? By Dr. Allen Nazeri CM&AP

Should You Sell or Keep Your Healthcare Real Estate When Exiting Your Business?

When preparing for a business exit, healthcare business owners often focus on optimizing their financials, streamlining operations, and getting their team ready for a transition. But one major asset class that often gets overlooked—or underestimated—is the healthcare real estate they own.

Whether it's a medical office building, surgery center, diagnostic lab, or specialty dental facility, the property itself can become one of the most strategic components of your exit plan. The key question is:

Should you sell the real estate along with the business, or retain it and lease it back to the buyer?

In my experience advising healthcare business owners and investors, I generally recommend retaining the real estate—if it aligns with your overall wealth and income strategy. But like most decisions in M&A, it’s never one-size-fits-all. It requires a careful look at your EBITDA, tax exposure, and long-term financial goals.

Let’s explore this decision in more detail.

Why Keeping Your Healthcare Real Estate Is Often the Smart Play

For many healthcare founders, their property was acquired early in their business journey. They purchased it when interest rates were low, or land values were modest, and they built or retrofitted it to meet the specific needs of their operation. That means they now hold a valuable, income-generating asset—and they have choices.

Retaining your healthcare real estate and leasing it back to the buyer of your operating business allows you to:

• Generate predictable passive income

• Maintain long-term asset appreciation

• Keep the property in your family or holding entity

• Reduce risk by diversifying your exit (cash from the business + ongoing real estate income)

In many cases, this becomes the foundation of an entrepreneur’s retirement strategy or wealth legacy—one that keeps paying long after they've handed over the keys to the business.

How Rent and EBITDA Are Interconnected in Healthcare Real Estate

This is where many owners get caught off guard: the rent you charge your business impacts your company’s EBITDA, and therefore, its valuation.

Here’s how:

• If you have been underpaying rent (i.e., charging your operating business below-market rent), your EBITDA is inflated. When a buyer or their financial advisors assess your financials, they’ll “normalize” the rent to market rates, which will decrease EBITDA—and potentially lower the purchase price of the business.

• On the flip side, if you’ve been overpaying rent to your real estate holding company (perhaps for tax or liability reasons), your EBITDA is understated. Adjusting that rent down to market rates will increase EBITDA, which could lead to a higher valuation and payout.

This is a critical conversation to have with your M&A advisor and CPA. Ideally, you should normalize the rent 12–18 months before going to market to present clean, predictable numbers that are aligned with what buyers expect.

This small move can add significant enterprise value.

Leaseback Structures for Healthcare Real Estate Can Add Long-Term Stability

If you decide to keep your real estate, then creating a leaseback agreement becomes essential. Buyers want to know that the location is secure and the lease terms are competitive. Sellers want to ensure long-term income with minimal headaches.

Here’s what to consider in structuring your lease:

• Longer lease terms (10–15 years) with renewal options are preferred, especially by institutional investors.

• Use a triple-net lease (NNN) structure, which passes most of the property expenses (taxes, insurance, maintenance) to the tenant.

• Build in annual rent escalations (2–3%) to keep pace with inflation.

• Make sure the lease reflects market rent—validated by a third-party appraisal if needed.

A properly structured leaseback benefits both parties:

• The buyer gets security and stability.

• The seller (you) get passive income and retain control over a high-performing asset.

But here’s a word of caution: lease terms can affect EBITDA. If the lease is too expensive or poorly structured, it could suppress the company’s profitability and make the deal less attractive to buyers. That’s why working closely with your M&A advisor and accountant is non-negotiable.

When Should You Consider Selling Your Healthcare Real Estate?

While I often advise clients to hold their real estate, there are cases where selling makes more sense:

• You need liquidity now for other investments, debt repayment, or retirement.

• You're exiting completely and don’t want the ongoing responsibility of property management.

• You're planning a 1031 exchange to upgrade to a better-performing asset.

• You’re not confident in the long-term viability of the location or the tenant.

If you choose to sell your healthcare real estate, you have options. You can:

• Sell it as part of a combined transaction (business + real estate),

• Sell it to a third-party investor with a leaseback in place,

• Or time the real estate sale separately from the business to optimize tax outcomes.

Each path has tax, timing, and legal implications. And each one affects your net proceeds differently.

The Final Decision: Align Your Healthcare Real Estate Strategy with Your Wealth Plan

In the end, your decision to sell or keep your healthcare real estate should align with your personal and financial objectives.

Ask yourself:

• What’s your desired lifestyle post-sale?

• Do you prefer lump-sum liquidity or steady income?

• Are you looking to minimize taxes, diversify assets, or maximize ROI?

• Do you have a strong CPA, attorney, and wealth advisor helping you navigate the options?

The real estate piece is too significant to treat as an afterthought. With careful planning, it can become a cornerstone of your exit strategy.

Final Thoughts

Healthcare real estate is often one of the most undervalued elements in a business exit strategy—but it can also be one of the most profitable.

Whether you decide to sell, lease it back, or hold it long-term, your real estate should serve your future—not just your business past.

If you’re preparing to exit your healthcare company and want a strategy that includes both your business and real estate assets, let’s connect. A 30-minute strategy session could be the difference between leaving money on the table—or walking away with the legacy you’ve built.

Dr. Allen Nazeri, aka "Dr. Allen," boasts over 30 years of global experience as a healthcare entrepreneur. He is the Managing Director at American Healthcare Capital and Managing Partner at PRIME exits. Dr. Allen provides strategic growth consulting to leadership teams of both privately held and publicly listed companies, ensuring their preparedness for successful exits.

He holds a Dental Degree from Creighton University and an MBA in M&A and Investment Banking from the University of Bedfordshire. He is a Certified M&A Professional (CM&AP) from Keenesaw State University. Dr. Allen is the author of the brand new book "Selling Your Healthcare Company at a Premium". Dr. Allen offers a free valuation to business owners ready for a partial or complete exit strategy. Dr. Allen collaborates with strategic buyers, private equity firms, and institutional investors, taking direct accountability for the annual successful sell-side representation of nearly $750M in enterprise value.

To have a confidential discussion about your company and receive a free valuation, please email Allen@ahcteam.com or Allen@ahcpexits.com or fill out the valuation form https://www.pexits.com/freecompanyvaluation

You can also now communicate with Dr. Allen's clone https://www.delphi.ai/drallen