OrthoWilmington Case Study
OrthoWilmington, the region’s dominant independent orthopedic practice, was in the process of merging with three other practices to form EmergeOrtho. The group’s 23 physicians operated out of two facilities, maintaining extremely high patient volume. OrthoWilmington also was in the process of building a third, 14,500 square-foot facilities 30 miles away. One deterrent to support for the sale among the group: concerns that not all physicians would benefit from such a transaction.
During the merger with the three other practices, Montecito assisted OrthoWilmington by structuring the sale-leaseback so that the new entity could assume all leases. Now, EmergeOrtho is one of the largest physician-owned orthopedic practices in the country. Montecito also worked closely with OrthoWilmington to structure the agreement so that all physicians in the group — not just those who previously owned shares of the buildings — could reinvest in the new LLC.
Physicians approved the sale of the group’s entire portfolio (including the third building then under development) to Montecito, which became OrthoWilmington’s partner for growing its real estate development and acquisitions. In addition to structuring a long-term lease that met the needs of physicians, Montecito’s creative deal structure enabled reinvesting physicians to receive frequent distributions and participate in future equity events when their buildings traded again.
The experience with Montecito was a seamless and hassle-free transaction that allowed us to monetize the assets, re-invest in the acquiring entity and keep all property management. Clearly a win-win, which was why our physician group ultimately voted in favor of the sale.- James Rouse, Chief Administration Officer