Physician Co-Investment

Physician Co-Investment: Unlock the Equity in Your Building. Keep Ownership.

Capital for your organization. Ownership for your physicians. Through Montecito’s Provider Real Estate Partnership (PREP), the physicians who sell a building to us can co-invested in it, tax-deferred, and share in the upside when it sells again as part of a larger portfolio.

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How a Sale-Leaseback Works

What We Hear

“Our Senior Partners Want Their Equity Out. Our Younger Physicians Can’t Afford to Buy In.”

Physician-owned real estate solves one problem but creates another at the same time. The asset builds wealth for the partners who bought in originally, then becomes the obstacle to succession: retiring physicians need liquidity, incoming physicians face a buy-in priced at today’s value, and the practice’s growth capital stays locked in the walls.

PREP was created to resolve this concern. It levels the playing field by allowing senior physicians to cash out if they want and younger physicians to buy in and become owners.

How the Provider Real Estate Partnership Works

Step 01

Montecito Forms the Acquiring Entity

A new special purpose entity acquires the building in a sale-leaseback. The practice signs a long-term lease and stays in place.

Step 02

Sellers Roll a Share of Proceeds Into It

Participating physicians contribute an undivided ownership interest in the property to the new entity for a minority stake of up to 49%. Montecito provides the balance of the equity.

Step 03

The Reinvestment Is Structured for Tax Deferral

Because the sellers' original holding period carries forward, the rollover can be structured as tax-deferred with respect to long-term capital gains.

Step 04

Physicians Earn Alongside Montecito

Co-investors sit on the same side of the table as Montecito, pari passu: distributions during the hold, and a pro-rata share of net proceeds when the building sells as part of a larger portfolio.

Why Physician Groups Choose PREP

Tax Deferral, Recurring Income, and a Second Bite of the Apple

Tax Deferral

The co-investment is structured as tax-deferred on long-term capital gains, so more of the building’s value keeps working.

Recurring Income

Ongoing monthly cash flow distributions for the life of the hold, as a true economic partner in the property.

Succession, Recruitment, and Retention

Retiring partners take their equity off the table. Younger physicians buy in at a basis they set. The practice gains a tool for recruiting and keeping the physicians it needs.

$122M+ Invested by Physicians Through PREP

Over the last ten years over 1,000 physicians have invested more than $122 million alongside Montecito through PREP. It is available on sale-leasebacks and on development projects, where tenants and physicians can invest up to 49% in the new joint venture.

PREP Program Results

XRAYVSN Case Study