Montecito Medical reviews approximately 400 prospective medical office building deals in a typical month. Much of the credit for that figure goes to the company’s business development team, led by Tyler Rhoades and Alex Nicholson.
The secret behind the approach that brings Montecito so many deal opportunities involves a combination of technological sophistication and old-school relationship building.
On the high-tech side, reaping the benefits of the company’s investments is its proprietary MRA system and a variety of databases, Montecito can cast a targeted net to MOB owners and commercial real estate brokers. “We have an edge,” says Tyler, “in that we know where every single medical office building is, and we can pinpoint the kinds of buildings we want to acquire. Then we can pull personal phone numbers and email addresses so we can go right to the decision-makers.”
Typically, twice a week, and sometimes more, Montecito’s marketing communications team sends out more than 24,000 emails tailored to various segments of the contact list: physician groups, developers, health system executives and brokers. From there, Tyler and Alex can follow up on leads and responses.
Having such a technological edge means that Montecito can save time and energy by focusing more efforts on properties that meet its acquisition criteria. “When I reach out directly,” Tyler says, “I can get a 70% reply rate because I have the correct info and have validated it.”
The edge is even keener with our Salesforce software integration. “We built out our platform to automate a lot of the processes and integrate machine learning to be more predictive,” explains Alex. “This saves time and allows us to multiply our efforts. You can understand the entire ecosystem of MOBs better with Salesforce, because we can sort all the MOBs and target the ones we want to acquire.”
For all of Montecito’s technical sophistication, the low-tech side of the equation — relationship building — may be the biggest advantage of all. It starts with listening. Of the 100+ phone calls Tyler and Alex complete in a typical week, a large percentage of them involve a “quality conversation” of half an hour or more. “We listen to their pain points so we can better understand how to apply the “Montecito way” to solve their problems,” Tyler says. “Some partners who own the building want longer leases and higher rents; non-owners want shorter leases and lower rents; and many non-owners want to buy in. Our Physician Reinvestment Program (PREP) addresses these concerns.”
“We also have a lot of brand recognition and a favorable reputation. When we talk with people, they consult with their colleagues in the industry. That kind of word-of-mouth is invaluable.” As a case in point, Alex cites a Dallas-area physician who talked to a colleague in Virginia whose practice had previously completed a sale-leaseback arrangement with Montecito. That conversation, in turn, cemented the Dallas physician’s decision to pursue a deal with Montecito.
“Physicians also tell us that, if they sell their buildings, they don’t have other investment opportunities that are good as MOBs,” Tyler says. “We counter that with the opportunity to invest in our Physicians Limited Partnership, which allows them to invest proceeds in prime medical office properties.”
Building successful relationships is also about patience and persistence. Tyler cites an acquisition completed in mid-2019 that was the culmination of five years of effort and a willingness to help the seller work through various issues during that time. “We got an email the other day from an orthopedic group in Wisconsin,” says Alex. “They told us they liked our model, which allows physicians to reinvest in the property tax-free, better than any others they had seen. They’re not ready yet, but we’re staying in touch.” Over time, such patience has paid off well for the company.
It also helps to have a good product to sell. “Our name, our ability to target MOBs using our database and scoring system, our referrals and our creative investment structures are what make us unique and allow us to continue to be successful. The physicians trust us.”