Sale / Lease back deal Financials

8 Replies

 I am currently discussing a triple net deal that will have a medical tenant in the building. This is a sale / lease back deal. I will be entering into a partnership with a real estate investing company with this deal. One thing I have asked for is financials on the tenant. I have been informed that because this tenant is part of a Medical Service Organization (MSO) that the MSO guarantees the lease. The partner and the financial institution will be under writing the MSO. So I am being informed that because its a MSO (private equity) that they will not let me see their financials. Does this sound like a fair assessment? Should I push harder for the numbers? This deal seams to be really good with a return each year and and large pay out when we exit the deal in 5 years. Thank you for your help.

That’s an odd dynamic. I think regardless of who’s putting up most the equity, I wouldn’t want to partner with anyone that pulled that with me. They’re essentially asking you to invest blind and on the good word of your lender? 

What is your partnership structure? Who’s responsible for what and where is the equity coming from?

Yeah that’s a non-starter for me. If you’re providing the equity, you should have full access to the financials and all of the underwriting. Two things if I were you: 1) I would seriously reconsider doing this deal because if you went a long with what they want, it would make it extremely easy for them to lie to you. 2) If you still want to do the deal, I would refuse to put up a penny unless you have full access to all financials. 

I would absolutely require it. I had a client just terminate a purchase on a building/sale leaseback from PE. They are highly leveraged and the leas and guarantee is quite thin.