Creative Building Solutions That Build Long-term Equity

December 11, 2024

Navigating Rising Costs & Interest Rates with Creative Solutions

Health Systems today are experiencing increased construction costs, higher interest rates and often less liquidity than five years ago.

Many systems are seeking creative solutions to achieve their strategic goals and expand their footprint at a time when issuing new bonds is unattractive. ERDMAN has created two unique financial solutions that enable providers to increase liquidity, maintain continued control over the real estate and receive 100% ownership of the property at the conclusion of the lease.

Sale/Lease-back

The first solution is a Sale/Lease-back which allows the system to sell existing properties and lease it back, increasing their cash liquidity while providing them control over the property. A unique benefit ERDMAN offers is that the property ownership reverts back to the health system at the conclusion of the lease. This program allows the hospital to invest the sales proceeds into new programs and services it otherwise may not be able to offer.

Build-to-Suit/Lease-back

A second solution is the Build-to-Suit/Lease-back option which allows a system to partner with ERDMAN Development to custom design and construct a new facility specific to their needs allowing them to serve the community more efficiently and achieve their strategic goals without requiring a cash investment. This solution allows the system to have long-term control over the property and offers the unique benefit where the ownership reverts back to the system at the conclusion of the lease. Under this scenario, ERDMAN Development assumes responsibility for design, financing, construction and management of the project allowing the health system to focus their resources on the delivery of care. ERDMAN takes complete responsibility for the project, including the construction budget and any potential cost increases.
ERDMAN Development offers these unique options to create long-term partnerships, providing the equity and debt in a market environment of increasing construction costs and decreased liquidity. ERDMAN can also structure purchase options which allow the system to buy the property prior to the lease expiration if the strategic objectives change.

Take the Next Step

Contact ERDMAN today to learn how our expertise can help you with real estate solutions that
meets the needs of your community and supports your organization’s goals for sustainable growth.