Sale and Lease back of Hospitals in India

  • 30/03/2021 2:53 PM
  • India
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  • Category : Hospitals


Sale and Lease back of Hospitals in India.

Ticket size: Hard Asset valuation: INR 50 crores and above

Type of Hospital:

100 to 200 Beds Super-Speciality, Multi-Speciality, Chain of smaller hospitals’ (50 beds each)

To evaluate the qualification of the Hospital as per PE funds mandate we will need:

1. Financial numbers like:

  • Occupancy Ratio
  • Monthly Burn
  • Average per bed earning vs cost etc.
  • Earnings from Services

2. Will the operating partners remain the same or does the PE have to bring in an O & M partner.

3. Valuation of Hard Assets of the Hospital:

  • Expected Valuation of Land
  • Expected Valuation of Building

4. Detailed list of facilities like no of operation theaters, ICU’s etc and allied services provided by the Hospital.

The Hospitals Equipments, Furniture, Ambulances etc. will not be a part of the valuations. Only Real Estate value taken in consideration.

Based on the earnings of the Hospital the PE fund will work on a Yield Rental amount, which the management has to pay the PE for using the property. Any earning over and above the rental payments is the profit retained by the management.

For example: The yield rental expectation on the spend of 100 Cr (cost to buy the asset), would be  10% per annum then the Net Earnings will have to be over 10 crores for the management to make any profit.

The lease tenure would typically be more than 25 years for both the management and the PE to earn decent returns on the same.

Advantage of this type of deal is:
1. The current owners get a chance to liquidate their assets.
2. The management or operating partners continue to earn revenue that the well-established hospital generates.
3. The PE investor get Real Estate (Land and Building) and a fixed Rent on leasing the running hospital to the operating partner.

For outright sale we will need the same details as above
You may call or WhatsApp on 91-98200-88394
Team – Intellex Strategic Consulting Pvt Ltd (India),,,,

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