This is Part II of Critical Real Estate Considerations in Health Care Transactions. Part I can be found here.

Real estate leases are critical components of health care operations and are often key considerations in health care transactions – whether as free standing lease arrangements, in connection with the acquisition or disposition of real estate, or as part of the assets in a merger or acquisition. Irrespective of the type of transaction in which a leasing issue arises, there is significant value to undertaking appropriate measures of care and due diligence to fully understand existing lease terms and to appropriately address and implement issues in new leases. This E-Alert is intended to outline some of the major concepts to be considered in entering into leases and revising existing leases, and the pitfalls associated with a failure to do so.

While the practical real estate issues and concepts discussed herein must be reviewed in conjunction with health care-specific regulatory issues, such as compliance with the federal Anti-Kickback Statute, Stark Law, and HIPAA, they must also be handled properly from a real estate perspective if health care providers desire to efficiently develop and use land and facilities to expand to meet the growing need for health care services. A lease is often incorrectly viewed as an ancillary document. However, the importance of the terms of a lease should not be underestimated. Leases are a considerable expense, bind the parties for years and govern in the event of a sale of the property or an assignment by the tenant.