Veterinary Care Real Estate Gets Its Own REIT

Not long ago, the veterinary clinic sector wasn’t on the radar of most net lease investors.  But culturally, Josh Pardue, senior director, Stan Johnson Company, tells GlobeSt.com, “Americans view their pets like family members and won’t hesitate to spend discretionary dollars on their diet, health, general vet visits, and, at […]

Not long ago, the veterinary clinic sector wasn’t on the radar of most net lease investors. 

But culturally, Josh Pardue, senior director, Stan Johnson Company, tells GlobeSt.com, “Americans view their pets like family members and won’t hesitate to spend discretionary dollars on their diet, health, general vet visits, and, at times, special lifesaving procedures. There is every expectation that this industry will continue to evolve and grow, and with that should be more investable net lease real estate.”

It wasn’t until Stan Johnson structured a $50-million-plus sale-leaseback portfolio with a leading net lease investor that the market really started taking this industry seriously, Pardue said. 

“Since then, the institutionalization of animal healthcare and animal healthcare facilities has been following the same trend of other industries that have historically been fragmented. 

“In recent advisory discussions we’ve had with Terravet, other investors, and operators, we’ve noted that this sector is becoming more efficient, and mergers and acquisitions are driving larger credits, helping the industry mature and allowing developers, owners, and funds like Terravet to create value through real estate solutions.”

Today’s Pet Owners Have ‘Desire to Spend’

On Monday, Terravet Real Estate Solutions, announced the launch of Terravet REIT, Inc., the company’s first private real estate investment trust.

It will provide owners of veterinary real estate an opportunity to diversify their real estate holdings by participating in a pool that is expected to scale to several hundred large general practice facilities and specialty/emergency veterinary hospital facilities nationwide.

Gil Bolotin, Co-CEO of Sploot Veterinary Care, tells GlobeSt.com that the growth of the veterinary care space (which has been strong for decades) has accelerated in the last few years, with a really positive outlook. 

“Pet parents, driven by Millennials (who represent 35% of all pet parents in the US), have both the income and the desire to spend on high quality, convenient pet care delivered with modern sensibilities. A vet clinic is not only a recession-proof businessa real consideration given economic uncertaintybut also a terrific amenity for the property and for the community.”

Chris Premac, senior associate, Coreland Companies, tells GlobeSt.com, “Alongside health and fitness, the veterinary industry is quickly proving to be one of the most viable alternative retail anchors. The industry alone has experienced 4% annual growth during this pandemic era and is an ideal complement to a traditional shopping center tenant lineup.

He said his team’s recent leasing activity includes negotiating a 10-year deal with high-end pet hospital, Pet Rise. The new concept will absorb a 20,000-square-foot anchor space in Laguna Hills, Calif., and expects to draw patients from a 10 to 15-mile radius.

Vet Property Owners Can Reduce Risks

Total spending on veterinary care in 2021 reached record highs of $32.3 billion with over 23 million Americans adopting pets in the last year. 

Significant institutional capital has been invested in veterinary operations over the past decade, but most veterinary real estate continues to be held by veterinarians, Terravet said in a release.

Veterinary property owners can now potentially reduce risk, defer taxes, and increase value by diversifying real estate holdings in a pool projected to grow substantially through this REIT.

Terravet has more than 1 million square feet of veterinary and healthcare real estate across 31 states under its ownership.

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