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H2C Structures Joint Venture to Launch Tax-Advantaged Fund for Investment in Seniors Housing & Care
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About American Healthcare Investors, LLC (“AHI”)

 

American Healthcare Investors, LLC (“AHI”), founded in 1998, is a privately owned healthcare real estate investment firm. Brian Hoyle, Founder and President of AHI, brings more than 40 years of experience in the development, brokerage, operation, management, and ownership of healthcare properties. Mr. Hoyle’s experience spans the country, from the development of the West Maui Hospital, skilled nursing, assisted living, and independent living project in the Kaanapali Resort in Maui, Hawaii to development of over 50 behavioral care and skilled nursing / assisted living facilities in 36 States. Prior to the formation of AHI, Mr. Hoyle held senior corporate executive and consulting positions for the planning and development of healthcare real estate throughout the US.

 

About H2C Securities Inc.

H2C is a strategic advisory and investment banking firm committed to providing superior advice to healthcare organizations and related companies throughout the United States. H2C’s professionals have a long track record of success in healthcare mergers and acquisitions, capital markets, real estate, and restructuring transactions, acting as lead advisors on hundreds of transactions representing billions of dollars in value.

 

Securities and services offered through H2C Securities Inc., member FINRA/SIPC,, a registered broker-dealer and an indirect subsidiary of Fifth Third Bank, National Association. All rights reserved. Securities and services offered through H2C Securities Inc.: Are Not FDIC Insured; Offer No Bank Guarantee; May Lose Value; Are Not Insured by any Federal Government Agency; Are Not a Deposit.

For more information, visit h2c.com.

NEW YORK — March 15, 2021 — H2C Securities Inc. (“H2C”), a healthcare-focused investment banking firm, served as the exclusive financial advisor to American Healthcare Investment, LLC (“AHI”) in the formation of a joint venture between AHI and Cascade Capital Group (“Cascade”). The joint venture manages Healthcare Properties Exchange Fund (“the Fund”), which is a tax-advantaged investment vehicle formed to acquire seniors housing and care assets. The Fund was seeded utilizing the Internal Revenue Service (“IRS”) Section 721 like-kind exchange whereby AHI contributed assets to a limited partnership in exchange for shares in the fund. The formation of the Fund became effective amid the COVID-19 pandemic despite market volatility and economic uncertainty.

AHI was founded in 1998, and its Founder has acquired, managed, or developed over 70 healthcare properties since 1985 with a focus on value-add strategies in the skilled nursing, seniors housing and behavioral healthcare sectors. AHI engaged H2C to assist in monetizing a portfolio of skilled nursing and assisted living facilities (the “Portfolio”) located throughout Iowa. As the long-term owner of the facilities, AHI faced a substantial capital gains tax due to value appreciation and depreciation recapture. Furthermore, the 2017 Tax Cuts and Jobs Act (“TCJA”) excluded personal property from like-kind exchanges under IRS Section 1031, which constituted a meaningful amount of value through furniture, fixtures, and equipment within the Portfolio. Furthermore, AHI’s founder sought to remain invested in the sector to generate ongoing cash flow and create strong risk-adjusted returns.

“While we were initially retained to monetize the Portfolio through a disposition,” said PJ Camp, Managing Director at H2C, “the solution to form the tax-advantaged Fund achieved additional objectives, which led to a superior result for our client.” Email PJ

H2C worked with AHI as its exclusive financial advisor to oversee the launch of the fund and advised on structuring and negotiation related to its formation. IRS Section 721 allows AHI and future investors to defer tax burdens and benefit from both the continued upside of the Portfolio and the growth of the Fund. AHI also benefitted from greater diversification of cash flows through the contribution of additional assets by Cascade to the Fund.

“H2C oversaw a complex structuring and negotiating process involving multiple partners and helped AHI develop a creative structuring solution to successfully achieve all of its stated goals,” said Brady Stern, Director, H2C. “We found a first-class partner in Cascade to create this unique Fund that has a clear competitive advantage to future sellers through the use of the 721 like-kind exchange program.” Email Brady

Brian Hoyle, Founder and President of AHI, praised H2C for its expertise and creative strategic advice. “With H2C’s assistance, we were able to unlock the value in our portfolio, defer capital gains tax on both real and personal property, diversify our exposure within the asset class and partner with a top-tier investment manager to supercharge our growth,” Hoyle said. “I thank H2C for helping AHI identify and execute upon this creative structuring solution.”