BidgeView: BV Ernest Health DST
Available
Overview
The Sacramento Rehabilitation Hospital is the top-performing facility in the Ernest Health network of 35 facilities so rent coverage is outstanding. The lease in place is 20 years with 1.5% annual rent bumps and two 10-year extensions at “then-market-rates”. The sponsor wants to sell the property with 10 years left on the initial lease.
Key Investment Features
Structure
Delaware Statutory Trust (DST)
Investment Sponsor
BV Real Estate
Property Type(s)
Medical
Location(s)
CA
Occupancy
100%
721 Exchange / UPREIT
None
Minimum Investment
$100,000
Investment Strategy
Buy & Hold
Year 1 Yield
5.70%
In-Place Loan
No Loan; All-Cash
Avg. Remaining Lease Term
20 Years
Cash Flow Forecast
Year 1
Year 2
Year 3
Year 4
5.70%
5.76%
5.74%
5.83%
Year 5
Year 6
Year 7
Year 8
5.92%
6.01%
6.10%
Sold
Year 9
Year 10
Sold
Sold
Investment Highlights
Facility opened in January 2023; 20-year lease through January 4, 2043; Absolute Net lease with two 10-year tenant options; Annual rent escalations
50 total beds with 95% average occupancy
Active overflow referral agreements with Kaiser Permanente and UC-Davis Medical Center
Advantages
For a newer facility, it is already a top performer of the 886 rehabilitation hospitals across the US per their top 1% PEM score as of February 2025.
Insurers favor rehabilitation centers for their lower care costs than a prolonged stay in the ICU at traditional hospitals. Sacramento Rehabilitation Hospital’s current Case Mix Index score is 1.81x as of February 2025. The index essentially says that the hospital’s patient acuity is higher, resulting in higher payouts from insurance reimbursements resulting in potentially higher profitability on a relative basis.
Weaknesses
Located in California
May be challenging to repurpose.