FLAGSHIP HEALTHCARE TRUST
A private REIT with a record of sustained excellence in the outpatient healthcare real estate market.
2.74 M
SQ FT OF PROPERTIES
107
PROPERTIES
$1.04 B
VALUE OF PROPERTIES
323
TENANTS
ABOUT US
Fully-integrated, focused expertise in the nation’s most attractive region for healthcare real estate investment.
Flagship Healthcare Trust, Inc. is a Private Placement (Reg D) offering available to accredited investors. If you are interested in portfolio diversification and sound alternatives to achieve a high rate of return. Our approach to outpatient healthcare real estate is an ideal solution.
OUR GROWTH
Flagship REIT has experienced significant financial growth through curating a high-quality portfolio with a robust pipeline of off-market development and acquisition opportunities. Our fully-built, scalable platform provides a strong foundation for financial success.
WHO INVESTS
Flagship REIT appeals to a wide variety of investors, each of whom meets the SEC’s definition of an “accredited investor.” That designation does not uniformly describe the various investors who decide to invest in Flagship. The unique characteristics of each investor determine which attributes are more beneficial to their personal investment strategy.
Clients are increasingly interested in accessing alternative investment opportunities due to their need for portfolio diversification and desire for sound alternatives to achieve elevated yield. Flagship REIT satisfies both of those criteria.
- At 17% of total assets, commercial real estate represents the third-largest class of investments in the U.S., behind equities and bonds. As a result, more than 80% of investment advisers now recommend REIT investments to their clients.
- Flagship REIT is non-commissioned with no sales load, unlike public non-traded REITs.
Flagship REIT is attractive to those seeking current income, as it generally falls within the tax-advantaged 20% pass-through income deduction under the Tax Cuts and Jobs Act. Due to our fully-integrated platform, there is opportunity for attractive upside through capital accumulation.
- Low correlation with equities
- Generates attractive current income and capital appreciation potential
Flagship REIT helps family-owned businesses create a solution for multi-generational wealth preservation and growth. Our open-end structure eliminates the need to re-invest funds, which typically occurs when closed-end funds reach maturity.
- Low correlation with equities
- Diversification with stable growth
- Open-end vehicle
Flagship REIT provides a unique structure for owners who wish to diversify from a single asset or small portfolio to participation in a larger portfolio. By exchanging a single property or portfolio of properties for share ownership, proceeds from the sale are tax-deferred. This allows sellers to retain a passive investment in real estate while diversifying their capital across the entire Flagship REIT portfolio and avoiding the complications of a 1031 exchange.
- Shifts control and timing of realizing gain to the seller
- Long-term, evergreen investment hold period offers returns to physician investor partners while relieving them of day-to day real estate ownership responsibilities
Flagship REIT gives tax-exempt and mutually beneficial organizations a way to block the Unrelated Business Taxable Income (UBTI) status that would ordinarily result from buying and selling real estate investment properties. By taking advantage of our special expertise and fully-integrated platform, tax-exempt entities present new opportunities, including:
- Increased real estate allocations
- Capitalizing on Southeastern demographic trends
- Increased exposure to outpatient healthcare real estate
- Alternatives to “mega-fund” investment options
- Benefitting from a diverse portfolio of core, core-plus, value-add and development assets
- Quarterly windows of liquidity with benefits similar to a close-end fund
- Private structure with low correlation to equity markets
WHY INVEST
Flagship REIT offers investors a Class A portfolio managed by a specialized and deeply-experienced, fully-integrated healthcare real estate firm. The Manager provides a robust pipeline of off-market development and acquisition opportunities. Our REIT offers targeted returns in the range of 10-14% and includes dividends of 5-6% as well as NAV growth of 7-8%.
- Outpatient healthcare real estate is less dependent on reimbursement rates
- Fully-built, scalable platform
- strategic blend of current income and long-term capital appreciation
- External valuations with quarterly NAV adjustments by an independent board of directors
- experienced and proven management team
INVESTOR BENEFITS
OUR STORY
As the firm grows and evolves, Flagship strives to maintain the highest standards of service for our clients and customers, as well as for ourselves.
1985
BRACKETT IS FORMED
Diane Brackett Rivers of Charlotte, NC formed Brackett to provide development solutions to
hospitals and physician groups in the greater Charlotte area. As Brackett’s development
projects and portfolio of investments expanded, leasing and property management services were added to the company’s service line.
2004
FLAGSHIP ENTITY FORMED
The legacy Flagship entity was formed in Charlotte, North Carolina by the late W. Charles Campbell to provide real estate investment opportunities to accredited investors. Within a few years, the firm’s property focus shifted almost entirely to medical office, a sector which had proven resilient throughout multiple economic environments and whose future was bolstered by favorable demographic trends.
2008
BETTER TOGETHER
The legacy Flagship investment firm purchased a medical office building that had been developed and was managed by Brackett. Acknowledging Brackett’s expertise in managing and leasing, Brackett was retained to continue providing those services for the new ownership group.
2010
JOINING FORCES
The two legacy companies formed a joint venture, creatively named Brackett Flagship Properties, in acknowledgement of each firms’ unique customer base and core competencies. In the years that followed, the company integrated and absorbed the legacies and teams of both firms, while creating its own culture and growth trajectory.
2012
FIRST CLOSE-END FUND
To provide greater diversification and improved execution, Flagship raised its first closed-end fund, raising $20 million of discretionary capital and $20 million of institutional, deal-specific joint-venture capital.
2015 & 2016
MORE LAUNCHES
Flagship launched two subsequent closed-end funds.
2016
COMPANY REBRAND
Upon the buyout of a founding partner, the company was rebranded as Flagship Healthcare Properties to highlight the firm’s focus on clinical, outpatient healthcare properties, and adopting as its mission, “to provide extraordinary stewardship and outcomes for all we gratefully serve in healthcare real estate.”
2017
IMPROVED ALIGNMENT
Flagship began exploring a liquidation of its first fund which was then in its fifth year. Investors were hesitant at the idea of a portfolio sale, highlighting the resulting tax burden, subsequent need for reinvestment and positive performance of the fund. This response led Flagship to engage a team of advisors to explore various structures that would create an improved alignment between our investors, our tenants, and our operating company.
2018
HEALTHCARE TRUST ESTABLISHED
Flagship engaged a third party to value all the legacy funds and associated assets to present to existing fund investors. The response was overwhelming. More than 93% of Flagship’s legacy fund investors voted to contribute fund interests to create Flagship Healthcare Trust, which officially launched.
2023
CONTINUED GROWTH
The REIT continues to experience significant growth and reaches 100 owned assets and nearly $1 billion in gross property value!
OUR STRATEGY
Flagship REIT views both real estate investment and relationships as being long-term in nature. Investors pursuing portfolio diversification need sound alternatives to achieve a high rate of return. Our approach to outpatient healthcare real estate is an ideal solution.
At Flagship REIT, we feel strongly that attractive investments exist outside the parameters generally focused on by publicly traded REITs, typically core properties in the top 25 U.S. markets with deal sizes over $20 million. While we do participate in primary markets, our private REIT also seeks investment opportunities in secondary and tertiary markets where superior risk-adjusted returns may be found. Our fully-integrated platform allows us to leverage our capabilities to invest in value-add assets and development projects, generating higher returns for our shareholders.
Unlike a highly-correlated public security, an investment in Flagship REIT reflects the value of its underlying outpatient healthcare assets and performance and is not subject to market volatility. Any fluctuation in value would be driven by operating fundamentals and/or the value of our real estate portfolio, not by stock market swings.
More detailed information on valuation can be found in the FAQ section.
Core properties typically have stable occupancy with long lease terms, investment-grade tenants and high-quality construction with few to no immediate capital needs. They also tend to be located within highly desirable areas in major markets. Therefore, core may be considered interchangeable with “income” in stock investing. Core property investors tend to have conservative profiles and seek to generate stable income with very low risk.
Core-plus properties are also typically high-quality and well-occupied. Owners of this property type are usually able to increase cash flows through simple property improvements and management efficiencies or by increasing the quality of tenants. This is why core-plus is often analogous to “growth and income” in stock investing and is generally connected to a low-to-moderate risk profile.
Flagship REIT invests in both core and core-plus opportunities and targets 60-70% of invested equity into such projects as part of our investment strategy.
Value-add properties are acquired with the intent to make improvements thereby creating value for ownership. At the time of purchase, such properties may have occupancy issues, management problems, deferred maintenance, a lack of relationships with providers in a market, lack of a coherent marketing plan or any combination of these. In stock terms, value-add may be seen as interchangeable with growth and is characterized by moderately higher levels of risk.
Value-add properties often have relatively low levels of cash flow at acquisition with a potential for increased cash flow after the value is added. Flagship’s fully-integrated platform enables leveraging our specialized expertise to capitalize on these types of investments by applying our knowledge of healthcare real estate, strategic planning and daily oversight.
Our strategy targets 15-25% to be invested in value-add properties.
Flagship's fully-integrated platform makes it possible to design, construct, lease and manage healthcare-related facilities. By developing projects in-house, Flagship REIT can obtain highly desirable properties at a lower basis than would be found on the open market. Our full-service platform allows us to provide options, solutions and opportunities for both healthcare tenants and investors.
Healthcare development is demand-driven, meaning some level of pre-leasing is generally present to reduce risk. Flagship’s existing relationships with healthcare providers allow the firm to uncover and capitalize on these opportunities, as opposed to being solely a capital allocator.
Flagship REIT's investment strategy requires an investment of 5-15% equity into development projects.
OUR APPROACH
Healthcare real estate should be considered as a component of the investment strategy for those focusing on the long term. The medical office building (MOB) market size has recently been estimated in the $500 billion to $1 trillion range. At least 60% of this inventory is 20 or more years old. This real estate varies in quality, with some buildings up to current standards, others serviceable with allowances for retrofitting and upgrades and a portion approaching obsolescence.
Healthcare systems continue to consolidate to form larger, more economical organizations. One strategy utilized by many larger systems is to sell their real estate and lease it back or reposition their facilities to provide greater efficiencies and system-wide flexibility. These transactions free up capital and allow greater focus on the core mission of caring for patients.
Some systems and physician groups are choosing independence over affiliation with larger healthcare organizations. These groups have incentives to lease space rather than commit their resources to real estate. High rates of renewal – 80% to 85% – indicate a reluctance to relocate due to deep ties to a community and specific locations. For Flagship REIT, these strategies provide attractive investment opportunities.
The greatest driver of healthcare demand is the aging of the American populace. This is a catalyst for the steady expansion of the population that uses the most healthcare and receives universal coverage through Medicare. People over the age of 65 experience three times more hospital days than the general public, while those over 75 have four times more days, according to the U.S. Centers for Disease Control. From 2010 to 2050, this strategic population for the healthcare industry will more than double – increasing by nearly 50 million, according to the U.S. Department of Health and Human Services.
The Southeast’s population is growing 5% more quickly than that of the U.S. as a whole. New residents relocate to the region due to the area’s mild climate, growing economic opportunities and quality of life.
The South remains at the forefront of a population shift that has produced a growth of 10 million people since 2010 and shows no sign of abating. In 2018 alone, movement into the region numbered about 1.2 million people, with movement out amounting to 714,000 for a net gain of 512,000 residents. Including migration from abroad, the net in-migration into the South resulted in a gain of around 959,000 people.
Nationally, just 20% of major metropolitan areas have exhibited positive gains in senior migration. As shown on the map, these net gainers in seniors are heavily represented in Flagship REIT’s primary market, the Southeastern and Southern Mid-Atlantic regions. These regions’ 55+ population increase outstrips the national average in major markets such as Charlotte, Orlando and Nashville as well as in secondary and tertiary markets. This massive influx of senior residents is one driver of the trend toward brick and mortar outpatient healthcare real estate.
Health systems are shifting care from their inpatient environments to outpatient settings, such as medical office buildings. Inpatient reimbursements from payors are declining, and occupancy costs to deliver care in outpatient facilities are far lower than those in hospitals. Construction costs for such facilities are typically lower in the Southeastern and Southern Mid-Atlantic U.S. than in other regions.
For these reasons, one can expect the demand for outpatient healthcare real estate space in the Southeastern and Southern Mid-Atlantic regions to continue growing.
A shift toward outpatient care continues to be a strong, enduring trend. Large healthcare providers want to treat patients off main campuses due to the lower facility and treatment costs, better outcomes and increased patient satisfaction. Patients prefer the convenience and accessibility of outpatient care.
Despite the arrival of telemedicine and the digitalization of some medical services, there is no large-scale alternative to face-to-face, clinician-to-patient interaction. This is especially true for most specialist and referral-based healthcare needs, such as orthopedists, allergists, eye doctors, dentists and other medical specialties. Rather than being seen virtually, patients still prefer brick-and-mortar locations and an in-person relationship with a trusted physician.
Flagship Healthcare Properties (Flagship) serves as external manager of Flagship REIT. Flagship shares the same commitment to and focus on outpatient healthcare real estate and provides a comprehensive suite of services. Our involvement in outpatient healthcare real estate and tenant experience goes much deeper than simple capital allocation and the initial decision to invest.
While capital allocation is a critically important function which Flagship performs skillfully, Flagship’s biggest differentiator is our vertically-integrated platform of more than 70 professionals who provide hands-on property and asset management, leasing, ground-up development and engineering services to our portfolio of properties (both those in the REIT and those owned by third-parties). This provides a competitive advantage for both clients and investors.
Managing over 4 million square feet across 165+ properties provides unparalleled industry knowledge, greater operating performance, an increased pipeline of off-market investment opportunities, and more strategic relationships with healthcare providers in the regions in which we operate. This translates into greater performance, including increased tenant satisfaction and retention, which is demonstrated by our 95% occupancy level and lease renewal rates approaching 80%.
INVESTOR RELATIONS TEAM
Alexis Budge
Executive Vice President & Director of Investor Relations
Angie Flynn
Office Manager & Investor Liaison
Downie Saussy
Executive Vice President, Investor Relationships
Jesse Roy
Director of Capital Markets & Investor Relations
James Bryant
Senior Associate, Fund Administration & Due Diligence
Alexis Budge
Executive Vice President & Director of Investor Relations
Angie Flynn
Office Manager & Investor Liaison
Downie Saussy
Executive Vice President, Investor Relationships
James Bryant
Senior Associate, Fund Administration & Due Diligence
Jesse Roy
Director of Capital Markets & Investor Relations
FREQUENTLY ASKED QUESTIONS
A REIT, or Real Estate Investment Trust is a company that makes investments in, owns and typically manages income-producing real estate. Investors buy shares in the REIT, and the REIT uses that money to make additional investments. REITs are an alternative investment that allow investors to access a portfolio of real estate and earn a share of the income produced through those investments.
According to the SEC, in order to qualify as a REIT, a company must:
- Be an entity that would be taxable as a corporation but for its REIT status
- Be managed by a board of directors or trustees
- Have shares that are fully transferable
- Have a minimum of 100 shareholders after its first year as a REIT
- Have no more than 50% of its shares held by five or fewer individuals during the last half of the taxable year
- Invest at least 75% of its total assets in real estate assets and cash
- Derive at least 75% of its gross income from real estate related sources, including rents from real property and interest on mortgages financing real property
- Derive at least 95% of its gross income from such real estate sources and dividends or interest from any source
- Have no more than 25% of its assets consist of non-qualifying securities or stock in taxable REIT subsidiaries
Private REITs and public non-traded REITs are often confused. Both are open-ended vehicles, and neither is traded on a national stock exchange. But there are several important distinctions.
Private REITs are not registered with the Securities and Exchange Commission (the “SEC”), meaning their shares are not directly correlated to stock market volatility. Although Private REITs are exempt from SEC registration, they are required to abide by the SEC’s Rule 506, Regulation D. Private REITs are only available to accredited investors and typically require a minimum investment which varies by company.
As a private REIT, Flagship is a non-commissioned offering to accredited investors. Our investors receive REIT stock value equal to the dollar amount they’ve invested, with no commissions or fees removed.
Public Non-Traded REITs are required to file with the SEC and are therefore regulated, however they are also not traded on a national stock exchange. Unlike private REITs, a public non-traded REIT is open to investment by anyone, whether they are accredited or not, although as such, they are subject to investment limits.
Public non-traded REITs are typically sold through a broker-dealer network. Brokers earn commission on the sale of the non-traded REIT shares. Those costs are subtracted from investors’ share ownership, the REIT’s capital proceeds or both.
Accredited investors may request our investor packet by contacting a member of our Investment Relations team. We encourage you to contact our IR team so they can provide you with additional information and answer any questions. Once you are ready to move forward, you will complete and return the subscription documents to a member of the Investor Relations team. Once the subscription request has been accepted, the IR team will work closely with you to initiate your investment.
Flagship Healthcare has been approved by both TD Ameritrade and Schwab for custodial services and can be accessed on either platform.
An accredited investor in the context of a natural person, includes anyone who:
- earned income that exceeded $200,000 (or $300,000 together with a spouse) in each of the prior two years, and reasonably expects the same for the current year, OR
- has a net worth over $1 million, either alone or together with a spouse (excluding the value of the person’s primary residence).
There are other categories of accredited investors, including the following, which may be relevant to you:
any trust, with total assets in excess of $5 million, not formed specifically to purchase the subject securities, whose purchase is directed by a sophisticated person, or
any entity in which all of the equity owners are accredited investors.
In this context, a sophisticated person means the person must have, or the company or private fund offering the securities reasonably believes that this person has, sufficient knowledge and experience in financial and business matters to evaluate the merits and risks of the prospective investment.
An alternative investment is a financial asset that does not fall into one of the more traditional or “core” investment categories such as stocks, bonds and cash. Alternative investments include real estate, private equity or venture capital, hedge funds, managed futures, art and antiques, commodities and derivatives contracts. Alternative investments are an ideal strategy for those seeking diversification.
Flagship’s independent board of directors convenes on a quarterly basis to approve and establish the Net Asset Value (NAV) based on internal and external valuations. An external valuation is provided by a third-party every six months and an internal valuation is provided by Flagship’s Asset Management, Property Management, and Leasing and Brokerage teams for the interim quarters.
In estimating the portfolio’s net equity value, the external valuation firm forecasts stabilized property net operating income based on:
- Rent rolls
- Leases
- Potential future leases and lease terminations
- Historical operating statements and ARGUS files
- Discussions with the Manager
The REIT projects a 10-14% return, per annum. The return is comprised of a 5-6% annual dividend yield 4-9% in NAV growth.
Yes. Our investors can choose to participate in the Flagship Healthcare Trust, Inc. Distribution Reinvestment Plan (“Plan” or “DRIP”). The Plan provides our stockholders with an easy and economical way to designate all or a portion of the cash distributions on their REIT Shares or OP Units for reinvestment in additional REIT Shares. Under the Plan, you may elect to automatically reinvest all or a portion of your cash distributions, subject to a minimum reinvestment percentage of 10%, in additional REIT Shares at a 3% discount to NAV.
Flagship is an open-end REIT, meaning it is a diversified portfolio of pooled investor money and does not have a fixed number of shares or close date. When you invest in an open-end REIT, new shares are created, and your contribution is added to the investment pool. When you redeem, your shares are dissolved and the investment pool shrinks by the value of the shares redeemed.
An open-end structure allows investors to enter and exit the REIT throughout its life instead of limiting investors to a set time-frame.
The REIT does not have a predetermined end or liquidation date.
Yes. Many investors choose to invest with pretax money through their retirement account to take full advantage of the Dividend Reinvestment Plan. Investors who wish to invest through their retirement account must do so through a Self-Directed IRA (SDIRA). An SDIRA is a type of traditional or Roth IRA that differs only by the assets it holds. Its investment options are more expansive than basic securities for traditional and Roth IRAs offered by brokerage firms. Flagship has experience working with numerous companies that specialize in SDIRAs.