Terramed’s $1.9M Vet Hospital Deal Highlights a Smart Exit Strategy

BALA CYNWYD, PA – December 18, 2025 – Terramed Real Estate Solutions has finalized a $1.9275 million acquisition of the property housing the Animal Hospital of Dauphin County, a long-standing veterinary practice in Harrisburg. While the transaction adds a prime 7,384-square-foot facility to Terramed's growing portfolio, the deal's structure is drawing attention as a sophisticated model for how medical practice owners can monetize their real estate assets while ensuring long-term operational stability.

The acquisition was structured as an Umbrella Partnership Real Estate Investment Trust (UPREIT) exchange, a move that secures the hospital's future in its community and provides its owner with a tax-efficient transition into a diversified investment portfolio. The deal underscores a powerful trend in the specialized healthcare real estate market, where financial strategy and community continuity are increasingly intertwined.

A Strategic Play in a Booming Market

The acquisition is a calculated move for Terramed, a real estate group that recently rebranded from Terravet to reflect its expansion from a purely veterinary focus to include ophthalmology and fertility clinics. This pivot capitalizes on the robust, recession-resistant nature of specialized medical services. The veterinary sector, in particular, has seen explosive growth, fueled by a surge in pet ownership during the pandemic and a demographic shift towards treating pets as family members. This has made veterinary properties, often secured by long-term, triple-net leases, a highly sought-after asset class for investors seeking stable, predictable returns.

Terramed’s strategy centers on acquiring properties from top-quartile practices with deep community roots and a history of operational excellence. The Animal Hospital of Dauphin County, which has served the greater Harrisburg area for nearly 65 years, fits this profile perfectly. The practice operates from a well-maintained facility featuring an in-house laboratory, a pharmacy, and advanced diagnostic and treatment technologies.

"Our acquisition of this property reflects the important role Animal Hospital of Dauphin County holds in the community," said Daniel Eisenstadt, CEO of Terramed Real Estate Solutions. "Pet owners have relied on the practice for generations, so this well-established location in a region with consistent demand aligns strongly with our long-term investment approach."

By adding the property to its Real Estate Investment Trust (REIT), Terramed is not just buying a building; it is investing in the durable, demographically-supported business it houses. This approach has allowed the company to grow its portfolio to over 1.5 million square feet across more than 35 states, with its REIT comprising over 650,000 square feet of purpose-built medical facilities.

Unlocking Value Through an Innovative Tax Strategy

At the heart of this transaction is the UPREIT exchange, a mechanism that offers significant advantages over a traditional cash sale. In this structure, the seller, Dr. Bob Sarsfield, contributed the majority of the property's equity to Terramed's operating partnership in exchange for Operating Partnership (OP) units. The primary benefit is the deferral of capital gains taxes, which would have been immediately due in a cash transaction.

This tax-deferred exchange allows practice owners to unlock the wealth tied up in their real estate without a significant tax burden. Beyond the tax advantages, the UPREIT model offers a strategic transition from active property ownership to a passive, diversified investment. Instead of holding a single, illiquid asset, the seller now owns units in a professionally managed REIT that spans dozens of properties across multiple states and medical specialties. This diversifies risk and provides a steady stream of income through quarterly distributions.

Unlike a 1031 exchange, which requires an investor to roll proceeds into a similar "like-kind" property and continue managing real estate, the UPREIT structure converts property ownership into a more liquid security. These OP units can eventually be converted into shares of the REIT, offering a clear path to liquidity. For succession and estate planning, this model is also highly effective, as heirs can receive a step-up in basis upon the owner's death, potentially eliminating the deferred capital gains tax liability entirely.

Securing a Community Pillar for Decades to Come

For the Harrisburg community and its legions of pet owners, the most important outcome of this deal is continuity. The transaction was structured as a sale-leaseback, meaning the Animal Hospital of Dauphin County has signed a long-term lease to continue operating from its established location. This ensures that the team of 12 veterinarians and support staff will continue providing care without disruption.

The hospital is an American Animal Hospital Association (AAHA) accredited facility, a distinction held by less than 15% of animal hospitals nationwide, signifying its commitment to the highest standards of veterinary medicine. Its comprehensive services, from wellness exams and advanced surgery to rehabilitation and exotic pet care, have made it an indispensable local resource.

The stability provided by the long-term lease was a key consideration for Dr. Sarsfield, the hospital's Owner and Chief Medical Officer.

"This building has supported our team for a long time because it gives us the room and tools to offer a wide range of treatments in one place," said Dr. Sarsfield. "Families know they can come to us for whatever their animals need. They value that kind of familiarity — and so do we. This decision will help the hospital care for our patients' health and well-being for decades to come."

This sentiment highlights the dual benefit of the deal: it provides a sophisticated financial solution for the owner while reinforcing the long-term stability of a beloved community institution. The arrangement allows the medical professionals to focus entirely on patient care, free from the responsibilities of property management, while the community retains its trusted veterinary provider. This modern approach to real estate transactions demonstrates how financial and community interests can align to create lasting value for all parties involved.