Aspen Dental Investment Properties
Aspen Dental began as a dental lab, Upstate Dental, in 1964 in East Syracuse, New York. In 1981, Upstate merged its lab services with centralized management services and created a new dental support organization (DSO) concept, which evolved into Aspen Dental Management in 1998.
Fast forward to 2020 and you will find projections put Aspen Dental at roughly $500 million in earnings for the year. It supports 820 practices in 41 states that care for approximately 26,000 patients per day. Despite a short COVID-19 shut-down, the company is back to pre-pandemic numbers and plans to add 65 more locations throughout the nation where they are needed most.
Aspen Dental’s financial strength, unique business model (licensed dentists actually “own and operate” the practices), commercial real estate investor benefits, and the company’s virtually recession-proof consumer offerings, make Aspen Dental a worthy property investment opportunity, which is why it is Westwood Net Lease Advisors’ Tenant of the Quarter.
Aspen Dental Growth Strategy
Founded by CEO Bob Fontana, Aspen Dental Management, Inc. (ADMI) is one of the largest dental support organizations in the U.S., providing non-clinical business support services to independently owned and operated dental healthcare practices nationwide. This support includes services related to finding the right location for a practice, leasing, equipment, accounting, and marketing – a business model that leaves independent, licensed practitioners free to concentrate on providing quality patient care.1
Committed to being a leader in the DSO market, Aspen Dental has pursued an aggressive, tactical growth strategy. The company targets new locations in retail areas with demographic groups most in need of access to care. They have also started a collaboration with Walgreens, thus far opening practices within two Florida stores that also have on-site dental labs.
According to CEO Bob Fontana, “We are being thoughtful about how we reopen and build practices [during the pandemic]. Our company will continue to work hard to provide the best services and support for practice owners. Our DSO adds a lot of value [to the owner-operators] and we are committed to providing dental access to those who need us the most.”2
Why Aspen Dental is a Top CRE Investment Opportunity
As a net-lease investor, you want a passive, income-producing investment with few, if any, responsibilities. You want a long-term lease and a solid rate of return from a reliable tenant who takes care of the property and sends rent every month like clockwork. Aspen Dental fee-simple properties fit these criteria, providing a strong investment opportunity.
Aspen Dental CRE Investment Benefits
- Reasonable price points between $1.5–2 million
- A strong yield with 6.00 to 6.70% cap rates
- Typically, 10+ year, NN, corporate-backed lease
- Few, if any, landlord responsibilities
- Predictable monthly income
- Strong rent escalations
- Recession-resistant; a necessity driven service with return visits
- High-end buildouts, specialty dental equipment/fixtures make renewals more likely
- Immediate and long-term tax benefits for capital preservation
Aspen Dental stores are popping up in communities across the nation, usually on highly visible 1/2 – 3/4 acre lots with easy access. Stores are strategically situated in prime urban locations near other business and retail staples, which makes them easy to frequent and leads to stability in the value of the investment. Due to the modest price-point, these properties are great for first-time investors or for experienced CRE investors who want to diversify asset classes within their real estate portfolio.
To Wrap it Up – Why Aspen Dental is Our Tenant of the Quarter
Aspen Dental is piloting the DSO industry with solid growth projections and a dedication to increasing the number of locations nationwide while offering its real-estate investment partners a dependable, worry-free monthly income for 10+ years with few maintenance responsibilities or expenses, and a lucrative internal rate of return (IRR). This is why Aspen Dental is our tenant of the quarter.
If you’re interested in buying an Aspen Dental or utilizing a 1031 exchange to do so, be sure to engage a Westwood Net Lease Advisor first. Our advisors review the national market daily, connect with colleagues, and find off-market and developing properties that will meet your lifestyle and financial objectives. We represent you throughout every step of the process – from the property search to closing – all at no cost to you. Contact us today for your no-obligation, free consultation, 314-997-5227.