Chad Henderson, CEO Featured on Cover of Healthcare Real Estate Insights
Author: Erin E. Porter
A focus on relationships enables Chad Henderson and his team to drive organic growth in the HRE space
In recent years, Pensacola, Fla.-based Catalyst Healthcare Real Estate has made its mark through a flurry of several notable transactions, including the $150 million acquisition of a 21-property healthcare real estate portfolio spanning eight states, with 17 of the properties coming directly from Milwaukee-based Physicians Realty Trust (NYSE: DOC).
Another recent acquisition of note had Catalyst partnering with Bain Capital in the acquisition of Greenville Medical Tower, a six-story, $21 million medical office building (MOB) across from Texas Health Presbyterian Hospital Dallas.
The firm is also active in development, with several sizable MOB projects in the works, including: the mixed-use development of a 300,000 square foot master-planned healthcare campus for the University of Maryland Medical System in Laurel, Md.; an 80,000 square foot sports medicine complex for Dupont Hospital & Orthopedic Hospital in Fort Wayne, Ind.; a 100,000 square foot multispecialty MOB for Physicians Regional Healthcare System in Naples, Fla., and a 50,000 square foot multi-tenant MOB for St. Cloud Regional in St. Cloud, Fla.
At the helm of all this activity is an impressive, 40-year-old go-getter named Chad Henderson, whose vision, energy and focus on being the “centerpoint” of valued relationships has propelled him and his firm to a “wise beyond their years” position in the healthcare real estate (HRE) world.
This isn’t Mr. Henderson’s first rodeo. Prior to launching Catalyst HRE, he founded THG Investments, a private investment firm with a focus of providing capital and management services to opportunities in HRE and healthcare niche operating companies. THG Investments also launched Intelligent Retinal Imaging Systems (IRIS), a retinal screening company focused on ending preventable blindness. With operations in more than 30 states and over a quarter of a million patients examined, IRIS has been recognized as one of the Fastest Growing Companies in America by Inc. magazine. IRIS was the 2017 recipient of the Microsoft Healthcare Innovator of the Year award.
At the time of the Physicians Realty Trust transaction, John Thomas, the REIT’s CEO, commented on Mr. Henderson and his team:
“We believe they have built and are building the next generation healthcare real estate development and operating platform, and expect this win-win transaction will propel them to further opportunities that will benefit both organizations for years to come.”
Healthcare Real Estate Insights™ caught up with Mr. Henderson recently to discuss his career with Catalyst Healthcare Real Estate Properties, what’s next, and what’s most important. Here is the interview. (Some answers have been condensed slightly and edited for clarity.)
Catalyst is developing a 300,000 square foot, master-planned, mixed-use campus for the University of Maryland Medical System in Laurel, Md. Plans call for a freestanding medical facility, community focused retail, restaurants and green space.
1). Please tell us about launching Catalyst and what led up to it.
I’ve really kind of been a serial entrepreneur since a very young age and started my first business at the age of 16. So the good, bad and the really, really ugly in 2007-8 has really been my story – and really coming out of the fog in 2007 and 8. I had been involved in real estate, certainly commercial real estate – but wasn’t really dialed into any particular asset class. Coming out of that downturn, I certainly wanted to position myself to offer a true value-added proposition to whatever sector of real estate I ended up focusing on.
And I just happened to finish up a few clinics for some physicians, other providers and a local hospital, and in looking at it I realized there was really nobody focused on my neck of the woods on healthcare, and it seemed interesting.
And I really just began to kind of dig in. I wish I could tell you I knew the Affordable Care Act was coming down the pipe and there was going to be this huge need for access. But, the reality is, I did a couple of clinics, enjoyed the stakeholder engagement, the providers and the physicians, began to focus on it and learn more about it, and worked to create a value-added proposition for the space.
2.) Could you elaborate a bit more on your choosing to focus on healthcare as an asset class and your unique value-added proposition?
I think healthcare is so fragmented that you have to have a focus and a commitment to healthcare to really make an impact. It’s one of those asset classes where I think It would be tough to pop in out and really be able to offer true value.
So I committed, and began to build resources and capabilities around what we believe healthcare would need. And In doing so, one of the first things we committed to – and it’s really baked in our DNA and our character as an organization – is we have become and stayed true to being a purpose-driven organization. We believe our purpose is very much aligned with the mission, vision and values of healthcare. At Catalyst, our purpose is better access, quality outcomes and lasting relationships.
And when we say better access, we certainly want to align ourselves with providers that want to create better access for patients, but we also want to create better access to healthcare from a perspective of better access to capital, data, real estate strategy, and so forth. And that naturally leads to quality outcomes. We certainly want to be aligned with providers that focus on quality outcomes in a clinical setting, but we want to help healthcare think through quality outcomes and strategic initiatives and projects. And wrapping it up in the last one which is lasting relationships.
And so, we don’t pride ourselves on being a transactional firm. We are very relationship-driven, and don’t necessarily have a perfect box for a project size or an acquisition size. We want to be great partners for healthcare and align ourselves with purpose.
Pensacola, Fla.-based Catalyst is developing an on-campus, four-story, 100,000 square foot multispecialty MOB for Physicians Regional Healthcare System in Naples, Fla.
3.) Why the name Catalyst?
By definition we want to be at the centerpoint of relationships while also being a tipping point of moving things forward. The way we’re ingrained with our purpose-driven way of thinking, we want to bring an integrated suite of deliverables to align with healthcare – because it’s so fragmented and there are multiple stakeholders.
4.) You’re young and making a solid impact. Tell us how it feels to accomplish so much at such a young age?
Thank you. I mean, we’re a fairly young company. We’re just about 10 years old. And just a few short weeks ago I actually turned 40, so I can no longer say, “I’m a real young entrepreneur. I can blame my mistakes on being young.” But, I think there’s a pretty good runway in front of us. We enjoy what we’re doing. We like the fact that we feel like we’re making a solid impact on healthcare and we’d like to continue to do that and grow.
The point is, you can measure success and growth and scale in a number of different ways, but I think the one that is most important that aligns with our purpose is we’re making a positive impact on the landscape of healthcare. And so that’s really where we’re focused, and we want to continue to grow that, and have big aspirations to grow that.
5.) How much do you plan to grow overall and annually?
We’ve had quite a bit of growth. And so while we consider ourselves a success story from a perspective of scale, we certainly have aspirations to continue to grow from a perspective not only of employee count, portfolio size and geographical reach. However with the past three to five years, it’s been quite a growth story in itself. You know, we have offices in Milwaukee, Wisc.; Winston-Salem, N.C., and then as I mentioned down in the North Central Florida region down in Ocala, but we’re based out of Pensacola.
So, we have essentially doubled our employee size over the last two years, and we would expect to continue to grow in numbers – however, I don’t believe at that rate. So, we have a really sound foundation with the capacity to build and grow with what we have, but certainly we have aspirations to grow.
6.) What is your strategy for achieving growth?
For us, the growth strategy is not necessarily aligned with projects and transactions. It’s aligned with relationships. And anybody who works in healthcare knows and understands that folks within healthcare move around, which allows you to expand on relationships. We have an organic growth strategy in which we feel we are effective in navigating healthcare. I would say less than 10 or 15 percent is by way of national RFP or nationally marketed opportunities. We work hard to grow our platform and our organization organically. Not that we are not interested in growing the other ways, and we certainly have and are continuing to respond to national RFPs and other opportunities that are marketed nationally. We do want to that, but we do want to work closely with healthcare, so that’s a big part of our strategy.
7.) You seem sort of regional, but are you planning to go more national or become fully national?
So for us, our strategy of scale and coverage is not necessarily market-centric, it’s not geographic-centric, it’s relationship-centric. So, from that perspective I feel we are national. We’re having opportunities that we’re fielding in multiple states across the country and we’re going to commit to those relationships. At the same time we’re not actively seeking opportunities that are market centric in San Francisco. So we’re very focused on our relationships and we’re happy to go where that takes us.
8.) Are you developing, acquiring, or both? What percentage are you developing and what percentage are you acquiring?
That fluctuates depending on the quarter. We talk about existing portfolio, the forecast and pipeline. It’s probably a little different reflecting on what we own currently. We certainly pride ourselves on being developers and being really good underwriters of healthcare delivery in the sense that whether it’s a development or an acquisition we really want to understand: what is the clinical strategy or the business plan behind this asset, and understand the relationship.
So, I’d say our pipeline right now is 60-40 in favor of development. However, over the past 12 months we have done more acquisition than development. So again, that’s not really a metric that we spend a lot of time on analyzing. I think it’s more the opportunity, the relationship. I think we’re pretty well balanced from an acquisition and development perspective.
9.) What types of healthcare properties are your “sweet spot”?
I would say that certainly our primary focus has been medical office buildings, although we have certainly as healthcare delivery continues to integrate and move more to outpatient, more high acuity uses find their way into MOBs. We are comfortable with that and we’ve done a lot of those – ASCs, dialysis, cancer centers, inpatient rehab hospitals and so forth. We are very comfortable as long as we understand the operator and user – the overall business and clinical strategy.
10.) What are the keys to success for Catalyst?
The growth of the organization and the level of talent, experience and overall good people has been the absolute key to our success. Our team collectively shares about 100 years’ experience. A ton of experience has been added in the last 18 months with Anthony Lampisona and Elisha Pacheco joining us from Landmark Healthcare Facilities. Last October, Alex Stacy came over who has background in nontraded REITs – he was formerly a senior director from Novant Health and is focusing on acquiring and developing healthcare properties throughout the Southeast and Midwest. I am both extremely proud and grateful and also humbled that they would come on board.
11.) Who have been your greatest mentors and role models? Why? What book (or books) have made the greatest impact on your life and/ or career? Why?
My grandfather, my papa, was a man of great character. He was a very small business owner. He built a foundation on timeless values and characteristics. I hold that dear.
I’m a guy who has read many great books in my career on the cadence and rhythm of an organization. One that sticks out is “Traction: Get a Grip on Your Business” by Gino Wickman. After reading the book in early 2016, I presented it to our team, which led to Catalyst implementing the Entrepreneur Operating System (EOS) that we still operate under today. (For more information, please visit EOSWorldwide.com/EOS-Model).
12.) Please share a little bit about your family and your personal interests when you’re not busy managing Catalyst Healthcare Real Estate’s assets. How do like to spend your leisure time?
My family is the most important thing in my life. I have my wife, Brooke. We have an older son Charlie who is seven years old. Then, Archie who is five years old. And an 18-month-old named Mary Jean. Our fourth child is arriving in less than two months and her name is already Hattie. So, “Henderson, party of six,” here we come. It takes a whole lot of energy. Other than that, I enjoy coaching my boys in sports, like T-ball. We are very family-centric and spend a ton of time with sports. Those are definitely the things that are the most important to me.