An Interview with Brannen Edge III, President and CEO, Flagship Healthcare Properties

An Interview with Brannen Edge III, President and CEO, Flagship Healthcare

In this interview, Andrew Dick sits down with Brannen Edge III, to talk about the evolution of Flagship Healthcare Properties and trends in the health care real estate industry.

Podcast Participants

Andrew Dick

Attorney, Hall Render

Brannen Edge III

President, CEO, Flagship Healthcare Properties

Andrew Dick: Hello and welcome to the Healthcare Real Estate Advisor podcast. I’m Andrew Dick, an attorney at Hall Render, the largest healthcare focus law firm in the country. Today, we will be speaking with traded Edge III, the president and chief executive officer of Flagship Healthcare Properties, LLC. Flagship is a privately held real estate company that owns, manages and develops healthcare facilities. We’re going to talk about Brannen’s background, the evolution of the company and trends in the industry. Brannen, thanks for joining me today.

Brannen Edge: Andrew, thanks for inviting me and pleasure to be with you.

Andrew Dick: Terrific. Well Brannen, before we talk about your role as the chief executive officer at Flagship, let’s talk about your background, tell us where you’re from, where you went to college and what you wanted to be.

Brannen Edge: Sure. So, before moving to North Carolina, I was born and raised in Richmond, Virginia. Lived there, my whole childhood went to James Madison University for undergrad, up in Harrisonburg, Virginia, and after graduation initially started out in banking. So, I describe myself as a recovering banker. I had gone to Charlotte for a conference, middle of my time at JMU, the first time I visited Charlotte, and was so impressed with the city. It was a clean city, a growing city, a business-friendly city. So, as I approached graduation, really all of my efforts were focused on how do I find a job in Charlotte? Which is a little unusual, Richmond has a way of bringing its natives back to Richmond, but I wanted to do something a little different and frankly, I really didn’t care what industry it was.

Brannen Edge: I wanted to find some training program that would teach me how to do some something. I found that in BB&T and joined their training program right out of school. It was actually located in Winston Salem, which is about 80 miles from Charlotte. I thought, “All right, that’s close enough. I can do a pit stop in Winston Salem and then find my way to Charlotte,” which is what I did. It was a great pit stop because I met my now wife in Winston and had a great experience with the bank.

Brannen Edge: But after about six years of working with the bank, where I learned a bunch about credit, and operating companies, and service companies, and manufacturing companies and real estate companies, I realized that I didn’t want to be a banker for the rest of my days. A number of my clients that were in the real estate side appeared to be having a lot more fun than I was having in the banking world. So I used that opportunity to go back to business school and spent two years in Chapel Hill, also known as Blue Heaven. Then during that time, is when I found the founder of Flagship and joined forces with Charles Campbell in 2006. So, that’s what I made the shift from the banking world to the healthcare, real estate world.

Andrew Dick: So, talk about that opportunity and how you met Charles and how did you all decide to come together and start your business?

Brannen Edge: Sure, sure. So this business school’s, I guess like many universities and graduate programs are focused on getting you a job, that is from day one. So there I was in the fall of 2005 and newly married, newly resigned from my full-time employment and very much in debt with student loans. I knew where I had come from in terms of being with a public company, a big company in the form of the bank, and an old company, the bank had been around for 150 years. I wanted to do something the exact opposite. I wanted to find a young company that was growing, that entrepreneurial, that was in the real estate and private equity space. So, literally searching online for opportunities, I came across a press release from the early Flagship, Flagship 1.0, which had just launched earlier that year in 2005.

Brannen Edge: So, I reached out cold call to Charles and said, “You don’t know me, and you don’t know that you need to have an intern next summer, but I’m willing to do whatever it is.” So I did, I worked as an intern that summer, between first and second year of business school, and I think I was employee number five or six or something like that at the time. Then continued working with Charles my second year and then joined full-time after graduation. So, that’s how it got started. We were initially, a very small company working with family offices and high net worth individual investors to find real estate opportunities. And in pretty short order, focused exclusively on healthcare, which is how the firm and I got our start in the healthcare business.

Andrew Dick: So Brannen, when we’ve spoken before, you talked about the company evolving and what I’ll call the merger of Brackett and Flagship, talk a little bit about that and how the business really started to grow.

Brannen Edge: Sure. So you’re exactly right, Andrew, that that was the seminal moment for our company, which occurred in 2010. Up until that point, the legacy Flagship was really an investment firm in the real estate world. And in 2008, 2009, we purchased a building from the Brackett company, which was another firm focused on the healthcare, real estate space, also located in Charlotte, whose roots dated back to the mid 1980s. We bought a medical office building for our investors from the Brackett company, but Flagship at the time didn’t have property management skills. It didn’t have leasing and brokerage skills. We didn’t have those resources internally and we were really, really impressed with the platform and the people that the Brackett company employed. So, on the heels of the great financial crisis, we approached the Brackett company and said, “Look, we can probably be a better firm if we’re together, as opposed to separate.” They saw things the same way.

Brannen Edge: So we brought those two companies together initially as a joint venture. Then as I described, the slowest, longest merger and small business history, we integrated those two companies over the next four or five years. At that time I was really … I was not the CEO of the Brackett company, I was not the CEO of legacy Flagship. So, I was tapped as really the neutral party to integrate those two companies together. So, moved from my prior role to become president of what at the time was Brackett Flagship Properties. Then subsequently, we changed the name to Flagship Healthcare Properties. But that moment in 2010 really laid the groundwork for where we are today, which was the decision to be a vertically integrated, full service, healthcare real estate firm. That we made that decision, that how we were going to compete in the industry, how we were going to be able to serve our clients, whether they were tenants, healthcare providers, or investors, was going to be by providing the services that we do today.

Brannen Edge: So property management, maintenance and engineering, asset management, ground up development, acquisitions, investments, full service accounting, all of those services we have under one roof now, so that we are in our buildings every day, building relationships with our tenants and the healthcare providers that we serve. We didn’t want to be in a situation where investors were calling us and saying, “Well, how’s my investment performing?” We’d have to say, “Well, let me go check with the people that are taking care of your building and we’ll get right back to you.” We are the people taking care of your buildings.

Brannen Edge: And so that today is the single biggest differentiator, I think that Flagship has, versus some of the other folks in the industry. We allocate capital and it’s a critical role for us, but it’s only one facet of what we do.

Andrew Dick: So, that was a terrific summary. So Brannen, talk about the company today. So, fast forward today, talk about the size of the company in terms of employees, where your properties are located, where you’re doing business, give us a snapshot of what everything looks like today.

Brannen Edge: Sure, sure. So, the company as we’ve grown over the past 11 years and morphed into that full service provider, our mission, our whole purpose for being, is to provide extraordinary stewardship and outcomes for all we gratefully serve in healthcare real estate. So, that’s a mouthful, but what does that mean? So, we’ve really got three primary constituents and all of them are extremely important and none of them can get the short end of the stick. So, we view our investors, our tenants, and our employees as being critical to success and if we let one of those groups down, or put one of those groups well ahead of the others, there’s going to be problems. So, we work really hard to try to make our company a culture that attracts and retains really good people and we’ve got, I think the best in the business. We’ve got 86 employees now, and those are again, across the spectrum of asset management and property management and leasing and brokerage, and on the investment side, and the ground up development side, and the accounting side.

Brannen Edge: That’s what allows us to deliver excellent service to our tenants. And if we do that, we do that job and we can help meet their needs, they’re more likely to turn to us for their real estate needs. If we can deliver on the tenant side, that allows us to generate attractive returns to our investors and the investors provide the capital that lets us continue to grow and attract and retain employees. So, that virtuous circle is what keeps us going.

Brannen Edge: We are focused geographically on the Southeast and Southern Mid-Atlantic. So we own properties across 10 states right now, and that’s where we deploy our capital, our investors’ capital, is in that Southeast footprint. But when I look at the areas where we have services, we manage a building in Nebraska, not exactly in the Southeast, but that’s where one of our clients went and they asked us if we would help them with buildings that are outside of our footprint. Of course, we will follow our clients just about anywhere, but our focus is on growing our business and brand and services in the Southeast and Southern Mid-Atlantic.

Brannen Edge: The other thing you asked about was the types of properties that we’ve got. We are laser focused on the clinical outpatient healthcare sector. And so what does that mean? Well, one way to describe the properties that we seek to work on, or build, or lease, or manage and maintain, are those buildings where a patient enters the building to receive care from a healthcare provider and they leave without spending the night. So, we are not invested in senior housing facilities, or inpatient rehab hospitals, or skilled nursing, or acute care hospitals. Not that there’s anything wrong with those businesses, but they’re very different from what we are good at and know. So, I like to say, we love having senior housing as neighbor, we just aren’t looking to have them as tenants. We share the same patient population and same demographics, but we’re focused on the outpatient sector. So, that’s predominantly medical office buildings and ambulatory surgery centers.

Andrew Dick: Got it. So, let’s transition a little bit Brannen, and talk about Flagship’s REIT, because I think that is one service line that you offer that’s a little bit different than some of your competitors. There are lots of publicly traded REITs, a lot of investment funds that focus on healthcare assets, but Flagship has its own private REIT. Let’s talk a little bit about that and the evolution of that business, which is pretty interesting, based on what we’ve talked about before.

Brannen Edge: Yeah, yeah. Thank you, Andrew. I’ll describe our process, or journey of getting to the private REIT structure in Flagship Healthcare Trust. It was a journey and we’ve had some iterations along the way. Before 2010, we were doing all of our investments one off. We would do silo investments, we would have capital from a family or a group of high net worth individual investors, and we’d go and purchase or develop an asset, and we managed each of those investments separately. They were all separately capitalized and it worked. It worked well and investors were happy and the projects were profitable and turned out well, but we didn’t have any sort of synergy doing that. I like to say we weren’t managing a portfolio of say, 30 buildings, we were managing one building 30 different times.

Brannen Edge: So, everything had separate accounts, and separate reserves, and separate leasing teams, and separate agreements. So, we weren’t being efficient as a manager and our investors weren’t really getting the diversification because an investor might be in building number one, but not in buildings two through 30. So there really wasn’t that diversification.

Brannen Edge: So, the next iteration for us happened in 2012, when we launched our first closed-end fund. We raised money from accredited investors and from institutional investors. We did our first fund and we did a second … it was a venture with USAA Real Estate Company, but it operated much like a closed-end fund and started raising our third fund. At that time, we took a step back and this was 2016, 2017 and said, “What are we doing?”

Brannen Edge: Our investors were asking us … It was coming time to look at selling our first fund, liquidating that, and our investors almost in unison said, “Please don’t do that. We like the buildings that we’re invested in. We don’t want you to create a tax issue or a reinvestment issue by selling these funds.” We said, “Well, geez, we don’t really want to sell them either. We’re we’re in the business to be long-term owners in real estate and if our business model is to attract and retain the best and brightest in the healthcare real estate industry, how does that align with selling a big portfolio of properties every few years?”

Brannen Edge: Meanwhile, our tenants, the healthcare providers and healthcare systems, they really care about long-term ownership. They don’t want the owners of their property to be short-term holders. They want to know that you’ve got empathy for what they’re doing, that you are going to be taking care of these assets as if you’re going to own them forever. It didn’t really line up with a shorter term investment fund type structure.

Brannen Edge: So we engaged advisors to help us figure out how could we be structured that would create better alignment between our investors, and our tenants, and our employees, and the private REIT structure is what rose to the top. And admittedly, when we were talking about the private REIT structure, we didn’t understand what that meant and familiar with public traded REITs and there’s some excellent ones out there, but we didn’t really want to be public. But we’d heard about public non-traded REITs and those had not a great reputation at the time. It’s gotten better since then but we said, “I don’t know that we want to go down private REIT path.” It was explained to us that said, “Look, the structure as a private REIT is a tax structure.” REITs avoid double taxation, as long as you’re distributing 90% of your taxable income to investors. It looks and feels just like an open-ended fund, but it preserves a great deal of optionality.

Brannen Edge: Meanwhile, being private, we think avoids a lot of the correlation with the public markets. So, we get asked a lot by investors or prospective investors, “Why should I buy a private REIT as opposed to a public REIT?” My response is always, it’s not an either/or. There are some excellent public REITs out there and many that we are fortunate to work for on the management leasing side.

Brannen Edge: What we think we bring to the table is because we are private, we’re not correlated with the public markets. So, for investors who want to have an allocation to healthcare real estate, we think we provide that and maybe provide a better representation of the value of our healthcare real estate assets, as opposed to whatever’s happening from day to day in the stock market. So, it is almost like putting on a tailored suit or a tailored sport coat. When we got to the launch of Flagship Healthcare Trust four years ago, it felt like we were putting on a sport coat that had been tailored, it just fit, and our investors feel the same way. So, we’ve continued to grow and new capital, but just as importantly, attract additional capital from our existing investors who continue to believe in what we’re doing.

Andrew Dick: It’s a great story and I can appreciate why you selected the private REIT structure, right, it’s not subject to the whims of the market. That makes a lot of sense. So, talk about the REIT, number of properties, how much equity you currently have, things like that, that you’re able to share?

Brannen Edge: Sure, sure. Absolutely. So, we are structured as a Reg D private placement. All that means is that our investor base are considered accredited investors. We have about 350 shareholders. A number of those shareholders have been with us for many, many years, even predating the REIT’s launch. When we converted our legacy closed-end funds, all of those investors and the legacy closed-end funds had the option to either cash out of those funds and take their money and go elsewhere, or contribute their interests into launching the REIT. We had 94% of our investors by capital say, “This is exactly the structure that I want.” So when they joined us in the launch of the REIT, back in late 2017, we were about $55 million of equity. Since then, we’ve grown to where we are today, which is right at $250 million of equity, and about $600 million of gross property value. That’s about two million square feet in the REIT across 73 properties, and in 10 states in the Southeast and Southern Mid-Atlantic.

Brannen Edge: That’s in addition to about an equal number of properties and approximately three million square feet of properties that we manage for third party owners. And those are institutional investors, those are public REITs, and those are private individuals, or healthcare practices that want to own their own real estate but don’t want to have the headaches of property management or leasing. So we gladly do those services for others, as well as for our own account.

Andrew Dick: Terrific. I’m assuming that the REIT follows your investment philosophy, that it’s primarily MOBs, outpatient healthcare facilities, ASCs?
Brannen Edge: As exactly right, it’s ASCs and MOBs, are the predominant assets. We have a blend of multi-tenant buildings and single tenant buildings, a number of practices who make the decision in this current environment to lock in attractive pricing on their buildings, but they don’t have any desire to move. We’re doing a number of sale lease pack transactions with practices, both groups that are independent, as well as groups that are affiliated with healthcare systems. An interesting unexpected benefit of our REIT structure is that the vast majority of those sale lease back transactions, the selling groups, if they’re groups of physicians or investors, are electing to UPREIT a portion of their sale into Flagship. So, essentially a seller of a medical office building who chooses to work with Flagship, they can receive cash when they sell us a building, or they can receive operating partnership units in our REIT, and essentially it’s tax deferred in most instances, and it provides diversification for those sellers.

Brannen Edge: So, an investor who owned 100% of one building can UPREIT and all of a sudden, they’ve got that same value spread across a much more diversified portfolio of more than 70 assets. Meanwhile, they’re locking in their current valuation on their building and able to decide on their timeline, when to recognize that taxable gain on their own terms. So, it’s been something that we didn’t expect would be as popular as it has been, but it’s been a major source of our growth as we continue to grow our footprint. But it is all clinical healthcare outpatient. So, ASCs and MOBs are our primary investment targets.

Andrew Dick: Got it. So, let’s transition for a minute and talk about the healthcare real estate industry in general, over the past five, six, seven, eight, years, the asset class has really come into its own and becoming more and more attractive investors of all types. Talk about cap rate compression, trends in the industry. It seems like there’s an awful lot of demand for these assets right now. How does a company like Flagship through its REIT, compete for assets in a market that just seems very hot right now?

Brannen Edge: You’re exactly right. It is overwhelming the amount of capital that is chasing the healthcare real estate industry right now. It’s coming from traditional real estate investors who hadn’t previously been exposed to the healthcare sector. It’s coming from international investors, both individual and sovereign wealth funds. Everybody it seems, wants to get into healthcare real estate. So, the secret is out. Now, when we started in this business, plus or minus 20 years ago, healthcare real estate was really not its own asset class. It was lumped into other asset classes. Was it part of the office market, or was it part of the retail market, or do they just lump it as other? Now, it’s a clearly defined asset class and it’s clearly defined for good reason.

Brannen Edge: Through the great financial crisis, our portfolio and that of most healthcare real estate performed really, really well. And of course, values were impacted across all sectors in the great financial crisis, but we really didn’t see tenants that were handing over their keys and shutting their doors. It was a very resilient asset class. We’ve had bankers that would come and visit with us back during the Great Recession and saying, “Look, the credit folks say I can’t lend to anything unless it’s government backed or it’s healthcare-related or student housing. So what do you have for me?” When you fast forward the movie through the pandemic that we’re going through now with COVID, the portfolio did extremely well. Our tenants were extremely resilient and I describe the industry as it’s now more akin to a consumer staple than it is to something that is voluntary.

Brannen Edge: Americans want and demand and deserve healthcare and a pandemic’s not going to get in the way of receiving care. So, it was really impressive to see how these healthcare providers adapted to the global pandemic, whether it was changing the way they were having patients wait for care or alternating how they were seeing patients. But what didn’t happen was stopping seeing patients. Telemedicine had a big boon and folks wondered, “Is this going to replace the need for medical office buildings?” The answer was a resounding no. It became an additional avenue for providing care to patients but it was an additional outlet, it wasn’t a replacement.

Brannen Edge: So we saw a surge in telemedicine, but not one that overtook or replaced inpatient face-to-face visits. It’s interesting, we are really agnostic at Flagship of whether we’re buying on campus buildings or off campus buildings. We’re seeing really a proliferation of off campus buildings as healthcare providers recognize the three Cs in healthcare, of care, convenience, and cost. It is much more convenient and able to be delivered at a much lower cost when you have outpatient settings. So, I think last year, there were 60 plus million surgeries that were done in the US and over 60% of them were done in an outpatient surgery center environment.

Brannen Edge: So, 20 years ago you would be going to the hospital campus and having your knee procedure, or your wrist procedure done inpatient and on the campus, today, it’s generally not happening that way. Medicare and Medicaid are increasingly approving, and even requiring some of these procedures to be done in an outpatient setting, which is really good for both the providers and for the patient. So, that’s going to continue to grow and that’s why we’re laser focused on that outpatient setting.

Andrew Dick: Yep and I would add, through the pandemic, we saw that patients were hesitant to go to a hospital campus for fear of picking up the virus or contracting the virus. So, those outpatient facilities that are off campus seem even more attractive during difficult periods like we’re living through now.

Brannen Edge: You’re exactly right. That hospital acquired infection has all always been present but in the age of COVID in the pandemic, it got much greater scrutiny. So, I don’t think there’s any going back from this shift.

Andrew Dick: So Brannen, we’re near the end of our interview. Let’s talk a little bit about advice for young professionals. We’ve got a lot of folks who listen, that are starting out in the healthcare real estate profession. What advice would you have, someone who’s getting started in the business?

Brannen Edge: Gosh, that’s a great question. I guess I would say, try to figure out what you like and work toward achieving that. Oh, by the way, that’s a lifelong learning. So what you like to do at 21 and are working towards then, may be different than when you’re 31 or 41 or 51. So, continue to try to figure out what it is that makes you tick and gets you excited to go to work in the morning, I’d say, do every job to the best of your ability, even if it’s not exactly where you want to be and maybe especially if it’s not where you want to be. If you can focus on knocking the ball out of the park, opportunities will find you. So, do everything that you can to the best of your ability. Ask questions, that’s something that … that natural curiosity, I think, is a benefit for everybody.

Brannen Edge: It’s okay to not have the answers and shouldn’t be afraid to ask for help or ask questions to learn more. And finally, don’t be afraid to fail. A little bit better to fail quickly if you can, but you are going to make mistakes and it’s fun to find an environment where you can be supported when you make those mistakes and learn from those mistakes and move on. But healthcare real estate industry has got great tailwinds. We’ve got demographics that are providing a huge lift to the industry. So, for young folks that are looking at careers in various sectors, I think this has got a great next few decades in front of us.

Andrew Dick: Well, that’s good advice. So as we wrap up, where can our audience learn more about you and Flagship Healthcare properties?

Brannen Edge: Sure, please, we’d welcome visitors to our website at, or our sister website for the REIT at We’ve got an active social media presence, so follow us on Instagram and Facebook. If you have questions or we can provide any support, feel free to reach out to us. Call us, email us, text us.

Andrew Dick: Terrific. Thanks, Brannen. Thanks to our audience for listening on your Apple or Android device. Please subscribe to the podcast and leave feedback. We also publish a newsletter called The Healthcare Real Estate Advisor. To be added to the list. Please email me at

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