As the start of higher interest rates have entered into 2018 economic data, Medical Office REIT share prices have pulled back implying their portfolio values have also fallen...
The bread-and-butter medical office building (MOB) deal continues to entail the sale of a single building for a price of less $20 million, often quite a bit less.
Such deals, of course, do not typically satisfy the appetites of the sector’s largest investors, including private equity funds, the larger publicly traded REITs, and institutions, as well as foreign capital. Such investors prefer deals that provide immediate scale instead of having to accumulate a portfolio by making smaller, one-building acquisitions.
Houston is the number one metro in terms of square feet of hospital space under construction. As of the end of 2017, Houston had roughly 4.2 million square feet of hospital space under way – about a million square feet ahead of the runner up, New York.
These new reports detail transaction activity for 3 types of investors – Real Estate Investment Trusts (REITs), Hospitals and Health Systems and Private Investors. Each of the 3 reports provides detail on volume trends, pricing, share data, as well as data for the most active investors and metro areas.
2017 witnessed record MOB sales and outsized portfolio sales, but a notable shift occurred in the hot money – a theme that dominates the landscape in early 2018.
Here are the top 5 markets. The most active market during this time has been LA/Orange County which has seen $2.9B worth of MOB transaction volumes. LA/Orange also has the lowest cap rate/yield at 5.7%.