March 19, 2017
Mike Hargrave

Are Hospital Cap Rates Beginning to Rise?

During the past few years, investors have become increasingly interested in the $600B+ US hospital real estate sector.  We have seen Ventas’ $1.75B purchase of Ardent Healthcare, Medical Properties Trust’s $900 buy of Capella Healthcare and numerous other hospital real estate deals. This was all working during 2015 to push hospital cap rates to new low of 7.4% at the end of 2015.  Since then, however, we have seen cap rates return to levels we were seeing in 2014.  As of 4Q16, the TTM hospital real estate cap rate/yield was 7.9%.  While there are not a significant number of cap rates from quarter to quarter, the cap rates for hospitals we are seeing are generally in the 7.5 to 8.5% range now, compared to the low 7% to 8% range in 2015.   This data comes from the Revista 2016 year end transactions report which provides hospital real estate pricing trends such as cap rates, price per bed and price per square foot.  This report is available to subscribers of Revista.  For more information please contact Hilda Martin at (443) 949-8794 or hilda@revistamed.com.

Hospital Real Estate Pricing Trends