The growing size of medical office buildings and the related need for healthcare providers to utilize third-party capital is increasing opportunities for institutional investment in the sector.
As REITs pull back on acquisitions and focus more on refining their portfolios, private equity groups have more than taken up the slack. Total healthcare real estate transaction volume may have cooled ever so slightly - but not much - and so far this year, private investor buyers are making up 76% of that total.
The Mid-Year Revista transactions report has been released and is available to subscribers. Check out some of the highlights!
This unassuming market is number 2 in terms of outpatient building deliveries and 4th for total deal volume. Even rent growth has been consistently surpassing the national average.
In general, health systems are choosing to build hospitals with lower bed counts. Technology, demand and reimbursement changes are all pressures that shift the focus to patient experience, advancing technology, and wellness and preventative medicine. This translates into more outpatient services, private rooms and fewer beds.
Following a record year for transactions when $16.6B worth of MOBs traded hands, overall volume is showing signs of moderating through the first 2 quarters of 2018.
DuPage Medical Group (DMG), of Downers Grove, Illinois (www.dupagemedicalgroup.com) has recently sold a group of trophy MOBs to Harrison Street Realty Capital (HSRE).
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.