January 28, 2021
John B. Mugford

Kaiser Remains on top of Largest Property Owners

Revista’s Top 50 ownership report shows inventory growth, strong construction number

Once again, as has been the case for the last seven years, Oakland, Calif.-based Kaiser Permanente, the giant health insurance firm and healthcare services provider, remains the largest owner of real estate among healthcare-related entities in the United States. 

As of the end of 2019, Kaiser’s portfolio was valued at $43.08 billion, up from $40.5 billion a year earlier in 2018. 

The news comes by way of the annual “2020 Top 50 Owners of Medical Real Estate” report compiled by Revista, a seven-year-old firm that provides healthcare real estate (HRE) data and statistics for its members. 

“Kaiser keeps growing the value of its owned real estate, particularly by building new hospitals and medical office buildings,” says Revista Principal Mike Hargrave. “And it looks like they will remain on top for a number of years, unless other entities, be it a couple of large REITs or health systems, merge.” 

For the seventh straight year, Toledo, Ohio-based Welltower Inc. (NYSE: WELL), whose portfolio had a total value of $33.2 billion as of the end of 2019, remained in the second spot. 

Meanwhile, Revista’s Top 50 report shows that Birmingham, Ala.-based Medical Properties Trust (MPT), which trades on the New York Stock Exchange as MPW, grew its portfolio the fastest among the top 50 owners in 2019. 

The publicly traded REIT that is focused on acquiring and owning inpatient hospital facilities, grew its portfolio by a substantial 53.8 percent from 2018 to 2019. As of the end of 2019, MPT’s portfolio was valued at $7.5 billion, up from $4.9 billion in 2018. As of 2019, MPT was the 19th largest owner of medical real estate in the country.  

In other new news from the top 50 owner’s report, Palo Alto, Calif.-based Stanford Health had the highest percentage of new construction when compared to the size of its overall portfolio in 2019. The Revista report indicates that the value of Stanford’s construction projects in 2019 equaled 56.8 percent of its gross real estate assets, which totaled $4.3 billion. 

When it comes to building new facilities, the top 50 owners continue to add to their inventories through construction. In 2019, the top 50 owners had increased the value of their overall portfolios by 5.8 percent versus inventory. That was down slightly from 2018, when the rate of new construction versus inventory was 6.2 percent. 

“Construction in the sector remains strong, and on the MOB side we didn’t see much of a slowdown in deliveries in 2020,” Mr. Hargrave notes, adding that construction “starts were down a bit last year as a result of some delays caused by the COVID-19 pandemic, but overall there are a lot of projects in the pipeline, some of which were delayed but are expected to move forward in 2021.” 

Overall in 2019, the top 50 owners, as a cohort, increased the value of their real estate holdings by an aggregate 6.1 percent over 2018, an increase from the 5.2 percent growth recorded in 2018. As of 2019, the top 50 owners’ properties had an aggregate value of $436.5 billion, up from $411.5 billion in 2018 and $388.9 billion in 2017. 

Health systems, as group, continued to dominate the real estate ownership landscape in 2019, with seven of them ranked in the top 10 owners. Those include Nashville, Tenn.-based HCA Holdings Inc. (NYSE: HCA), which has taken over the fourth spot with a portfolio valued at $21.5 billion. St. Louis-based Ascension Health Alliance fell one spot, to fifth place, with a portfolio also valued at $21.5 billion. 

Three REITs were among the top 10 owners in the 2019 rankings. Those were: Welltower; Chicago-based Ventas Inc. (NYSE: VTR), ranked third with a portfolio valued at $27.1 billion, up from $25 billion a year earlier; and Irvine, Calif.-based Healthpeak Inc. (NYSE: PEAK), which ranked seventh with a portfolio valued at $13.8 billion, up from $13.1 billion in 2018. 

According to Mr. Hargrave, the Top 50 report includes only entities whose portfolios are predominantly comprised of what he calls “true healthcare” facilities, such as MOBs, hospitals, post-acute and rehabilitation facilities, skilled nursing facilities (SNFs) and others. The report is focused on the value of real estate, not square footage.