March 15, 2016
Mike Hargrave

The Buyer Composition has Changed

Recent years has seen the healthcare real estate transaction world more or less controlled by real estate investment trusts (REITS). Healthcare REITs have enjoyed a long run of comparatively low priced capital with ready access to various forms of debt financing. They have also been in growth mode. Private REITs have been aggressively growing and public REITs have been pursuing FFO growth. During this time, private equity has been active but not nearly as acquisitive as the REITs; until the end of 2105, that is…

From 2Q14 to 3Q15, REITs were responsible for no less than 59% of the buying volume in each quarter according to Revista. In Q414, REITS purchased over $3.6B of medical real estate which represented 82% of the transaction volume for that quarter. However, in Q415, REITS purchased just under $1B of medical real estate, a drop in volume of over 70% from one year ago. During the quarter the REIT share dropped to 32% of the overall buying volume in the sector.

Overall volume in 4Q15 was $3.1B which demonstrates volume in the sector is still strong. So who is filling in the gap in volume left by the REITs? The answer is private equity. Private investors closed on $2B of medical real estate in 4Q15, which is more than double their quarterly volume during each of the past 8 quarters.   As a result, their share of the overall buying volume increased from 12% in 4Q14 to 64% in 4Q15.

Will these trends continue into 2016? The Revista Transitions Module allows you to search for transactions and see activity by investor type. Please contact Hilda Martin for more information or to schedule a demonstration.

Buyer Composition All Medical Real Estate