Broe Real Estate Signs Colorado Eye Consultants to Anchor New Medical Office Building Concept

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Broe Real Estate Group (BREG) has signed eye care industry leader Colorado Eye Consultants, formerly known as Corneal Consultants of Colorado, to anchor its new medical building located on 4.66 acres at 1501 W. Mineral Ave., Littleton, CO.

BREG acquired the property in October 2019 and is actively converting the traditional office building into a Class A medical facility. Colorado Eye Consultants‘ long-term commitment secures most of the first floor—approximately 34% of the 39,728 SF property.

“Given Southwest Denver’s consistent growth and the corresponding need for medical services in the region, we sought a trusted medical provider to anchor this newly imagined medical concept,” said BREG COO Peter Albro. “Colorado Eye Consultants is a renowned comprehensive multispecialty eye care practice with a deep and successful track record of unsurpassed patient outcomes. We view them as an ideal foundational partner for this project.”

After decades of trusted eye care service to the Rocky Mountain region, Colorado Eye Consultants is looking forward to their future move.

“We are fortunate to have an outstanding group of physicians who are supported by an amazing staff in our practice.  Providing high quality eye care for our patients is our top priority. Our new Mineral Avenue location provides a unique opportunity to align our leading-edge technology and focus on personalized patient care in a fully redesigned space that can conveniently and efficiently serve the region,” said Colorado Eye Consultants‘ partner Karen Repine, MD.

Extensive renovations are underway to fully convert the property into a medical office building concept with surgical center capability. Tenant recruitment continues for a complementary base of medical providers to serve the region’s growing demand for excellent medical care.

 

Source:  PR Newswire

Medical Office Building Sales Fell Nearly 50 Percent In Q2, But The Sector’s Outlook Is Strong

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The volume of MOB investment sales transactions in the second quarter of 2020 totaled around $2.2 billion, a 43 percent decrease compared to a year ago. In the first quarter of 2020, MOB investment sales volume reached $3.7 billion, according to data firm Real Capital Analytics (RCA).

The CoStar Group, another provider of commercial real estate data, pegs MOB investment sales volume at around $2.1 billion in the second quarter, a drop of 54 percent from $4.7 billion from a year ago.

“The volume of sales has absolutely hit pause, it hit the brakes really hard in the second quarter. You saw a significant drop in sales volume,” says Keith Pierce, research manager for Southeastern region with real estate services firm Transwestern. “The price per square foot did not really shift that much for those sales that did close. But by and large, just everybody froze in late March and largely stayed frozen until sometime in June.”

Average cap rates on transactions involving MOB assets remained at 6.6 percent at the end of the second quarter, flat with the figure from a year ago and the first quarter of 2020, according to RCA. CoStar pegs average MOB cap rates at 6.7 percent, also registering no change from the previous quarter.

“I anticipate seeing somewhat of a flattening,” says Russell Brenner, president of the medical office and life sciences division with real estate investment firm CA. “Once the market truly opens up again and lenders, which have been very selective in where they lend, come back into the market in droves and in a more significant way, I think you may well see cap rates continue to fall. But for probably the next two three quarters, I think it will be a largely flattening of cap rates.”

Earlier during the pandemic, many Americans largely postponed elective procedures, which put a dent on revenues for medical office tenants. But in states where those facilities are reopening, industry sources are reporting pent-up demand.

“We saw very few delinquencies, perhaps a handful of rent deferral requests, but by and large, the healthcare medical office tenancy as a whole stood up very well,” says Brenner. “Certainly now that elective procedures are back on in most parts of the country, MOBs are poised to bounce back and will continue to be a stable and reliable asset class.”

“Medical practices are running at 90 to 95 percent of pre-pandemic levels,” says Steve Hall, senior managing director for healthcare advisory services at Transwestern, who expects this level of demand to continue through the end of the year.

“Many of the company’s tenants are back to 80 percent of pre-pandemic levels of procedures and services,” says Jon Boley, senior vice president of acquisitions and development for HSA PrimeCare, a firm that develops, leases and manages medical facilities.

“The reason these businesses are not back to 100 percent is because they are having to do above-standard cleaning in order to disinfect surgery centers throughout the day,” Hall notes. “A factor that will shore up MOB assets in the future is the dearth of new construction happening right now. During a pandemic, a lot of people aren’t pulling the trigger on a brand new construction. The lack of construction going on right now I think is really going to keep the market strong since there is not going to be oversupply.”

 

Source: HREI

Kayne Anderson Buys 34-Property Medical Office, Senior Housing Portfolio From Welltower

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The real estate private equity arm of Kayne Anderson Capital Advisors, Kayne Anderson Real Estate, has completed an acquisition of 34 Welltower properties, including seven senior housing properties in Florida.

The portfolio consists of 27 medical office buildings located across the U.S. along with the senior housing communities. An unspecified third-party company exercised the right of first offer to buy another medical office building property. The gross sales price for all of the properties combined was about $1 billion, according to Welltower.

Kayne Anderson Real Estate will own and operate the senior housing portfolio with its operating partners, MB Real Estate and Bonita Springs, Florida-based Discovery Senior Living. Kayne previously owned all but one of the newly acquired senior housing assets, and had originally sold them to Welltower in 2015, according to Max Newland, leader of the firm’s senior housing real estate team.

The announcement came as Welltower released its second-quarter earnings Wednesday afternoon. Welltower reported normalized funds from operations (FFO) attributable to common stockholders of 86 cents per share in 2Q20, beating analysts’ expectations by three cents.

The senior housing properties, formerly part of Welltower’s senior housing operating (SHO) portfolio, were managed by Discovery Senior Living, and were sold in April. Six of the properties, which were sold in May, were held in a joint venture with an institutional partner in which Welltower kept a stake of almost 54%. Welltower sold the other SHO property — a newly developed community in which Welltower owned a 97.5% stake — in June.

Seventeen of the outpatient medical properties were sold for proceeds of $329 million, with an additional nine properties sold in July for proceeds of $173 million, according to the Toledo, Ohio-based REIT. Welltower expects to complete the final outpatient medical property sale to Kayne Anderson in the third quarter of this year. The REIT also expects the other outpatient medical property sale, pursuant to a right of first refusal, to close in the same time frame.

Chad Lavender and Ryan Maconachy of Newmark Knight Frank acted as advisors for Welltower on the sale, while Wells Fargo Bank financed the senior housing assets through its Freddie Mac Seller Servicer business. Additionally, Capital One Bank NA led financing for the medical office assets.

“This portfolio is a very compelling addition to our platform — institutional quality medical office buildings with long duration leases and seniors housing assets with strong current cash flow and near-term value enhancements through significant capital improvements,” said Kayne Anderson Real Estate Chief Investment Officer David Selznick in a press release. “We believe KA Real Estate’s operator-oriented investment platform positions us very well to continue to acquire attractive assets and create favorable risk-adjusted returns for our investors.”

“On Welltower’s end, the sale significantly enhances our liquidity profile, not only affording us increased flexibility to navigate the ongoing challenges posed by the COVID-19 pandemic, but also allows us to consider opportunistic capital deployment,” Welltower Vice Chair, CIO and COO Shankh Mitra said in a press release.

A representative for Welltower declined to comment further on the sale, but said the company would provide more information during its second-quarter earnings call.

The Covid-19 pandemic impacted Welltower’s senior housing operations and occupancy in the second quarter of 2020. The REIT reported a 79.4% average occupancy rate for its SHO portfolio in July, a marked decrease from the 85.8% occupancy rate it reported in February before the pandemic hit.

Looking ahead, Welltower believes it will shed 125 to 175 basis points of occupancy in the third quarter of 2020, as move-outs are expected to exceed move-ins. And while the REIT is seeing improvements related to the degree of its occupancy declines, the company is also not out of the woods yet, according to Chairman and CEO Tom DeRosa.

“Our seniors housing and post-acute care businesses, in particular, endured significant challenges, which resulted in steep occupancy declines and a sharp increase in expenses through April and early-May,” DeRosa stated in a press release Wednesday. “However, through June and July, we have witnessed a consistent sequential improvement in seniors housing occupancy trends. While we are encouraged by these recent data points, the path to recovery remains far from certain. Therefore, we continue to prioritize the strength of our balance sheet which will enable us to navigate through near-term uncertainty and position ourselves to deploy capital opportunistically.”

 

Source: Senior Housing News