Amazon-Led Health Care Venture To Disband As Walgreens, Walmart Ramp Up

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Haven, a joint venture formed in 2018 by Amazon, Berkshire Hathaway and JPMorgan Chase that was supposed to revolutionize the American health care system, is closing down, CNBC reports.

The JV partners formed Haven with the goal of finding ways of lowering costs and improving outcomes in the U.S. health care system, which persistently costs more but delivers worse outcomes than dozens of other nations.

A report comparing 11 high-income nations prepared by the Commonwealth Fund found that the U.S. spends the most on health care as a percentage of its economy (16.2% in 2018). That is nearly twice as much as the average of the other high-income countries (8.8%), but America still has the lowest life expectancy and highest suicide rates among the 11 countries.

Tackling an entrenched problem of that magnitude apparently proved to be too much even for companies as large as the Haven partners. In 2019, in a hint that Haven might not be up to the task, Berkshire CEO Warren Buffett said that there was no guarantee that Haven would succeed in its goals.

One difficulty for the JV was that the three partners tended to pursue their own projects separately, according to CNBC, citing an anonymous source familiar with Haven.

Other corporate giants, retailers in particular, are also out to change the face of U.S. health care delivery. In 2020, Walgreens Boots Alliance, in partnership with VillageMD, announced plans to open 500 to 700 clinics at Walgreens sites in 30 U.S. markets over the next five years, with about 40 opening this year.

Walgreens tested five in-store clinics in the Houston market and said they were successful. The clinics will offer a variety of physician services on-site, as well as care via telehealth and at-home visits.

Another retail giant, Walmart, has expanded into retail health care, opening 15 clinics in 2020, with plans for further expansion, with seven more by the end of 2021. All together, Walmart has more than 4,700 U.S. stores, meaning that its health care locations still represent a tiny fraction of its total so far.

The opportunity for further retail health care has surged as the coronavirus pandemic spurred greater consumer use of retail health care clinics, according to a late 2020 survey by digital signage company UPshow. That is because people have been consolidating errands more than previously, and a visit to a pharmacy can also be one to a retail health care clinic at the same location.

The survey found that 32% of consumers said COVID-19 increased their usage of retail health clinics, with nearly half (49%) saying that they will be more likely to use these clinics even after the pandemic. Also, the majority of health care executives (74%) reported that the pandemic has increased the volume or revenue or both of their health care offerings.

UPshow also found that 77% of consumers have at least one prescription that requires a pharmacy visit for refills on a regular basis, and more than half (56%) would consider visiting on-site retail health care for other services. The company surveyed 500 consumers and 250 retail health care executives nationwide.

 

Source:  Bisnow

MedCraft Launches $500M Medical Office Acquisition Platform

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MedCraft Healthcare Real Estate and Cadence Healthcare Group, a wholly-owned subsidiary of Cadence Capital Partners, have formed MedCraft Investment Partners (MIP), a $500 million acquisition platform that will be active over the next 18 to 24 months. The platform is capitalized through an institutional partner.

MIP is led by MedCraft Principals Jon Lewin, Eric Carmichael and Keith Beneke and long-time healthcare real estate capital markets experts Michael Bennett and Jay Soave of Cadence.

MIP will offer co-investment opportunities in its acquired real estate and expansion of client ambulatory networks within its growing portfolio. MIP will also pursue complementary MOB assets and development from new third parties.

MIP has over $200 million in on- and off-market opportunities currently in the underwriting or LOI stage. With the MIP fund well on its way to achieving its investment objectives, the leadership team already has plans underway for a second, larger fund that targets more than $1 billion of MOB investments.

As many sectors have struggled through the pandemic, investors have shown interest in medical offices.

“The uncertainty caused by the COVID-19 pandemic seen in other real estate asset classes, such as retail and hospitality, is increasing investor interest in the stability of the MOB space, which benefits from significant long-term tailwinds, such as an aging population and increased healthcare spending,” according to the H2C Industry Insights Medical Office Building Quarterly Update 2Q20 from Hammond Hanlon Camp LLC.

 

Source:  GlobeSt.

Twenty-Nine Medical Office Building Portfolio Trades

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Healthcare Real Estate Capital (“HRE Capital”) acted as a financial advisor to Hammes Partners (“Hammes”) in its disposition of a 29-building portfolio of medical office buildings (the “Portfolio”).

The 1,226,312 square foot Portfolio features modern, well occupied assets with significant remaining average lease term and is geographically diverse, spanning Illinois, Wisconsin, Missouri, Ohio, Pennsylvania, Virginia, Washington D.C., Arizona, Texas, Mississippi, and Georgia.

The Portfolio includes on-campus, off-campus, and adjacent-to-campus locations and was transacted subject to assumption of existing debt.

HRE Capital’s Role

On behalf of Hammes, HRE Capital undertook a tailored effort to identify a well-capitalized investor (“Investor”) seeking a substantial and geographically diverse medical office building portfolio and who was positioned to (i) acquire the Portfolio, (ii) take full responsibility for assumption or prepayment of significant existing debt and (iii) close this sizeable transaction on a truncated timeline in the face of a national pandemic complicating diligence.

Leveraging its unmatched relationships in the sector, HRE Capital approached a pool of credible Investors that would allow Hammes to achieve its previously identified goals. With multiple offers in-hand from different types of Investors, Hammes ultimately selected a private equity real estate Investor with extensive experience in the healthcare real estate sector who provided the most attractive offer.

HRE Capital assisted Hammes in navigating the simultaneous completion of buyer diligence, negotiation of purchase and sale agreement, and assumption of existing debt across multiple lenders to successfully achieve a year end closing.

 

Source: HREI