Nothing But Good News Abounds In The Healthcare Real Estate Sector

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At a time when U.S. and international headlines have been full of bad news, there seems to be nothing but good news to report about the healthcare real estate (HRE) space.

To start with, medical office building (MOB) sales in 2021 – despite the lingering of the COVID-19 pandemic – broke the all-time record for volume at $17.4 billion, topping the previous record of $15.4 billion set in 2015.

In addition, occupancy rates increased significantly last year, absorption of MOB space is as strong as ever, MOB construction starts are on the rise, and third-party owned MOB projects made up a larger share of projects than any of the previous seven years.

This data and more was presented during a session at last week’s Revista Medical Real Estate Investment Forum 2022, which was held at the Loews Coronado Bay Resort from March 2-4. The annual event is put on by Arnold, Md.-based Revista, which gathers a wide range of HRE data for its subscribers.

Kicking off the agenda on the second day of the conference, March 3, Revista Principals Mike Hargrave and Hilda Martin provided the audience with a wide variety of data from 2021 during a session titled “Medical Real Estate Trends & Top Markets.”

 

Source: HREI

19-Building Florida Medical Building Portfolio Recapitalization Transaction Closes

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Kaufman Hall and Associates, LLC (“Kaufman Hall”) was selected as the exclusive financial advisor to AW Property Co. (“AW” or “Sponsor”) related to the joint venture equity raise for the recapitalization of a 19-building, 525,759 square foot medical office building portfolio located throughout the State of Florida.

The portfolio is comprised of a diverse mix of on- and off-campus medical office buildings aligned with several of the nation’s leading non-profit health systems. The portfolio was owned by a discretionary real estate fund sponsored by AW.

Kaufman Hall’s Role

On behalf of AW, Kaufman Hall undertook a competitive effort to identify the most appropriate institutional capital partner. Kaufman Hall’s efforts included approaching a diverse pool of potential equity partners, including investors with previous medical office experience and firms with no prior experience with healthcare real estate. Based on Kaufman Hall’s efforts, the quality of the Sponsor and the opportunity, AW received multiple proposals from various investor types, including domestic pension fund advisors, foreign capital sources and private equity groups, among others. The structured and highly competitive process resulted in the selection of a well-established institutional investment manager with a national presence across multiple real estate asset types.

 

Source: HREI

New Medical Office Building Pitched For West Orange County In Apopka

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A new medical office building has been proposed for west Orange County.

Longwood-based Dafflyn Property 2 LLC plans to construct a new 11,500-square-foot medical office building at 2106 Plymouth Sorrento Road in Apopka on 1.31 acres, according to city documents. A project that size could cost $1.13 million to build, according to industry standards.

The property, which totals 8.95 acres, already has an Apopka Storage location that was built in 2021 on the site. The medical office building is slated to be built adjacent a 0.68-acre lot that would be preserved for future development. The project will go before Apopka’s development review committee on March 2.

Dafflyn Property 2 LLC bought the vacant site in March 2018 for $1.4 million from a trust, according to the Orange County Property Appraiser. The 2021 appraised value for the property is $1.21 million.

Representatives with the developer were not available for comment. The Dafflyn entity is managed by Central Florida dentists Dr. Robert Bliss, Dr. Bobby Garfinkel and Dr. Dennis Horanic.

Meanwhile, the medical office building market has remained steady during the Covid-19 pandemic. There is more than 16 million square feet of properties that include some sort of medical office under construction, according to CommercialEdge, which is part of Santa Barbara, California real estate data company Yardi Systems Inc.

The changing demographics of the U.S. also will create more medical office demand. About 12.8% of Apopka’s population is comprised of people age 65 and older, compared to 12.3% for Orange County.

By 2030, the U.S. is projected to have more people age 65 and older than those age 18 and younger, according to the Census Bureau.

“As the aging population seeks health services closer to home, we expect to see increased demand for medical office buildings in non-campus settings,” said a CommercialEdge report.

That demand could draw conversions for some suburban office buildings outside of health campus settings, but they would have to fit specific development standards when compared to regular office space, like improved HVAC and different ceiling heights.

 

Source: OBJ