MOBs Continue To See Demand As They Adapt To Market Changes

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The medical office building (MOB) sector continues to be favored by investors as a stable asset despite real estate challenges and disruptions brought on by the pandemic, according to JLL’s (Chicago) new “Healthcare and Medical Office Perspective.”

The recent report explores key themes impacting U.S. healthcare systems and medical office owners, including labor challenges, payor and reimbursement pressures, elevated costs, and industry disruptions

“Facilities offer both risks and opportunities to healthcare providers, and, despite the challenges, the critical nature of healthcare and large tailwinds from a growing and aging population continue to make healthcare real estate one of the most stable asset classes for investors,” Jay Johnson, National Practice Leader, Healthcare Markets, JLL, said in a press release.

Specifically, medical office occupancy is relatively stronger than the commercial office sector and was significantly less disrupted by pandemic. Medical office asking rents averaged 2 percent growth year over year for the past five years and reached an average $23 per square foot triple net by mid-year 2022, reports JLL.

Medical office sales reached $9.2 billion in the first half of 2022 after a record performance and investor interest in 2021. JLL anticipates 2022 to close at another record year. The strong demand for healthcare services and the continued shift to outpatient care is expected to assure healthy investor appetite for MOBs.

 

Source: healthcare design

Texas Health Rockwall’s $92.3 Million Expansion Serves Growing North Texas Region

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An estimated $92.3 million expansion and renovation at Texas Health Hospital Rockwall is nearly doubling the size of the hospital and bringing a Level II Neonatal Intensive Care Unit (NICU), a Cardiac Catheterization Lab and an expanded Emergency Department to the growing North Texas community.

By expanding, Texas Health Rockwall, a joint venture between Texas Health Resources and area physicians, is increasing healthcare services to Rockwall and nearby communities.

“We are growing Texas Health Rockwall to better serve our patients and their families,” said Cindy Perrin, president of the hospital. “We are especially proud of our new NICU, which will help meet the health needs of our tiniest patients closer to their homes. Proximity to a hospital that can address critical care needs will bring greater comfort to families living in the communities we serve.”

A new two-story addition transforms an inpatient wing into a four-story bed tower. The project will add 32,000 square feet of new space and 51,000 square feet of renovated interior areas. These additions and renovations are being constructed in phases, with final completion expected in summer 2023.

Once the project is completed, the hospital is expected to deliver an estimated 1,200 babies a year, up from 400 or 200% today.

The project is an investment in the future health of families and residents in a high growth area. The hospital, which began as a small community hospital with a focus on surgery in December 2007, serves patients and families from various counties, including Rockwall, Kaufman, Hunt, eastern Dallas County and southern Collin County.

“Our caregivers live in these communities,” said Jason Linscott, chief operating officer and chief financial officer at Texas Health Rockwall. “We want to provide the best care for our neighbors, friends and family members. This expansion allows us to bring greater access to medical services to families living east of Lake Ray Hubbard.”

The estimated population of Rockwall County was listed as 116,381 according to 2021 U.S. Census figures, an increase of more than 38,000 since the 2010 Census. Rockwall and nearby communities have been attracting businesses as North Texas continues to grow.

The new eight-bed NICU includes two private rooms and a separate room for parents who need to stay overnight to care for their babies. This addition brings a NICU to the hospital for the first time.

The NICU and other renovated areas have spacious waiting rooms in light blue and gray tones. Wave features are painted on the walls, alluding to the nearby lake. These features are intended to instill a sense of calm.

Most of the first floor is being renovated or refreshed. The facility’s front-line caregivers provided input into the design based on needs that came to light during the COVID-19 pandemic.

Once completed, Texas Health Rockwall’s project will include:

  • • New NICU
  • • Ten new Labor & Delivery Rooms in an expanded Labor & Delivery area – up from seven
  • • Two C-Section rooms up from one
  • • Twenty-four postpartum rooms up from 10
  • • Twelve Intensive Care Unit (ICU) beds up from six
  • • Renovation of the Post Anesthesia Care Unit
  • • Expanded Emergency Department with 14 emergency room beds – up from seven
  • • New Cardiac cath lab and Interventional Radiology lab
  • • New kitchen
  • • New central plant and additional parking

 

Source:Blue Ribbon News

Artemis Joint Venture Acquires 12-Building Medical Office Building Portfolio Spanning Eight States

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Artemis Real Estate Partners, in a joint venture with Rendina Healthcare Real Estate and CalSTRS, has acquired a 12-building, 352,981-square-foot medical office portfolio.

Newmark acted as equity placement agent, broker and financial advisor for the transaction. The brokerage also facilitated Rendina and Artemis entering into a $1 billion joint venture back in 2021, a partnership that was seeded through the recapitalization of a six-property medical office building portfolio.

The 96 percent-occupied ensemble encompasses assets spanning Florida, Georgia, Illinois, Minnesota, Nevada, Ohio, Texas and Virginia. Most of the properties are located in Certificate-of-Need states, with their weighted average remaining lease term reaching 6.6 years.

Health systems, credit tenants and physician networks occupy more than half of the leased space in the portfolio. With a $21 triple-net rent operating income per occupied square foot, average rents across the assets are roughly 10 percent below national portfolio averages traded over the past five years.

Newmark’s Healthcare Capital Markets team representing the seller included Senior Managing Directors Jay Miele, Michael Greeley and John Nero, together with Executive Managing Director Ben Appel. Associates Adam Goss and Ron Ott provided financial analysis for the deal.

In early 2022, Artemis also entered in a joint venture with Thomas Park Investments, planning to invest a total of $500 million in the purchase of core-plus medical office properties. The partners seeded the venture with the acquisition of three assets totaling 92,000 square feet.

 

Source: Commercial Property Executive