Florida And Chicago Investors Team Up To Buy Baylor Scott & White’s Frisco Medical Campus

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Two investors have teamed up to buy a Frisco hospital complex.

Chicago-based Remedy Medical Properties and Kayne Anderson Real Estate of Florida have purchased the Baylor Scott & White Frisco Medical Center.

The 161,264-square-foot, 68-bed specialty hospital is at 5601 Warren Parkway, west of the Dallas North Tollway. The medical center is near The Star, the headquarters and training facility of the Dallas Cowboys.

The 7.4-acre campus is fully occupied by Texas Health Ventures Group, a joint venture between Baylor Scott & White and United Surgical Partners International.

Built in 2001, the medical center was previously owned by Nashville-based Healthcare Realty Trust.

“This was an attractive opportunity to secure a fully leased medical center that has a strong growth trajectory in one of the hottest markets in the country,” Joe Magliochetti, chief investment officer for Remedy Medical, said in a statement. “The BSW Frisco Medical Center is performing very well, and is benefiting from a notable increase in outpatient and ambulatory services, with orthopedic care as the primary driving force. In addition, Remedy has existing relationships with Baylor Scott & White and USPI, and we are pleased to be able to further strengthen those relationships through this acquisition.”

The Frisco medical complex includes 11 operating rooms, an emergency department, onsite pharmacy, private rooms and a two-story parking garage. Terms of the purchase were not disclosed.

“The Dallas-Fort Worth region is growing rapidly, and the Frisco market area is the epicenter of that growth,” Antonio Minchella, senior managing director with Kayne Anderson Real Estate said. “Baylor Scott & White is committed to serving the Frisco area through this location. They entered a long-term lease extension prior to the purchase, and are investing in the building to both improve the patient experience and upgrade and enhance surgical capacity.”

Remedy Medical Properties owns almost 30 million square feet of medical real estate in 43 states. The company’s holdings include the Healthcare Associates of Texas medical center in Irving.

Kayne Anderson Real Estate is based in Boca Raton and manages more than $14.5 billion in real estate assets.

 

Source: The Dallas Morning News

Senior Housing Demand Continues To Outpace New Supply

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The senior housing market appears set for a steady and ongoing recovery, with occupancy levels in 2024 expected to meet or exceed pre-pandemic levels, provided no unforeseen difficulties occur.

That is the conclusion of an analysis of 3Q 2023 data by the National Investment Center for Seniors Housing and Care (NIC).

Senior housing occupied stock is now 2.6% or 15,026 units above the pre-pandemic 1Q 2020 level, NIC found. Demand continued to outpace new supply for the ninth consecutive quarter. In primary markets, net absorption rose 1.3%, or 7,583 units, from the previous quarter and 4.3%, or 24,627 units, over the prior year. The stock of senior housing in these markets rose 0.4% from 2Q 2023, and 1.3% above the prior year, NIC stated.

However, construction remained below pre-pandemic levels, and the 11,133 units under construction in the year ended 3Q 2023 amounted to less than half the starts reported during all of 2019. A new measure of senior housing, the Absorption-to-Inventory Velocity ratio, stood at 28:10 for primary markets, which implies that for every 10 newly added units, 28 were absorbed. This indicates that the senior housing market has been able to absorb a significantly higher number of units than were added during the third quarter of 2023.

The senior housing all-occupancy rate rose to 84.4% in 3Q 2023. It remained below the 87.1% rate of 1Q 2020. However, it is expected to reach or exceed that level in 2024, NIC predicted. Risks remain in the form of economic uncertainty and the possibility of a future threat to public health.

However, current capital market conditions and the resulting lending environment, today’s relatively limited construction pipeline, and elongated delivery times of new projects suggest that supply growth is manageable and is not expected to outpace demand through 2024, the report noted.

It also pointed to differences in the all-occupancy rate between independent and assisted living facilities in primary markets. It stood at 86% for majority independent living properties, a 0.7% increase from 2Q 2023. For assisted living, it stood at 82.6%, up 0.9%. Though occupancy for both was above pandemic lows, in neither case did it reach pre-pandemic 1Q 2020 levels.

In secondary markets, though, the occupancy rate for majority assisted living facilities reached 84.3%, slightly above its 1Q 2020 level of 84.2%, indicating a full recovery explained by limited inventory growth and restrained supply pipelines. The one good thing that did emerge from the pandemic, NIC commented, is increased recognition of the value proposition that senior housing offers. It also highlighted the resilience and adaptability of senior housing operators.

 

Source: GlobeSt.

Where The Best Deals Are In Healthcare?

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Changes in interest rates and cap rates continue to exert influence on healthcare property values, and Daniel Anderson, investment sales broker in Northmarq’s Nashville office, said he’s seeing falling transaction volume and plenty of all-cash buyers.

Anderson said the healthcare real estate sector continues to be both resilient and attractive. He singles out urgent care facilities and dental properties as good buys.

All-cash buyers are leveraging reduced prices and favorable rates. And with reduced competition, this investor group is becoming more active, he said.

“There has been a decrease in sales volume across all investor categories, especially as of late,” according to Northmarq. “But despite REITs and institutional investors temporarily reducing their acquisition activities, private buyers – including those all-cash buyers I mentioned before – have really emerged as influential players in the market.

He said what makes the healthcare real estate sector attractive is high acuity, resilience against economic downturns, and indispensable importance.

“Despite the recent uptick in interest rates, we continue to see low cap rates, although they are trending upward, net lease investors across nearly all categories remain active in the market,” Anderson said. “Regarding medical offices, those greatly depend on foot traffic and synergies for sales volume, and often cost twice as much as traditional office space to build. Therefore, we see healthcare tenants become heavily reliant on the stickiness of the location and buildout of the building.”

With cap rates, he said dental properties “currently shine” with a noteworthy four-basis-point compression year-over-year, while dialysis properties saw a significant spike in cap rate expansion of 135 basis points year-over-year.

Anderson’s advice to investors is to consider the pivotal role of diversification in healthcare real estate investments.

“Meticulously evaluate factors such as tenant creditworthiness, lease durations, and geographical diversity when constructing their portfolios or evaluating new acquisitions,” Anderson said.

For 2024, Anderson said he hopes to see the buyer-seller gap in pricing expectations converge in mid-2024, which could lead to an increase in transaction volume next year and beyond.

 

Source: GlobeSt.