Micro-Hospitals Continue To Make Inroads In US Healthcare

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Sila Realty Trust just announced completion of an $85.5 million healthcare portfolio acquisition whose assets were either micro-hospitals or a facility to offer similar services. It was the latest illustration of the continued growth of this healthcare trend.

The portfolio, located in Arizona and Texas, comprise four built-to-suit micro-hospitals and one freestanding emergency department, totaling approximately 158,000 square feet on a combined 17.5 acres. Each of the micro-hospitals is licensed for 8-inpatient beds, and offers a 13-bed emergency department, operating room, laboratory, diagnostic imaging suite, and a pharmacy. The freestanding emergency department is a 13-bed full-service emergency center, constructed to also offer the same services as the micro-hospitals.

Micro-hospitals have been growing in importance for at least a half dozen years. They are inpatient facilities with a handful of short-stay beds offering some of the same services as larger hospitals—typically emergency services, imaging, pharmacy, lab work and sometimes even outpatient surgeries and primary care—but are cheaper to operate.

Healthcare loves them and their ability to offload demand from large institutions while surgically, if you will, addressing markets. Net lease loves them for their ability to expand need for real estate in areas that might not be able to support a major hospital.

A new example is the micro-hospital expected to open next month in Bellevue, Wisconsin. The Green Bay ER & Hospital is run by Nutex Health, a Houston-based company. It will have six overnight beds and have an emergency department as well as imaging and lab services. There are inpatient and outpatient suites, including pediatric rooms and separate isolation rooms, but no operating rooms.

“We want to start smaller and grow with the community,” facility administrator Sonja Hansen told the Green Bay Press Gazette. “Whether 10 people come through the day or we have 30, we can meet those needs.”

ChristianaCare, which operates three hospitals in northern Delawareand the surrounding area, is expanding into southeastern Pennsylvania through a joint venture with Emerus Holdings, reported the Delaware Business Times. The JV will open three micro-hospitals by 2025 with health and wellness centers and potentially primary care, outpatient diagnostics, and other specialty services.

 

Source: GlobeSt.

Rising Rates, Costs Catch Up With The MOB Development Market

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Although 2022 was generally considered to be a tough year for healthcare real estate developers – the result of rising construction costs and inflation – the amount of medical outpatient building space started or completed fell only 1.1 percent from the previous year.

That was indeed a bit of a surprise last year when the Arnold, Md.-based research firm Revista issued its 2023 Outpatient Real Estate Development Report, which indicated that the volume of MOB projects started or completed in 2022 totaled 44.9 million square feet in 2022, down slightly from the 45.4 million square feet of space started or completed in 2021.

However, it looks as if increasing costs, rising interest rates, harder-to-obtain debt and financially challenged health systems caught up with the MOB development business in 2023.

The newly released 2024 Outpatient Real Estate Development Report provides a wealth of information on medical office and other outpatient properties started and completed in 2023 by third party developers. The report provides a ranking of total number of projects, total square feet and total construction value for the top developers.

 

Source: HREI

Sila Realty Trust, Inc. Completes Acquisition Of $85.5 Million Healthcare Portfolio In Arizona And Texas

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Sila Realty Trust, Inc., a net lease real estate investment trust focused on investing in high quality healthcare properties across the continuum of care, just announced the acquisition of five Class A healthcare facilities located in Arizona and Texas, for a contract purchase price of $85.5 million.

The Portfolio is comprised of four built-to-suit micro-hospitals and one freestanding emergency department, totaling approximately 158,000 square feet on a combined 17.5 acres. Each of the micro-hospitals is licensed for 8-inpatient beds, and offers a 13-bed emergency department, operating room, laboratory, diagnostic imaging suite, and a pharmacy. The freestanding emergency department is a 13-bed full-service emergency center, constructed to also offer the same services as the micro-hospitals.

The Portfolio is 100% leased by Tenet Healthcare Corporation, one of the nation’s largest healthcare systems, with over 15,000 licensed beds, which designed and developed these facilities from 2019 through 2021. Each property is operated under the name of the local affiliated hospital brand of Tenet.

Two of the micro-hospitals are in the Phoenix-Mesa-Chandler, Arizona metropolitan statistical area and operate under the brand of Abrazo Health. One micro-hospital and the freestanding emergency department are in the Tucson, Arizona MSA and operate under the brand of Carondelet Health. The additional micro-hospital is in the McAllen-Edinburg-Mission, Texas MSA and operates under the brand of Valley Baptist Health. Tenet strategically chose each of these locations due to its belief that each exhibits strong population density and demographics, and positive growth characteristics.

“We are pleased to announce the closing of this portfolio of properties which are emblematic of the healthcare facilities that Sila Realty Trust is focused on acquiring – high quality, well located, strong credit tenancy with healthcare system affiliations,” stated Michael A. Seton, President and Chief Executive Officer of the Company. “This acquisition demonstrates our ability to source property and invest capital in what we believe to be an accretive manner to the Company while others remain on the sidelines.”

About Sila Realty Trust, Inc.

Sila Realty Trust, Inc. is a net lease real estate investment trust headquartered in Tampa, Florida, with a strategic focus on investing in the significant, growing, and resilient healthcare sector of the U.S. economy. The Company invests in high quality healthcare facilities along the continuum of care, which, we believe, generate predictable, durable, and growing income streams. Our portfolio is comprised of high quality tenants in geographically diverse facilities which are positioned to capitalize on the dynamic delivery of healthcare to patients. As of December 31, 2023, the Company owned 131 real estate properties and two undeveloped land parcels located in 62 markets across the U.S.

 

Source: HREI