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Big Investor Has A New Strategy For Healthcare

A new investment company, SPHERE Investments — standing for Strategic Public Health Equities and Real Estate — is looking to reinvigorate approaches to healthcare investment.

While the company is technically new, it’s the development of Flagler Healthcare Investments, with a lot of experience, access to massive amounts of industry data analysis, and a claimed $1 billion healthcare portfolio.

Founder Didier Choukroun tells GlobeSt.com that to make healthcare work well, a much broader investment in properties that, while not considered healthcare, are a necessary infrastructure.

“I wanted to find a sector of the U.S. economy that could drive the economy with a value proposition that would go beyond the buildings,” said Choukroun. “We decided in 2023 to not only expand geographically, but we expanded the mission and repositioned the entire company. We have to get beyond healthcare.”

He saw a need to look at social drivers of healthcare, including environment, nutrition, education, housing, and transportation.

“We also wanted to make sure we continued on what has made our company successful, which is if you really want to invest in healthcare real estate, you cannot only focus on your immediate tenant,” said Choukroun. “Success comes from the outcome of the patient.”

On the direct care provision side, they focus on tenants in oncology, cardiovascular, neurology, and a combination of GI and endocrinology. Choukroun points to a Pareto-type distribution, with the four sectors served by 19% of all providers bringing in between 65% and 66% of personal care expenditure. It provides a density of demand, creating a strongly stable floor. The firm is also focused on senior living and care, including independent living, assisted living, and memory care, with some twists.

“None of the management companies are profitable,” Choukroun said. “Acquisition costs are four to five times EBIDTA. Most of the good management companies refused to sign long-term leases, forcing property owners to hold the risk. I think the business model of senior living in the US is not functioning; 98% comes from the inclusive rental of the bed. Every single operator fights on price. It’s their only strategy. Instead, they should be looking at both healthcare and non-healthcare services for the residents, including wellness, adult day care, and transportation. Management fees are 5% of revenue. There is no way the manager can focus. The way out is to focus on the outcomes.”

SPHERE identified 181 management companies with at least 20 communities under management.

“They’re trying to make money on the real estate,” said Choukroun. “Owners give the management companies a small carried interest or something like that. If you focus on outcome, you will bring technology in, you will rethink the model. One way to change the model is to be much more proactive in creating a pipeline of leads,” like being in contact with potential future residents. And then there could be other seemingly non-related services, like having daycare for kids and using elders, who may lack self-esteem in current care philosophies, to have a role. Or tutoring services for underprivileged communities near a center.”

 

Source: GlobeSt.

MOB In Denver Market Among Top 20 Largest US Deliveries of 2024

Despite difficult capital conditions, the medical office sector remains a strong player in the commercial real estate industry, demonstrating resilience.

With that in mind, CommercialSearch just published a new report overviewing the medical office building market. The report looked at the 20 largest medical office deliveries of 2024, highlighting the markets with the most active medical office pipelines as well as the evolution of the largest U.S. medical building markets over the last 10 years.

The Madison market is home to the largest medical office building to be completed this year. Standing at 469,000 square feet, the Eastpark Medical Center is slated for completion in Q3 2024.

Denver Findings:

  • A rendering of the Intermountain Health Lutheran MOB. (CREDIT: Davis Partnership Architects)

    The Intermountain Health Lutheran Medical Office Building in the Denver market will be the 11th-largest medical office delivery to be completed this year, standing at 137,000 square feet.

  • Owned by Intermountain Healthcare, the building broke ground in December of 2022 and will open to the public in Q3 of 2024.
  • Davis Partnership Architects is the architect and Saunders Construction is the general contractor for the project.

NexCore Group was selected by Intermountain Health to develop the 5-story, 130,000-square-foot medical office building on the new 28-acre Lutheran campus, located at 12905 W. 40th Ave. in Wheat Ridge. The campus, including the hospital, is being relocated about 3.5 miles from its current location. The independent medical office facility will connect to the new Lutheran Hospital via a pedestrian bridge. Planned building services include cardiovascular, maternal & fetal medicine, a weight loss center, a breast cancer center, a neurology and neurosurgery center, a laboratory, and a joint-venture ambulatory surgery center.

Click here to read the full CommercialSearch report.

 

Source: Mile High CRE

Medical City McKinney Embarking On A $50 Million Expansion Project

Medical City McKinney is embarking on a $50 million expansion project, adding a five-story, 124,500-square-foot medical office building adjacent to the hospital.

This expansion will accommodate more high-level medical specialists and critical services like cardiology and orthopedics, which are set to open in the summer of 2025. Complementing the recently opened $17 million women’s hospital in November 2023 and a $64 million patient tower with an ER expansion in December 2021, this project helps meet the needs of a vibrant and growing community by being done in three phases.

The first phase includes a new parking lot on the west side of the campus, providing over 550 additional spots for the convenience of patients, visitors, and staff.

 

Source: D CEO Magazine