Big Sky Secures $190M Financing For Ten Healthcare Properties Across Four States

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JLL Capital Markets just announced that it has arranged approximately $190 million acquisition financing for ten healthcare properties totaling 857,779 square feet.

JLL worked on behalf of the borrower, Big Sky Medical Real Estate, in securing the five-year, floating-rate loan from a bank syndication led by Capital One Healthcare.

“Despite a challenging environment, our team and JLL persevered and successfully syndicated this loan to close out a successful 2022 for Big Sky’s partnership with GFH,” said Jason L. Signor, founder and CEO of Big Sky Medical. “We value our relationships with Capital One and the syndication group.”

The properties, which are collectively 87% occupied, serve a wide range of healthcare uses, including outpatient medical office buildings, ambulatory surgery centers, diagnostic imaging centers and more. The portfolio includes:

• Pyramids North, 9201 North Central Expressway, Dallas, Texas
• Pyramids South, 9101 North Central Expressway, Dallas, Texas
• Providence Park, 2501 Earl Rudder Freeway, College Station, Texas
• Greenpark MOB, 7515 Main St., Houston, Texas
• Peninsula Orthopedic Associates, 1675 Woodbrooke Dr., Salisbury, Maryland
• Tidal Health Cardiology, 400 Eastern Shore Dr., Salisbury, Maryland
• Pelican Professional Center, 42388 Pelican Professional Park, Hammond, Louisiana
• Texas A&M Health Science Center, 8441 Highway 47 West, College Station, Texas
• Peak Surgical Center, 610 North Coit Road, Richardson, Texas
• Valley Ortho & River Surgical Institute, 609 East Orangeburg Avenue, Modesto, California

JLL’s 2022 Healthcare and Medical Office Perspective highlights that patients are moving to sunbelt states and retirement markets such as Texas, Louisiana and California at exponential rates creating more demand for medical office buildings. As a result, medical office occupancy has ticked upwards as demand intensifies in a moderate construction environment which has gradually increased rents for the 11th quarter in a row.

The JLL Capital Markets team representing the borrower was led by Managing Directors Timothy Joyce and John Chun and Director Anthony Sardo.

“We are thrilled to have the opportunity to work with the Big Sky Medical team to help capitalize this outstanding portfolio of medical office assets in diverse, high growth markets. We would like to thank the lenders for stepping up in a challenging environment and providing a great debt package for these acquisitions,” says Joyce.

JLL Capital Markets is a full-service global provider of capital solutions for real estate investors and occupiers. The firm’s in-depth local market and global investor knowledge delivers the best-in-class solutions for clients — whether investment sales and advisory, debt advisory, equity advisory or a recapitalization. The firm has more than 3,000 Capital Markets specialists worldwide with offices in nearly 50 countries.

 

Source: JLL

CVS Considering $10B Purchase Of Oak Street Health

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CVS is reportedly looking to expand its healthcare offerings by purchasing Oak Street Health.

The acquisition would value Oak Street at more than $10 billion, Bloomberg News reported late Monday (Jan. 9), citing sources with knowledge of the matter who said talks between the two companies are ongoing. PYMNTS has reached out to both companies; CVS declined to comment and Oak Street did not reply.

The deal would further expand CVS’ move into the world of primary care. The pharmacy giant last year agreed to purchase Signify Health in an $8 billion deal.

Headquartered in Dallas, Signify has a network of 10,000 medical professionals in all 50 states and uses analytics and technology to offer in-home care to health plans, employers, physician groups and health systems.

“This acquisition will enhance our connection to consumers in the home and enable providers to better address patient needs as we execute our vision to redefine the health care experience,” said CVS Health President and CEO Karen S. Lynch. “In addition, this combination will strengthen our ability to expand and develop new product offerings in a multi-payor approach.”

Last year also saw the debut of CVS Health Virtual Primary Care, a virtual care solution available through a digital platform.

“The program connects CVS Health’s services, clinical expertise, and data for a more coordinated and consumer-centric health care experience,” CVS said in May 2022, adding it “enables consumers to choose care when and where they want, continuing CVS’ shift into primary care.”

The company was also considering the purchase of Cano Health, which operates primary care centers in eight states and works mostly with patients from the Medicare Advantage program.

Oak Street, founded in 2012, serves Medicare recipients and has locations in 21 states, according to its website. It specializes in preventative care, “including personalized wellness plans, integrated health services, and educational and social activities,” the website says.

And CVS isn’t alone in shifting more directly into healthcare. As PYMNTS noted in September of last year, “Big Retail” has helped usher the healthcare industry fully into the 21st century.

“For the Walmarts and the Amazons of the world, offering value care and virtual care creates a new avenue to connect payments to a broader ecosystem,” PYMNTS wrote.

To that end, Walmart joined forces with UnitedHealth Group in a deal that, among other things,  offers virtual healthcare services through a 10-year partnership. Amazon, meanwhile, announced last July that it was purchasing tech-powered primary care provider One Medical for about $3.9 billion.

 

Source: PYMNTS

As 2023 Recession Predictions Mount, Healthcare Real Estate Rises On CRE’s Most-Wanted List

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With whispers about a 2023 recession growing louder in the CRE industry, many players are looking for safe asset classes to invest in and more eyes are making their way to healthcare real estate.

“There’s this growing chorus of economists suggesting that a recession could be a reality in 2023 — some say shallow, some say not so shallow,” Steve Bolen, U.S. head of Healthcare Real Estate at LaSalle Investment Management, told the audience at Bisnow’s New York Healthcare Summit. “That is a time when I think healthcare real estate will really shine.”

The past six months have sent shock waves through the CRE sector, with stubborn inflation, ever-rising construction costs and seven federal interest rate hikes sparing no sector from economic pain. And as investors examine where to allocate their dollars in 2023, many are doubling down in their search for asset classes a little more removed from economic cycles, a dynamic that CRE players at the event, held at 156 William St., said will favor healthcare real estate.

“It was already on LaSalle’s 2022 list of preferred asset classes to invest in,” Bolen said.  “And alongside industrial, multifamily and single-family rentals, remains on 2023’s list for LaSalle’s clients. It has historically been a recession-resistant asset class. We were not surprised at all to see healthcare real estate land again on the favored list for 2023.”

In particular, venture capital and private equity are looking to healthcare real estate as they seek shelter from the instability shaking the broader economy.

“That dynamic is challenging traditional health systems looking to raise capital for their real estate,” Mount Sinai Ventures Managing Director Brent Stackhouse told Bisnow’s audience. “In terms of what I’m seeing here in New York, there’s a big influx of private equity capital coming in to build new healthcare businesses. That is eroding away our base of business’s health systems, and we need to compete with that. Our strategy is to move towards joint ventures with some of those entities.”

Major players in New York City are looking to capitalize on healthcare consumer demand for convenience, targeting real estate investments in areas that their clientele moved to during the pandemic, Stackhouse said.

“One of the things that was really eye-opening for our health system was the tremendous success of CityMD. They put up urgent care centers on seemingly every corner, and in doing so created a new dynamic,” Stackhouse said. “People will get care — and at times, very intimate and sensitive care — with somebody they’ve never met before because it’s convenient. And that convenience outweighed those longstanding relationships between the patient and provider.”

The pandemic’s disruption of the healthcare industry has opened up new opportunities, said Joy Altimore, chief revenue officer at EHE Health. The early pandemic brought a revolution in virtual care, creating new opportunity and space for other types of innovative healthcare businesses.

“What we’re seeing right now, especially in 2022, 2023 — and particularly in the femtech space — we see a huge lead in freezing your eggs or family planning or IVF. These are high-tech experiences that have to happen in a location and cannot happen virtually,” Altimore said. “You have a company like Kindbody, that last year only had eight locations. By the end of next year, it will have almost 100 locations. Where is that going to go?”

Convenience of healthcare is a key theme permeating different aspects of the industry: Large NYC employers, thinking about benefit packages and employee retention, are also looking at ways to build on-site care centers, Altimore said.

“Employers need convenient options for their employees,” Altimore said, adding that hybrid and remote work add to the demand for diversified location selection for employer-based healthcare sites. “Employer populations are not monolithic. You have working moms, working families, you have younger generations coming in, they’re looking for different healthcare options.”

A growing aging population also presents a huge opportunity for the healthcare sector to examine its real estate decisions and adds to demand for convenience, Bolen said.

“Today’s senior citizens are quite a bit different from the senior citizens of times gone by. They are not satisfied to sit home and watch TV — it’s a very active senior citizen population,” Bolen said. “They want to stay healthy. If something hurts, they’re in their local physician’s office getting it fixed so they can go back to their lives of vitality and activity.”

Despite a seeming abundance of activity in 2022 and fresh opportunities for 2023, the healthcare real estate sector will face the same headwinds as any other real estate asset class, Rethink Healthcare Real Estate President Jonathan Winer said.

“A lot of people are focused on ambulatory real estate for next year. But the headwind against that, of course, is just pure capital allocation,” Winter said, citing dramatic changes to the spread between interest rates and cap rates leading to a 600-basis-point contraction over the past 12 months.

However, Winer stressed, fundamentals for healthcare real estate remain healthy.

“If you look at the last five years, the fundamentals for occupancy and rent growth have never been better,” Winter said. “This is a place investors want to be in times of economic stress, whenever that economic stress is.”

 

Source: Bisnow