New Hospital Coming To Venice, Florida In 2021

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Sarasota Memorial Hospital broke ground on its new hospital in April 2019, with its campus in Venice at Laurel and Pinebrook roads.

Its opening will be here in no time: SMH-Venice should be completed in fall 2021.

“It is going to bring services to that part of our community that is in great need,” SMH CEO David Verinder said. “We are looking forward to, quite frankly, many many years of that growing and continuing to serve in South County.”

The new hospital will offer a full array of medical and surgical care, including:

• Cardiology Unit/Catheterization Lab
•  Critical Care/Intensive Care Unit
• Emergency Care
• Endoscopy & other procedural areas
• Gastroenterology
• General/Vasular Surgery
• Labor & Delivery/Post-Partum Unit
• Laboratory/Diagnostic Testing
• Nephrology
• Neurology/Neurosurgery
• Oncology
• Orthopedics
• Pulmonology
• Imaging/Radiology
• Urology and more

The Venice hospital costs about $255 million to build. With furniture, equipment, the energy center and other campus infrastructure, the total cost will be about $437 million. The new hospital will be hurricane ready and has undergone some design changes in order to be better prepared for treating COVID patients, as well as other infectious diseases.

“The ICU is designed with negative pressure rooms so that we can better manage the pandemic if needed,” said Kim Savage, SMH’s public relations manager.

A negative pressure room, also called an isolation room, is meant for infection control. It allows air to flow into the isolation room but not escape from the infected patient’s room.

“Most hospitals had to quickly convert existing patient rooms into negative pressure environments or dedicate entire critical care units to safely isolate COVID-19 patients from other hospitalized patients,” SMH-Venice President Sharon Roush said. “Given the ongoing nature of this pandemic, we felt it important to be prepared for a resurgence of this or any other highly infectious airborne disease in the future.”

In addition to this, SMH added a negative-pressure ventilation system to convert all or a portion of their ICU/critical care units to a pandemic unit if needed. The new hospital will also greatly increase bed capacity.

“It will immediately add more than 100 beds, and we already are planning for expansion and that will allow it to double,” Savage said.

The initial development covers 48 acres on the eastern side of the parcel, but Savage says as the community grows, so will SMH-Venice. It has the capacity for 300 private patient suites, 16 surgical suites and a 50-bed ER. The expansion also will bring Sarasota Memorial’s extensive physician base further south and help build the medical staff for a future hospital in North Port.

The current plans for the Venice location includes:

• A 365,000-square-foot, 5-story hospital, with 110 private patient suites and 28-bed emergency center and 8 surgical suites
• A 2-story, 60,000-square-foot medical office building
•  Related support structures and service area
•  An adjacent 400-space parking garage and surface parking lots

“Construction on the new campus is full speed ahead,” Verinder says “COVID hasn’t slowed them down. We are very excited about the new Venice hospital coming online. It is going full speed right now. It’s beautiful even as it sitting in construction.”

He says they are in the process of hiring step and will be doing that throughout this coming year.

“We are excited to bring Sarasota Memorial’s high-quality care to the rapidly growing south Sarasota County community,” Roush said “Opening the new hospital in Venice will enhance care to the entire region, while also creating and sustaining jobs and livelihoods for hundreds of people and area businesses.”

Source: WTSP-TV News

Health System Financial Strength Fortifies Medical Office Acquisitions

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Health systems are on track to buy $1 billion of their leased medical office buildings in 2020 between closed and announced transactions – a trend we’ve coined as “reverse monetization.”

Despite the pandemic-related operating losses sustained by hospitals in 2020, health system liquidity remains high due to CARES Act funding and abundant access to capital. In fact, 2020 will be the third year in the past five during which MOB buybacks will exceed $1 billion, representing nearly 10% of all MOB trades. Buybacks typically occur when hospitals take advantage of purchase options embedded in leases or exercise contractual rights of first refusal. However, certain buybacks are happening today with no contractual rights.

The popularity of MOB buybacks and ownership is fueled, in part, by the cash savings opportunity they create. During the pandemic, health systems are highly focused on reducing cash expense. MOB buybacks can eliminate rent payments and help cash occupancy costs. Health systems may also be able to avoid property taxes for qualifying properties – sometimes saving $3-4 per square foot. Even in the face of record high pricing for MOBs in 2020, health systems have been willing to pay top dollar – matching the most competitive real estate investors – in recognition of the significant bottom line advantage presented by buybacks.

Where does the money come from to pay for buybacks? Hospitals’ cash reserves were fortified by the CARES Act, which bridged the initial loss of patient volumes and revenue. Today, most providers report that they are back to 90-95% of pre-COVID volumes, if not more, thanks to the reinstatement of elective procedures. Though operating cash flow has been significantly impaired in 2020, days cash on hand was less affected due to other sources of liquidity and the strong performance of investment portfolios for the not-for-profit health systems.

Municipal bond issuance accelerated in 2020, increasing by 25%. Not-for-profit issuers enjoyed record low interest rates, which created cash interest savings for refunding bonds as well as new issuance. Thanks to nominal rates consistent with the direct cost of borrowing, many health systems have found structured finance products appealing to finance real estate, including credit tenant lease financing and synthetic leases.

The headiest days of monetization date to 2016, when a record $1.4 billion of MOB sales by health systems occurred. Cash generated by sales of outpatient buildings, whether on or off campus, was used to reinforce liquidity, provide access to capital for high growth systems, transfer capital responsibility for buildings to a third party and manage regulatory compliance with physician tenants.

Today, healthcare providers own 65% of MOB inventory nationally, down from 75% ten years ago, driven by the advent of new off campus outpatient clinics. Investor demand for medical office is at an all-time high, accelerated by the defensive qualities of the asset class and its proven durable performance. Investors can’t get enough MOB and now find themselves vying for investment alongside the tenants. Health systems face a happy decision – whether to buy or lease – with capital markets supporting them well, whichever choice they make.

You can more about extracting capital from healthcare real estate in JLL: A 360 View of Healthcare Real Estate Monetization. Plus, view Jll’s 2020 Healthcare Real Estate Outlook

Recent 2020 activity

  • Closed – Investment Sale – Midwest Medical Office Portfolio, 439,000 s.f. – Indiana, Illinois & Missouri
  • Closed – Investment Sale & Debt Placement – Greenpark II – 80,098 s.f. – Houston, TX
  • Closed – Investment Sale – M.D. Medical Tower – 68,285 s.f. – Midwest City, OK
  • Closed – Investment Sale – Lovelace Medical Center – 69,539 s.f. – Albuquerque, NM
  • Closed – Debt Placement – Peachtree Orthopedics – 60,578 s.f. – Cummings, GA
  • Closed – Debt Placement – San Juan Medical Center – 42,970 s.f. – San Juan Capistrano, CA
  • Closed – Debt Placement – Milwaukee Nobis – 20,383 s.f. – Milwaukee, WI

 

Source: HREI

Welltower Recaps $550M Medical Office Portfolio Through Joint Venture With Wafra

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Welltower has recapitalized a medical office portfolio through a $550 million joint venture with global alternative investment platform Wafra.

Wafra now owns a 80% stake in the 24-asset portfolio, which is located in Texas, Florida, Minnesota, the Carolinas, Tennessee, California, Pennsylvania and Washington, among other states. The REIT is retaining a 20% interest in the portfolio, which is 97% affiliated with health systems. Welltower will also continue serving as asset manager and operator for the properties.

“The two companies may partner on other deals,” said Russell Valdez, Wafra’s chief investment officer. “We look forward to expanding our footprint together in these growing sectors with the shared goal of further collaboration on healthcare and other real estate opportunities.”

There is a case to be made that medical office assets will flourish as the pandemic passes. Cushman & Wakefield argues that the same drivers that fueled medical offices before the pandemic—namely demographics—will continue to support the sector’s growth. It also notes that healthcare spending is projected to increase by $1.9 trillion in the US alone between 2020 and 2027, per the Centers for Medicare and Medicaid Services.

 

Source: GlobeSt.