Borrowers And Lenders Are Adapting To The Hot Heathcare Real Estate Market

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When it comes to financing medical office building (MOB) acquisitions, the cost of capital is not always the most important factor in choosing a lender.

“In fact, when a nine-property MOB portfolio in the Atlanta area changed hands in a sale-leaseback transaction in late 2019, the borrower on the $25 million loan chose to go with a lender that did not have the lowest cost but that knew the tenant best so that they could make sure that everything would go quickly through due diligence and get to closing and not hit any bumps along the way,” said Sabrina Solomiany, a first VP, US Healthcare Capital Markets Debt & Structured Finance with CBRE Group Inc. (NYSE: CBRE), who helped line up the debt for the buyer. “It was very competitive, but ultimately we went with Synovus, with part of the reason being that even though they did not necessarily have the most competitive terms, they actually had a banking relationship with the physician group.”

Ms. Solomiany made her remarks during the recent Revista Medical Real Estate Investment Forum 2020, held Jan. 27-29 at PGA National Resort & Spa in Palm Beach Gardens, Florida. She was part of a panel session titled, “Debt Outside the Box: Construction, Mezz & Alternative Asset Classes.” Joining Ms. Solomiany on the panel were: Natalie Sproull, VP with Capital One (NYSE: COF), as moderator; Jim Barnes, director of Healthcare Specialty Lending with Synovus Financial Corp. (NYSE: SNV); and Andrew Smith, managing director with Los Angeles-based Kayne Anderson Capital Advisors LP.

During the session, the panelists discussed some of the latest trends in healthcare real estate (HRE) financing when it comes to acquisitions as well as development deals. Part of the discussion focused on how and why certain HRE deals get done.

“When it comes to construction financing of medical projects, people are often surprised that the first few things I consider are not always financial in nature, said Mr. Barnes of Columbus, Ga.-based Synovous. “I like to look more at the expertise of the developer,” he said, “making sure that the developer really has a deep experience in delivering medical properties on time and within budget. This has become much more important recently with the trend toward greater institutional equity investment and, for the most part, the institutional investors having much less expertise in construction than the developers. Secondly, the firm looks for strong sponsorship either from a hospital system or a longstanding, stabilized private practice – something that will create an anchor within the property.”

 

Source: HREI

Medical Office Building Sales Surpass $10 Billion For Fifth Consecutive Year

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U.S. medical office building sales continued in an upward trend through the fourth quarter of 2019 and into 2020, driven by steady M&A activity within the healthcare market, says Cleveland-based Brown Gibbons Lang & Company (BGL).

Total MOB sales reached $11.2 billion in 2019, marking the fifth consecutive year that sales surpassed $10 billion and the third successive year topping $11 billion.

“The 2019 tally underscores the fact that medical office properties remain a core asset class,” says BGL. “Demographic and healthcare industry trends are firmly entrenched and forecasted to persist, supporting long-term demand for medical office space.”

Q4 2019 saw a total of 379 MOB deals valued at $4.3 billion, representing a 20% increase in transaction value. The average price per square foot decreased by 8% to $274 per square foot. The cap rate remained unchanged to 6.6%, pushing the 12-month average to 6.6%—a marginal contraction from from 6.7% over the previous 12-month average.

Based in Chicago, MB Real Estate (MBRE) emerged with a 29% share of acquisition volume in the Southeast market and a 12% share nationally in Q4 2019, according to BGL. MBRE’s reach in the Southeast was underscored by the purchase of 900 Village Square Crossing in Palm Beach Gardens, Florida..

Completed in 2012, the two-story, multi-tenant building with 38,944 rentable square feet was acquired from Prestige for approximately $381 per square foot, which is 15% and 23% above the regional and national averages, respectively.

“While sales volume is down year-over-year, pricing remains strong across medical office investments as investors seek to take advantage of continued strength in the U.S. economy,” says BGL. “We continue to see strong demand for medical office assets from public and private REITS as well as private equity and foreign capital investors. Major players dominated M&A activity throughout 2019, which is likely to continue; however, new investors are entering the marketplace, which is setting the stage for a busy first half in 2020,” according to BGL’s report. It also cites a fact that bears repeating: “U.S. healthcare jobs outpaced nearly every other sector during 2019.”

 

Source: Connect Media

Disney’s Team Of Heroes To Help Transform Three Central Florida Children’s Hospitals

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Disney’s Team of Heroes initiative that began two years ago will soon be expanding to three Central Florida children’s hospitals

The five-year, $100 million investment brings popular Disney stories to the hospitals, and hopefully a bit of comfort and joy to the patients.

Disney will create interactive play spaces, murals, interactive art, and more to provide distractions during what could be a stressful hospital stay.

Transformations will begin soon at AdventHealth for Children, Arnold Palmer Children’s Hospital, and Nemours Children’s Hospital. Disney has worked with patient care experts to design the re-imagined spaces that help create healing experiences that are “distinctly Disney.”

Here’s a look behind the scenes at one of the transformation that Team of Heroes is bringing to hospitals around the country:

Dr. Rajan Wadhawan, senior executive office of AdventHealth for Children:

“At AdventHealth for Children, we see first-hand the joy and reactions that come from patients and families who experience our Walt Disney Pavilion. Bringing that joy can be very important at what otherwise can be a stressful time in our patients’ young lives. Part of the whole-person care we provide is healing the body, mind, and spirit. These transformations will continue to make a positive impact on our patients’ spirits and bring even more comfort and happiness during their time with us.”

Cary D’Ortona, president of Orlando Health Arnold Palmer Hospital for Children:

“Walt Disney World and Orlando Health Arnold Palmer Hospital for Children have been working together to give back to our community since we first opened our doors in the 1980s. Receiving medical care in a hospital setting can feel especially scary and overwhelming for kids. Disney gets right to the heart of helping bring magic to our patients and their families during what is often a difficult time.”

R. Lawrence Moss MD, president and CEO of Nemours Children’s Health System:

“Together, Disney and Nemours Children’s Hospital are brightening the hospital experience for children and families facing serious health issues. Disney is bringing impactful elements into our healthcare space, such as interactive technology. With these new advancements at our fingertips, this program will help us continue providing exceptional care and actively ensure children can be children while they heal.”

Click here to view Disney Parks YouTube video ‘Three Central Fla. Children’s Hospitals & Their Patients to Benefit from Disney Transformations’

 

Source: Walt Disney World News