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Medical Office Building Mergers, Acquisitions Up 14% In First Quarter 2023

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Medical office building mergers and acquisitions were up 13.7 percent in the first quarter of 2023 and up 5 percent from the same period last year.

Medical office building spending increased by 21.3 percent over the last quarter, hitting $991 million in the first quarter, according to an April 14 press release.

The largest medical office building sale with a disclosed price in the first quarter was for $190 million.

Tennessee saw the highest number of mergers and acquisitions in quarter one with 11 deals, followed by California, Illinois, Florida and Texas.

Montecito Medical was the busiest acquirer in the market, obtaining 261,307 square feet of property across the country. The real estate investment firm’s most expensive transaction of the quarter reached $48 million.

 

Source: Becker’s ASC Review

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Cap Rates On The Rise

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Amid all of the uncertainty in the healthcare real estate sector due to rising interest rates and inflation, Mike Hargrave, principal with Arnold, Md.-based HRE data firm Revista, noted during the firm’s recent conference in Bonita Springs that there are two main questions on the minds of most HRE professionals.

“At Revista, the biggest questions we’re getting are, where are cap rates at and where are they going?” Mr. Hargrave said.

A bit later, after he’d provided plenty of data on medical office building (MOB) sales transaction volumes and capitalization rates, or estimated first-year returns, Mr. Hargrave noted: “So generally, when people ask how much are cap rates going up, I tell them, ‘Well, it depends upon what kind of asset you’re talking about and where it’s located.’”

For the most part, however, Mr. Hargrave indicated that MOB cap rates have been on a steady upward march since the third quarter (Q3) of 2022, amid a time of rising interest rates, pricing uncertainty and greater difficulty in obtaining debt for acquisitions.

Mr. Hargrave presented plenty of data on MOB sales volumes and cap rates during a presentation he gave with another Revista principal, Hilda Martin, during the 2023 Revista Medical Real Estate Investment Forum (MREIF) conference, held Feb. 28 to March 2 at the Hyatt Regency Coconut Point in Bonita Springs, Fla.

 

Source: HREI