Nuveen Real Estate has moved into the healthcare sector in a big way. Since 2019, the leading investment manager has built a portfolio of more than $2.5 billion. With the sector poised for even greater growth due to the increasing popularity of MOB’s as well as the mounting demand for senior living facilities, Nuveen is planning to increase its investment.
Greene Park Capital continues to show a robust pipeline of health care real estate investment, announcing that it closed a $602 million transaction in collaboration with its capital partner, NorthWest Healthcare Properties REIT.
This “significant milestone event,” as Greene Park Capital called it, marks the REIT’s entry into the US. The portfolio includes 27 specialized healthcare real estate assets across five asset classes located in 10 states.
“REITs are stepping back into the game,” Jeffrey A. Piehl, MAI, Partner and Real Estate Lead at HealthCare Appraisers, tells GlobeSt,
As detailed in Health Care Appraisers’ 2022 Medical Office Fundamentals Outlook, “new institutional investors and capital are actively pursuing US-based healthcare real estate, and medical office properties, in particular.
“The MOB asset class and its recession-resilient fundamentals has attracted capital worldwide as recently witnessed by the large-scale transaction by the Canadian REIT, a portfolio that included properties across the spectrum of healthcare real estate, illustrating the depth of demand across healthcare real estate facilities.”
Included in the diverse portfolio of assets as part of the initial transaction are medical office buildings, acute care hospitals, inpatient rehabilitation facilities, ambulatory surgical centers, micro hospitals and behavioral health facilities.
“Our strategy is to focus on customer-centric healthcare providers that can adapt to new technologies, new delivery models, and evolving regulations,” Greene Park Co-Founder and Managing Partner Jason Simmers said in prepared remarks,
Source: GlobeSt.
The I-word, inflation, is bad enough. But then there’s the R-word: recession. And some forecasters see the potential coming forward, according to the latest CNBC Fed Survey.
Not that it’s a given, but the trifecta of inflation, more hawkish Fed monetary policy, and issues coming out of Russia’s invasion of Ukraine have increased the bet to a 33% chance of one in the next 12 months.
That may be what a new CBRE survey picked up on. Distributed to “approximately 500 of healthcare real estate’s most influential healthcare real estate trusts (REITs), institutional healthcare investors, private capital investors, and developers throughout the United States” and responses coming from about a fifth of them, 85% believed that the healthcare real estate industry is “recession resistant.”
“Survey results suggest a very significant increase in capital allocated to healthcare real estate for 2022,” the report said. “In 2021, the total capital allocation provided by respondents in our survey was $10.9 billion, while actual transaction volume for 2021 ended at nearly $16 billion. This year, the total capital allocation from those unique firms who provided a figure (65 out of 86 firms) totaled $17.1 billion, which represents a 57% increase compared to 2021.”
This year, the firms that gave a capital allocation reported $17.1 billion going into 2022, a 57% increase. Given that, CBRE expects investors to allocate at least $25 billion in capital to the sector. Market caps are likely to drop with the capitol going in, and 96% of respondents expected cap rates on Class A on-campus to be below 6% this year, while 79% anticipate the average cap rate will drop below 5.5%.
“This can be ascribed to the ongoing increase in demand for high-quality healthcare real estate, the resiliency of healthcare real estate during the pandemic, and new funding sources actively exploring alternatives to traditional real estate products, such as office, industrial, multifamily and retail,” the report reads.
Similarly, the life science sector is also tremendously strong, with record level venture funding of $32.5 billion in 2021 and in 2022 40% of respondents thinking that life sciences properties, especially those housing biotech or pharma, should see a cap rate below 5%.
As might be expected from these numbers, a big majority—84%—plan to be net buyers of healthcare real estate, including all healthcare REITs and institutional investors that responded. Only 26% of current owners will be net sellers. With that much demand and low interest in dropping net ownership, that describes a coming challenge to obtain additional properties, meaning likely higher prices.
Source: GlobeSt.
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