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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

Medical Office Building Sales Are Off To A Hot Start: $3.8 Billion In First Quarter 2022

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The year 2021 got off to what could certainly be described as a lackluster start in terms of medical office building sales.

In fact, the first quarter of 2021 saw an MOB sales volume of just $2.1 billion, the second lowest total since Arnold-based Revista began compiling healthcare real estate data for its subscribers in 2015.

Of course, in no way was the moribund Q1 sales volume an indication of what was to come in the remainder of 2021, as Revista’s most recent and updated statistics indicate that last year’s MOB sales total not only broke the all-time record, but shattered it.

The final volume for 2021 came in at $18.3 billion, or 15.3 percent higher than the next highest total tallied by Revista: $15.5 billion in 2017.

 

Source: HREI

Physicians Realty Trust Closes On $750 Million Deal Acquiring A 14 Medical Office Building Portfolio

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Physicians Realty Trust has acquired a 14-building medical office portfolio from Landmark Healthcare Facilities for approximately $750 million, in an off-market transaction.

Spread across eight states, the Class A medical facilities totaling roughly 1.4 million square feet were 95 percent leased at the time of sale. The REIT will continue to partner with Landmark in the property and facility management of the traded assets.

With most assets in Florida and Michigan, the portfolio comprises:

• 200,583-square-foot UF Health Jacksonville North in Jacksonville, Florida
• 164,186-square-foot Baptist Medical Center Belhaven in Jackson, Mississippi
• 141,205-square-foot Burns POB (professional office building) in Petoskey, Michigan
• 121,834-square-foot TGH Brandon Healthplex in Brandon, Florida
• 100,490-square-foot Beaumont POB in Sterling Heights, Michigan
• 99,055-square-foot Lafayette MOB in Lafayette, Louisiana
• 94,572-square-foot Beaumont Health and Wellness Center in Rochester Hills, Michigan
• 90,156-square-foot Hospital Hill MOB in Kansas City, Missouri
• 89,159-square-foot Raritan Bay Medical Center in Old Bridge, New Jersey
• 85,582-square-foot Saint Vincent MOB in Erie, Pennsylvania
• 81,312-square-foot Riverside MOB in Hampton, Virginia
• 73,453-square-foot Bay City MOB in Bay City, Michigan
• 57,040-square-foot Beaumont Grosse Point MOB in Grosse Pointe, Michigan
• 36,045-square-foot Yulee MOB in Yulee, Florida

Each facility is part of a hospital campus or affiliated with a health system and 75 percent of the leased space has investment-grade health systems or their subsidiaries as tenants.

Grounds For New Relationships

Considered to be the largest single transaction in the company’s history, the Landmark portfolio acquisition was originally announced in October. The initial deal included 15 medical facilities with a total price tag of approximately $764.3 million. However, a 24,972-square-foot property in Deltona, Fla., was ultimately excluded from the sale as its tenant chose to exercise its Right of First Refusal.

The deal helped Physicians Realty Trust establish 10 new health system relationships, including the University of Florida Health, Beaumont Health, Hackensack Meridian Health, Baptist Health Systems, McLaren Health Care and Allegheny Health.

 

Source: Commercial Property Executive