Editor’s Letter: Tidbits and topics

Miscellaneous news from around the HRE sector

Dear Reader:

John B. Mugford

We come across plenty of tidbits and hear about so many things taking place in the healthcare real estate (HRE) sector that it’s not always easy to include all of the information in each issue of Healthcare Real Estate InsightsTM.

So this month I decided to provide you with a quick-hitting potpourri of items that we’ve either heard about or tracked down that might not have made it into the publication, at least not this month.

■ In the “Post-Acute & Senior Living” section of our magazine last month, we wrote that many companies long involved in the medical office building (MOB) sector are looking to make waves in the post-acute arena as well. The reason, of course, is that as health systems continue to look into providing more services along the continuum of care, third-party companies might want to expand their areas of expertise as well. We chatted by phone recently to one well-known, long-time MOB broker with a strong presence in a large market who said he has been dabbling in the sales of such facilities. And, he’s finding quite a bit of success. Perhaps we’ll highlight his story in an upcoming issue.

■ In a conference call in recent months between Wells Fargo Securities analysts and Chris Bodnar, senior VP of the Healthcare Capital Markets Group at CBRE, Mr. Bodnar noted that it doesn’t look as if there will be a significant increase in the supply of healthcare-related facilities for most of 2013. This is bad news for hungry investors such as unlisted real estate investment trusts (REITs), who, according to CBRE, have raised about $6 billion in equity to acquire such properties, as well as other investors. CBRE believes supply could increase in time, however, as health systems will look to sell real estate assets for a number of reasons related to healthcare reform and the changing, more expensive landscape of delivering care.

■ A research report issued by Marcus & Millichap Real Estate Investment Services agrees with CBRE’s assessment, noting that the “ever-increasing operational costs and potential physician shortages are forcing providers to identify and exploit opportunities to create efficiencies and maximize revenues. Many large practices and health systems have started to look to real estate for assistance in meeting these objectives.” According to Alan L. “Al” Pontius, managing director of the firm’s National Office and Industrial Properties Group: “From an investment perspective, health system mergers and acquisitions stand to elevate the overall credit characteristics of the nation’s medical office sector, resulting in additional high-quality acquisition opportunities, and potentially more favorable financing terms.”

 John B. Mugford, Editor