Cover Story: Still bullish on MOBs

Capital markets experts see long-term success for sector

By John B. Mugford

bull

By the end of a fast-paced, upbeat and information-laden panel discussion about the medical office building (MOB) sector, moderator Jeffrey S. Langbaum, a senior real estate investment trust (REIT) analyst with Bloomberg Intelligence, had to make sure things didn’t end on too positive of a note.

“Only (one panelist) has put any negative, or bearish, perspective out there – and it was only slightly conservative,” Mr. Langbaum said. “So I’d like to ask you if there is any one thing that you do worry about, something that could perhaps change … and put a damper on what I have gathered from all of you is a very bullish outlook for this sector moving forward.”

We’ll get to their worries a bit later. But first, the bullish part.
The session took place during the 2016 Revista Medical Real Estate Investment Forum Oct. 4-5 in the Denver suburb of Broomfield, Colo., where Bethesda, Md.-based Revista, a healthcare real estate research and data firm, released its latest statistics concerning the medical office building (MOB) sector. The conference included six panel discussions and two keynotes, one by former U.S. Health and Human Services Secretary and Wisconsin Gov. Tommy Thompson.

The conference’s leadoff panel session, with Mr. Langbaum as the moderator, was titled, “Capital Markets 2016: An Industry Executive Panel Discussion.”

The panelists, representing lenders, major investors and investment bankers in the MOB space, provided plenty of insight into the current state of the sector as well as what might take place in the future, both in the short term and long term.

The panel included:
■ Christopher Merrill, co-founder, president and CEO of Chicago-based Harrison Street Real Estate Capital LLC;
■ Mark D. Engstrom, executive VP-acquisitions for Scottsdale, Ariz.-based Healthcare Trust of America (NYSE: HTA);
■ Jeff N. Theiler, executive VP and chief financial officer of Milwaukee-based Physicians Realty Trust (NYSE: DOC);
■ James Seymour, senior managing director of real estate for Capital One Healthcare, part of McLean, Va.-based Capital One Financial Corp. (NYSE: COF);
■ Randy Williamson, managing director and vice chairman with New York-based Eastdil Secured LLC; and
■ Peter Scott, managing director in the Real Estate Investment Banking Group of New York-based Barclays.

“We really have all sides of the sector covered,” Mr. Langbaum noted, “an insider’s view of the current state of the medical office capital markets.”

He started off by asking the panelists why the national MOB sales volume was trending downward through the first half of 2016 as compared to the first half of 2015, which turned out to be a record-setting year.

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