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Feature Story: ‘Lease vs. own’ examined during BOMA panel

Health systems should invest capital in other areas, one panelist notes

By John B. Mugford

Lee Nester (right), director of real estate and asset management for Gastonia, N.C.-based CaroMount Health, spoke while serving as a panelist during the 2019 BOMA MOB conference in Minneapolis from May 1-3. Mr. Nester was flanked by Steven K. Barry, president of Rendina Healthcare Real Estate. Other panelists were Steven Chyung, senior VP of real estate with Broomfield, Colo.-based SCL Health, and Moderator Kyle Arnold, a director of real estate with CBRE Group Inc. The panel was titled, “Keeping Up with the Joneses: Maintaining and Managing Your Asset Base.” (Photo courtesy of BOMA)

MINNEAPOLIS – Lease vs. own? It’s a debate as old as time in healthcare real estate (HRE) – well, not quite that old.

But for at least a few decades now – ever since third-party developers and investors became key players in the sector and began owning more and more medical office space occupied by hospitals and health systems – the question has loomed.

For the most part, according to many HRE professionals, the argument comes down to the philosophy of the health systems themselves, with many having a long tradition of owning all of their real estate while others have been more open to tapping into third-party capital sources for new developments and the ownership of their facilities.

During the recent 2019 BOMA International Medical Office Building + Healthcare Real Estate Conference in Minneapolis, which drew 1,306 attendees from May 1-3, the “lease vs. own” question emerged as a major topic during a panel session titled, “Keeping Up with the Joneses: Maintaining and Managing Your Asset Base.”

The moderator was Kyle Arnold, who is with CBRE Group Inc. (NYSE: CBRE) and serves as a real estate consultant for Broomfield, Colo.-based SCL Health.

The other panelists were:

■ Steven Chyung, senior VP, real estate for SCL, which has nine hospitals and nearly 200 outpatient locations in Colorado, Kansas and Montana.

■ Lee Nester, director of real estate and asset management with Gastonia, N.C.-based CaroMount Health, which has two hospitals and dozens of outpatient locations in an area west of Charlotte.

■ Steven K. Barry, president of longtime healthcare facility development firm Rendina Healthcare Real Estate, which is based in Jupiter, Fla., and has a national platform.

Mr. Arnold, the moderator didn’t waste any time asking the panelists for their stances concerning leasing vs. owning.

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