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Thought Leaders: Healthcare and Life Sciences COVID-19 Update from CBRE

Capital Markets

Healthcare & Life Sciences COVID-19 Update

During times like these, our team feels very fortunate to be working for an industry leading real estate services firm like CBRE where resources and information are in abundance. Also, our involvement with the healthcare and life sciences divisions of BOMA and ULI have provided us additional resources to help our clients. If you have any specific questions regarding your healthcare real estate or life science holdings, we are available to share these resources with you.

As the COVID-19 health crisis continues to unfold, we’d like to share some insights that we have gathered over the last few days.

The situation is fluid. We have included a clip below where Spencer Levy, CBRE head of research, joined CNBC ‘Power Lunch’ last week to discuss how the Coronavirus pandemic will and is affecting the commercial real estate industry. As he states in the interview, “different elements of the commercial industry have been hit differently. Probably the hardest hit are hotels and retail, less so the other asset classes, but no asset class is immune.”

Perspective is always important. Based on discussions with many of our clients and data provided by our property management division, it appears that industrial, medical office and life sciences may be the least impacted. With the first of the month now behind us, owners and lenders will now begin to see who was able to pay rent and meet debt service. Although anecdotal at this stage, several of the publicly traded healthcare REITs have reported to Wall Street analysts that all their medical buildings are still open for business, with about 15% of tenants inquiring about rent relief. We compare this to Prologis, one of the biggest logistics real estate companies in the world, who announced this week that nearly a quarter of its tenants are seeking rent relief. In addition, Related Companies CEO said in an interview with CNBC recently that only 26 percent of its retail tenants have paid rent in April. The key will be  in discerning which requests are opportunistic from financially sound tenants across all industries.

The healthcare industry is eligible for the most stimulus from the government.
On March 27, President Trump signed into law the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), the largest ever stimulus bill in U.S. history. The CARES Act authorized over $2.1 trillion of spending focusing on small businesses (for which physician tenants are typically eligible) and personal tax income tax credits; however, it also specifically called for $130 billion in relief to the medical and hospital industries. This includes paying hospitals for the treatment of uninsured patients.

For more on how the COVID-19 pandemic is affecting the medical office, life sciences, acute care and post-acute hospitals, and more, please click here.

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