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Thought Leaders: CBRE Fall 2020 National Healthcare & Life Sciences Real Estate Investor Update

CBRE Capital Markets | Healthcare

NATIONAL HEALTHCARE & LIFE SCIENCES REAL ESTATE INVESTOR UPDATE

FALL 2020

Included in the Fall 2020 issue of the National Healthcare & Life Sciences Real Estate Investor Update:

FEATURE ARTICLES

  • All Buyer Types Have Moved Off the Sidelines for MOB and Life Sciences
  • Life Sciences Cap Rates Stay Resilient Through COVID
  • U.S. Medical Office Building Construction Trends
  • Notable Healthcare Real Estate and Life Sciences Transactions from Last Quarter
  • National Medical Office Cap Rate Trends
  • National Medical Office Sales Volume
  • Debt Market Update for Healthcare and Life Sciences

ALL BUYER TYPES HAVE MOVED OFF THE SIDELINES FOR MOB AND LIFE SCIENCES

One of the most significant buying groups for the healthcare, senior housing and life sciences sector has always been the publicly-traded Real Estate Investment Trusts (REITs). However, the REIT sector (like most of the equity markets) saw significant volatility in the first part of the year due to the onset of the COVID-19 pandemic, with only those REITs with a singular focus on medical office and life sciences outperforming the broader REIT indexes. As such, REIT acquisition activity declined from 47% of all healthcare real estate sales in 2Q19 to only 7% in 2Q20 (source: Revista). However, we believe the publicly-traded REIT sector is much better positioned for the second half of the year and that all buying groups have now moved off the sidelines. Many REITs have diversified their equity partnerships with institutional capital to stabilize their buying power. For example, Ventas (NYSE: VTR) closed on a core and core-plus perpetual life fund vehicle earlier this year targeting medical office and life sciences, marking its largest purchase in the vehicle in October with the Genesis South San Francisco life sciences portfolio for $1 billion. Publicly traded REITs, such as Alexandria Real Estate Equities (NYSE: ARE), have recently structured ioint venture partnerships with separate institutional funds in a meaningful way throughout various primary life sciences markets.

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