Special Report: Are changes ahead for ground leases?


By John Mugford

P.J. Camp of Shattuck Hammond
HREI™ photo

Vince Cozzi of Ventas Inc.
HREI™ photo

As medical office buildings (MOBs) became a hot commodity and more of a core investment in recent years, it seemed as if health systems selling such properties held all of the cards in their favor.

In many sales, or monetizations, hospitals or health systems would not only receive top pricing but could handpick the buyer of their choice based on any number of factors.

However, in selling its MOBs, some hospitals feared that the new buyer would turn around and sell the facilities for a quick profit. Some also feared that the new owner would bring in tenants that would not be beneficial to their operations.

To make sure these scenarios did not happen, many hospitals required that the buyers of their MOBs enter long-term ground leases with plenty of restrictions and provisions.

Ground leases, of course, have long been the bane of some potential buyers and developers of on-campus, or hospital-affiliated, MOBs. Such contracts were known to keep some institutional investors from entering the arena of healthcare real estate altogether. These buyers didn’t want the hospital to be in control of whom they could sell the assets to in ensuing years, among other restrictions.

The full content of this article is only available to paid subscribers. If you are an active subscriber, please log in. To subscribe, please click here: SUBSCRIBE

Existing Users Log In

Comments are closed, but trackbacks and pingbacks are open.