HAMMOND HANLON CAMP LLC

Medical Office Building Quarterly Update

Comparison of Healthcare REIT, REIT Index and Dow Jones Industrial Average (1)

  
2012 was a record-setting year for MOB transaction volume, with nearly $5.57 billion in recorded transaction volume disclosed for the year, the highest of any year since Real Capital Analytics began tracking the data in 2002. The 2012 annual volume total was higher than the total volumes reported in 2006 ($5.54 billion) and 2007 ($5.46 billion), signaling  that investor demand for the property type and seller awareness of favorable market conditions are in line with levels experienced in the pre-recession era.

Compared with recent years, 2012 volume exceeded 2010 volume of $3.89 billion by 43 percent, and was over twice the $2.56 billion in trades reported in 2011. The large number of reported transactions within the medical office building sector continues to be fairly fragmented, with single-asset transactions and several small portfolios accounting for the majority of trades throughout the calendar year. The market continues to experience a lack of large portfolio transactions since the previous peak in volume levels experienced in 2006-2007. However, while small transactions ranging in size from $5 to $20 million account for the majority of announced deals, the overall dollar volume for the year was driven by a few large M&A transactions within the healthcare REIT sector. These transactions have become increasingly common as consolidation within the healthcare REIT sector continues to evolve. The most notable transaction of this type in 2012 was Ventas’ acquisition of Cogdell Spencer and its medical office building portfolio and development pipeline in April 2012.

The consolidation within the Healthcare REIT sector has been favorable for the valuations and performance for the remaining REITs focused on medical office building investment, as evidenced by the accompanying chart.

For the complete report, please visit: MOB Trades Set Record in Annual Transaction Volume