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Feature Story: Even some MOBs are feeling the pain

Yet the asset class could be the first to recover due to pent-up demand

By John B. Mugford

This time, things are different for medical office buildings (MOBs) — and yet, there is still a light at the end of the tunnel.

During the Great Recession, MOBs gained their well-known reputation as being “recession-resistant,” in large part because patients continued to see their doctors and opt for elective surgeries and procedures. As a result, physician practices and health systems were able to continue to pay rent.

During this quickly initiated, devastating downturn caused by the COVID-19 pandemic, however, people have been discouraged from seeking care for ailments or conditions considered to be non-essential. For example, nearly all elective surgeries and procedures have been postponed until an undetermined future date.

This sudden loss of revenue, according to numerous reports and newsletters from healthcare real estate (HRE) firms, has left physician groups throughout the country struggling financially, with many practices applying for Small Business Administration (SBA) and Payment Protection Program (PPP) loans through the Coronavirus Aid, Relief and Economic Security (CARES) Act, which was signed into law on March 27.

In addition, many smaller practices are seeking rent relief from their landlords, according to numerous reports.

And it’s not just physician practice groups that are feeling the pain.

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