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Feature Story: Alternative assets are looking good

NKF webcast discusses why MOBs and other alternatives should perform well

By John B. Mugford

Although the capital markets for commercial real estate have “experienced extreme volatility” during the COVID-19 pandemic, a team with New York-based Newmark Knight Frank (NKF) believes acquisitions of “alternative assets,” including medical office buildings (MOBs), are poised to make a strong comeback.

Chad Lavender, vice chairman of the Capital Markets Healthcare & Alternative Real Estate Assets group of NKF, said he and the team believe “the transactional market will remain strong for alternative asset classes post-COVID, not unlike what we saw in the Great Global Financial Crisis.”

Those capital markets have, in recent weeks, “stabilized materially… The ground is moving under our feet in a good direction for once, and the capital markets lock-up seems to be thawing. So that’s great to see.’

Because MOBs and other healthcare facilities are part of NKF’s alternative assets group, Vice Chairman Todd Perman, who leads the firm’s Global Healthcare Services team, took part in the NKF Alternative Assets Forum webinar May 28. The session included NKF brokers from the medical office, senior housing, student housing, manufactured housing and self-storage segments.

Mr. Perman said the healthcare group has completed more than $6.5 billion in MOB sales volume during the past three years. The group has advised more than 300 healthcare clients on all aspects of real estate, finance, development and strategy, and “has been on the front edge of most of the hospital monetizations in the country,” he said.

Mr. Perman, one of seven NKF professionals taking part in the webcast, provided a number of observations concerning the healthcare real estate (HRE) and MOB sector. For example, he noted that because hospitals, health systems and providers have faced financial stresses from having to postpone lucrative elective procedures, they are placing an emphasis on preserving cash and raising capital. As a result, “we do see monetizations kind of coming back.”

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