Feature Story: Cap rates are on the rise

Mike Hargrave, Hilda Martin present updated info at Revista MREIF conference

By John B. Mugford

Hilda Martin (left) and Mike Hargrave of Revista share healthcare real estate market data during the Revista Medical Real Estate Investment Forum (MREIF) in Bonita Springs, Fla., Feb. 28. (HREI photo)

Amid all of the uncertainty in the healthcare real estate (HRE) sector due to rising interest rates and inflation, Mike Hargrave, principal with Arnold, Md.-based HRE data firm Revista, noted during the firm’s recent conference in Bonita Springs that there are two main questions on the minds of most HRE professionals.

“At Revista, the biggest questions we’re getting are, where are cap rates at and where are they going?” Mr. Hargrave said.

A bit later, after he’d provided plenty of data on medical office building (MOB) sales transaction volumes and capitalization rates, or estimated first-year returns, Mr. Hargrave noted: “So generally, when people ask how much are cap rates going up, I tell them, ‘Well, it depends upon what kind of asset you’re talking about and where it’s located.’”

For the most part, however, Mr. Hargrave indicated that MOB cap rates have been on a steady upward march since the third quarter (Q3) of 2022, amid a time of rising interest rates, pricing uncertainty and greater difficulty in obtaining debt for acquisitions.

Mr. Hargrave presented plenty of data on MOB sales volumes and cap rates during a presentation he gave with another Revista principal, Hilda Martin, during the 2023 Revista Medical Real Estate Investment Forum (MREIF) conference, held Feb. 28 to March 2 at the Hyatt Regency Coconut Point in Bonita Springs, Fla.

Their presentation was titled, “Medical Real Estate Facts, Trends & Top Markets.”

Mr. Hargrave’s cap rate data showed that private equity (PE) investors have

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