August 2023
JLL Healthcare Perpectives
Capital Markets
One-off sales of outpatient medical show the most resilience
Outpatient Medical Transaction Volume, $ billions
Transactions larger than $2.5 million
Source: JLL Research, Real Capital Analytics
Key points:
• Sales of medical properties in the first half 2023 were $3.1 billion, off by two-thirds of 2022’s hot first half volume of $9.2 billion. Last year’s strong start was buoyed by the last dash of large portfolio trades closed early in the year, before interest rates started their rapid climb. Juxtaposed to other major property classes, the drop in medical sales was on par with the decline in multi-housing and office properties, and followed closely behind by industrial, retail and hotels that averaged 50 percent declines in sales volume.
• Notably, sales volume activity in healthcare was understandably skewed between single asset sales and portfolios. Single asset trades were off 41 percent in the first half 2023, dropping from $4.6 billion in 2022 to only $2.8 billion in 2023. Portfolio transactions were favored at the height of the market and before debt woes began and accounted for the most dramatic reduction in activity in 2023. MOB portfolios declined from $4.6 billion in the first half 2022 – the same amount of portfolios and single asset sales, interestingly – to $316 million in the same period of 2023. In other words, there were practically no old-style scale portfolios.
• The durable income profile of medical properties with long-term leases from strong healthcare tenants, often investment grade rated, with predictable cash flow and rental escalations, is finding appeal from both institutional sources and private capital. Market disruption has slowed deal velocity as the participants adjust pricing expectations given that benchmark interest rates for financing have gone up 50 to 100 basis points since the beginning of the year, the forward yield curve indicates a higher-for-longer outlook as well as the general clampdown on lending, due in large part to increased regulation, by commercial banks which have been the most vital source of financing for healthcare properties. JLL anticipates that medical properties will continue to be attractive to investors seeking certainty and inflation protection.
Recent Activity
New Listing – Investment Sale
Village Health Portfolio
89,640 s.f.
Dallas Metro, TX
(Coming Soon)
New Listing – Investment Sale
Florida Medical Clinic Portfolio
69,852 s.f.
Tampa Metro, FL
(Coming Soon)
New Listing – Investment Sale
Banner Health Tucson Portfolio
60,639 s.f.
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(Coming Soon)
New Listing – Investment Sale
Utah Surgical Center
23,934 s.f.
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New Listing – Investment Sale
Memorial Hermann Primary Care
20,000 s.f.
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New Listing – Investment Sale
Armenia Medical Office Building
20,000 s.f.
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New Listing – Investment Sale
Welbe Health – Long Beach
16,000 s.f.
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New Listing – Investment Sale
Memorial Hospital of Carbon County
13,415 s.f.
Carbon County, WY
Closed – Debt Placement
2023 Texas Portfolio
361,262 s.f.
Austin, Marble Falls, San Antonio, TX
Closed – Equity Placement
24 – 32 Newton Street
125,000 s.f.
Southborough, MA
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Closed – Equity Placement
1 Hampton Road
82,000 s.f.
Exeter, NH
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Holly Pond
73,060 s.f.
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Mountain Point Medical Center
60,000 s.f.
Lehi, UT
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Closed – Equity Placement
2 Wake Robin Road
30,000 s.f.
Providence, RI
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Closed – Investment Sale
Charleston Cancer Center
26,256 s.f.
Charleston, SC
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Closed – Debt Placement
5515 N Post Road
10,000 s.f.
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