Feature Story: He helped establish the HRE sector

‘Retirement’ is a misnomer for MOB monetization pioneer Todd W. Lillibridge

By John B. Mugford

Back in 1990, a rather young man who was involved in commercial real estate decided to form a new business focused on a niche asset class that, to that point in time, really did not exist.

The rest, as they say, is healthcare real estate (HRE) history.

The decision by Todd W. Lillibridge, now 68, to focus on helping health systems operate and manage their outpatient real estate properties helped create what would become a whole new asset class and industry of its own.

His firm, Chicago-based Lillibridge Healthcare Services, had its start in 1990, when it “morphed out of a commercial real estate firm that had been focused on redeveloping and managing office properties and into a healthcare real estate company,” Mr. Lillibridge tells HREI.

As a launching point, the firm found its first client right in its hometown of Chicago. That client was Northwestern Memorial (now Northwestern Medicine), for which Lillibridge provided an assessment of how well the system’s real estate was functioning on its campus in the Streeterville neighborhood.

“We initially provided them with advisory work, which then turned into them completely outsourcing all of their ambulatory and outpatient facilities in downtown Chicago to us,” Mr. Lillibridge recalls. “We probably had 25 or 30 Lillibridge employees working there at one point, and we were their outsourced real estate department for the better part of 17 years.”

From there, in marketing itself to other health systems both locally and throughout the country, Lillibridge highlighted its success in managing and optimizing the Northwestern portfolio.

“We took the success we had working with Northwestern on the road, and we landed other academic health systems, like BJC HealthCare (St. Louis) and others, and next thing you know, in a relatively short period of time, we became a true thought leader and pioneer just in what we were doing … in terms of going in and doing assessments and taking a close look at a system’s portfolio and inventory, as well as assets owned and leased. We looked for operational inefficiencies, and we were then positioned to be the outsourced real estate provider and to take over the day-to-day operations of the portfolios.

“We continued to grow the business, spending the first decade of our existence as this type of service business,” Mr. Lillibridge adds, noting that as he and others at the firm eventually realized that they could provide another potential solution – a financial solution – to health systems by acquiring outpatient facilities from them and managing the assets.

“We ultimately formed a private REIT (real estate investment trust) in 1999” he notes. “We spent the next 10 years as a private REIT with institutional partners, and we really helped pioneer the monetization of medical office buildings.”

Those next 10 years were a time of remarkable growth for Lillibridge, starting with Mr. Lillibridge spending “a year and a half going around the country explaining to health system executives how a company like ours could actually own and operate outpatient assets on their behalf. We showed them the benefits and the value proposition of having us do so.”

That formula – of serving health systems and stepping in to be their partner in owning and managing their real estate – led to enormous growth for the firm.

By 2010 or so, Lillibridge had grown its owned/managed portfolio to about $1 billion. It was then acquired by and became the MOB investment and ownership arm of Chicago-based Ventas Inc. (NYSE: VTR), which today is the second largest healthcare-focused real estate investment trust (REIT) by market capitalization.

For the next seven years or so, Mr. Lillibridge served as an executive VP of medical property operations for Ventas and the CEO of Lillibridge. During that time, the MOB portfolio continued to grow under Mr. Lillibridge’s guidance, reaching a value of about $8 billion and comprising more than 21 million square feet across 32 states.

Because of these accomplishments, and because Mr. Lillibridge was also a pioneer in helping create what is now known as the HRE sector, he has been named as the latest recipient of the HREI Insights Award™ for Lifetime Achievement, joining a list of what can fairly be called “HRE and MOB sector legends.”

Mr. Lillibridge formally accepted the award on Feb. 28 during a lunchtime presentation of the HREI Insights Awards™ during the 2024 Revista Medical Real Estate Investment Forum (MREIF), held at the Langham Huntington Hotel in Pasadena, Calif.

In accepting the award, Mr. Lillibridge said he was “humbled” about being the recipient of an award that has been bestowed upon so many HRE sector pioneers.

In reflecting on his own career, he provided audience members with three pieces of advice, asking them to continue to “take this industry to new levels of sophistication and capabilities.”

Also, “don’t be afraid to reinvent yourselves and your organizations, because if you don’t, someone else will.”

Finally, he said that following the “status quo in the healthcare real estate sector is not an option if you plan to grow in this space.”

Among industry peers who certainly consider Mr. Lillibridge to be a worthy recipient of the Lifetime Achievement Award is Jake Rohe, president and managing partner with San Diego-based PMB, which was founded by the late Bob Rosenthal, the first recipient of the Lifetime Achievement Award in 2013, and which has, for a number of years, been involved in a property management partnership with Lillibridge and Ventas.

“Todd is one of a handful of individuals in our industry who put healthcare real estate on the map,” Mr. Rhoe tells HREI. “He’s been an ambassador and proponent of the sector starting long before it was considered a core asset class.”

Mr. Lillibridge has remained quite active since leaving the REIT in 2018, as he has served on numerous boards and has had an advisory role with a number of large investment firms looking to enter, or expand, their presence in the HRE sector, including New York-based Blackstone Inc. (NYSE: BX) and Tower Brook Inc., a global private equity firm.