Feature Story: Playing the long game

Investment sales aren’t likely to take off again anytime soon, but healthcare real estate fundamentals remain strong

By John B. Mugford

In April 2023, HREI™ reported that the looming foreclosure of an 88-asset MOB portfolio “and could very well end up being the year’s largest transaction.” In a year of depressed sales volume, that prediction turned out to be correct, as Ventas Inc. assumed ownership of the portfolio, which had been put up by Santerre Health Investors as collateral for a 2019 loan. (Photo courtesy of CoStar)

By now, nearly everyone involved in healthcare real estate (HRE) knows that both the sales of facilities, namely medical outpatient buildings (MOBs), and new construction have slowed significantly during the past year or more.

Yet, at the same time, unlike in several of the other major commercial real estate asset classes, tenant demand for MOB and HRE space has increased, meaning occupancies and rents are rising at an unprecedented rate across the country.

Although raw data can broadly illustrate these trends, getting the insights of HRE investors, owners and developers helps to paint a clearer picture of what is taking place.

So, to get a better feel for what’s happening in the world of HRE investment, let’s take a look at both the data and what experienced HRE investment professionals are currently saying about the marketplace.

What the numbers say

First the data. For that, we turn to Arnold, Md.-based Revista, a commercial real estate research firm that compiles and provides a wide range of HRE information for its subscribers.

In its year-end “Medical Real Estate Transactions Report,” Revista stated that MOB sales were

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