Orlando Health To Buy 25 Acres For Future Expansion

Orlando Health has entered into a contract with EHOF Acquisitions II LLC to buy 25 acres in Osceola County.

The $3.8 billion nonprofit health care provider expects to close on the property at 8011 Osceola Polk Line Road in Davenport by early 2019. The organization has not yet announced its purpose for the site. Master development and infrastructure-related activities for the site are expected to begin this fall.

“This superior site, just south of Central Florida’s bustling tourist corridor and southeast of the fast-growing Four Corners area, will make possible new health care options for the thousands of residents, employees and visitors in the region and, we expect, expanded future employment opportunities,” Matt Taylor, the vice president of asset strategy for Orlando Health, said in a prepared statement.

The property will be part of a 108-acre mixed-use development called Reunion Village. That project, owned by Encore Capital Management, will feature three restaurants, a multi-tenant retail facility and 300 homes. Currently, there are leasing opportunities at the Davenport location through LandQwest Commercial Real Estate.

In addition, Orlando Health reportedly wants to buy a 51-acre cow pasture so it can bring more health care services to Apopka — and gain some strength in the northwest Orange County community. The hospital system reportedly has the property at 5401 Effie Drive near State Road 429 and West Kelly Park Road under contract, industry experts told Orlando Business Journal. Orlando Health didn’t respond to requests for comment, but it has been scooping up several medical office spaces and other properties in Central Florida this year.

Orlando Health also recently bought property in downtown Orlando and in Oviedo:

It bought a two-story, 72,000-square-foot building from Oviedo Medical Properties LLC on May 25 which it will use as medical office space.
The 121 W. Copeland Drive property in downtown Orlando was bought June 18 for $833,500. The city of Orlando and Orlando Utilities Commission previously owned the land and leased it to Orlando Health.

Meanwhile, Orlando Health is working on several projects, including a $400 million, 30-acre medical complex in Lake Mary and a freestanding emergency room near the Tupperware Brands Corp. (NYSE: TUP) headquarters on the Orange-Osceola counties border.

“We are in the midst of a health care arms race,” American College of Healthcare Architects President and local industry expert Bill Hercules previously told OBJ, referencing hospital systems’ scramble for land and/or medical properties.

Orlando Health owns nine Central Florida hospitals, including Orlando Regional Medical Center, Dr. P. Phillips Hospital, South Seminole Hospital, Health Central Hospital, the Arnold Palmer Hospital for Children, Winnie Palmer Hospital for Women & Babies, South Lake Hospital and St. Cloud Regional Medical Center. It also owns 11 urgent care centers in the region, as well as several cancer centers, freestanding ERs and more. It is one of the region’s largest employers, with 23,000 workers.

Source: OBJ

Cleveland Clinic Readies New $53 Million Coral Springs Family Health Center

With the countdown to opening at less than four days, workers streamed in and out of Cleveland Clinic Florida’s newest South Florida facility on Thursday installing and testing the final pieces of high-tech equipment.

On July 16, the clinic is scheduled to open its three-story, 73,000-square-foot Coral Springs Family Health Center at the southeast corner of North University Drive and the Sawgrass Expressway.

Inside, most of the pieces were in place and ready for use: large, naturally lit waiting rooms with carefully curated art on the wall — “shown to be beneficial for healing,” said Arlene Allen-Mitchell, the clinic’s director of communications and media.

Built for about $33 million and equipped for another $20 million, the facility is not a hospital or trauma center, but an ambulatory surgical center with 17 medical specialties and imaging and diagnostic services. It was developed through a joint venture between the clinic and Jupiter-based Rendina Healthcare Real Estate.

Services will include gastroenterology, orthopedic surgery, plastic and reconstructive surgery, podiatry, urology, sports health, hand surgery, gynecology and breast surgery.

Clinic patients will be referred for digital and 3D mammograms, CT scans, MRIs, ultrasounds, general X-rays and fluoroscope imaging.

The center also includes 40 exam rooms, 24 prep and recovery rooms, and four state-of-the-art operating rooms, with another two coming in the future.

The operating rooms are big — 300 square feet each, with ample empty space surrounding the operating table, anesthesiology equipment, various light and power sources and diagnostic equipment, and flat-screen monitors.

Juan Nogueras, the center’s medical director, said he has worked in smaller operating rooms “and this is much better.” He pointed out that a typical surgery involves numerous clinicians — an anesthesiologist, circulating nurse, scrub nurse, surgical team and additional equipment.

“In operations, it’s like an orchestra,” he said. “There’s a rhythm to it,” with specialized personnel carrying out vital tasks. “That’s why having space is important.”

Source: SunSentinel

Planned Marion Hospital Spurs Legal Challenge

Three hospitals in Marion and Citrus counties are challenging a state decision to sign off on a new 66-bed hospital in Marion County, according to documents posted Thursday on the state Division of Administrative Hearings website.

The dispute stems from the Florida Agency for Health Care Administration’s preliminary approval June 1 of a certificate of need for the 66-bed hospital proposed by Munroe Regional Medical Center.

Obtaining certificates of need are a critical regulatory step in building hospitals and other types of health-care facilities.

Ocala Regional Medical Center, West Marion Community Hospital and Citrus Memorial Hospital filed a challenge to the certificate-of-need decision, contending in part that the approval would lead to an unnecessary duplication of patient beds and services in the area and would result in a loss of patients for the competing hospitals.

The Agency for Health Care Administration on Thursday sent the challenge to the Division of Administrative Hearings, where it will be heard by an administrative law judge.

Source: Health News Florida

What’s The Outlook For Medical Office Buildings?

Medical real estate (MOB) is a sector undergoing some changes, but its future outlook remains stable. As healthcare providers continue to grapple with changes in reimbursement policies, investors are increasingly viewing these assets as more than just alternatives to core real estate sectors, says Lisa Strope, director of research at real estate services firm JLL. “It’s a really good time for healthcare investment,” Strope says. Here are some key updates on the sector from several industry experts.

1. There is a lot of development. And it’s happening across the country, says Mike Hargrave, principal at Revista, a medical real estate research firm. According to Revista’s construction report, the U.S. can expect to see about 22 million sq. ft. of medial office space delivered this year. “That would be really the high-water mark going all the way back to 2008,” Hargrave says.

2. But development is not outpacing demand. This new construction represents just 1.5 percent of existing stock, according to Revista figures. “It’s not like that inventory’s growing at a pace that demand can’t keep up with,” Hargrave says. In addition, very little of this pipeline is made up of speculative construction. Demand for medical office building and outpatient care centers continues to grow rapidly, and supply is keeping pace, says Mindy Berman, managing director at JLL, as technological advancements have allowed more critical medical care to be provided in retail settings and not just hospitals.

3. Construction trends differ geographically. In states including Missouri, Colorado and Texas, new development can happen quicker, whereas in more regulated states, you may see hospitals leasing space in a retail strip, Hargrave says. In some states where there is more land available—like Texas, for example—there is the growing trend of micro-hospitals and freestanding emergency rooms popping up, he notes. “The common thread is the hospitals are in a mad dash to protect market share, to grow market share and to deliver healthcare to the community,” Hargrave says.

4. The “retailization” of medical real estate has been driven by demographics and technology. According to a recent report on the sector from real estate services firm Avison Young, there are around 1,500 to 2,000 mobile clinics around the country, more than 2,000 retail clinics and about 5,600 ambulatory surgical centers. “The concept is that care providers are meeting their patients where they are. With medical offices located in prime retail locations, patients can access care in a convenient spot while running other errands,” Berman says. And the shift from retail to healthcare use is easier than one might think; such facilities tend to have high visibility, easy access and a large floor space, Strope adds. This ongoing “mutation of uses” of medical office space has resulted in part because of the aging of the baby boomer and millennial generations, the latter of which tends to go to the doctor for check-ups and preventative care less, says report author Tula Voutieros, senior research analyst at Avison Young. “You’re really seeing much more flexible open design in spaces, gearing the industry for preparedness of change along with the healthcare industry,” Voutieros says. Meanwhile, technological advances and changes in healthcare reimbursements have also helped to shift services more to out-patient locations—all to help keep healthcare costs down, Berman says. According to JLL’s health care real estate outlook for 2018, 39 percent of the market value for U.S. healthcare real estate is concentrated in outpatient facilities and MOBs; 31 percent is concentrated in hospitals.

5. The sector’s fundamentals are stable. “Operationally speaking, there’s nothing in the fundamentals that suggests that the sector should be heading to a downturn,” Hargrave says. MOBs have posted stable occupancy rates, a trend anticipated to continue. Jll’s report notes a quarterly weighted average occupancy rate between 90.4 percent in the first quarter of 2009 and 92.6 percent in the fourth quarter of 2016, “a mere 200-basis-point spread from recent peak to trough.” Meanwhile, pricing has slowly risen, up an average of 49.8 percent over the past five years.

6. There’s been a shift in who’s buying. Healthcare REITs used to be the dominant force in buying institutional grade class-A medical assets, as they had the lowest cost to capital and the ability to place the highest bids, Hargrave says. “That changed coming into 2018, and really whether it’s the big three REITs or whether it’s the MOB-focused REITs, their cost to capital has gone up,” says Hargrave. This has led a number of institutional-grade private equity firms to view class-A MOB assets as core real estate. “REITs are a little bit less active now than they were a year ago,” Hargrave says. According to JLL’s research, medical office assets have regularly posted a 200-basis-point spread in cap rate over the past five years; yields are anticipated to come in at 6.7 percent this year for MOBs.

Source: NREI

Davie Parcel Envisioned For More Medical Offices

Nearly 3 acres of land in Davie have been sold for $2.4 million to a developer looking to build medical and office space.
T.D.R.S. Properties Inc. has sold the property, at 7900 NW 33rd St., to New York-based investment group Nig FL Realty.
Located east of University Drive, the parcel has a 7,500-square-foot medical office building — the Carissa Rose Medical Complex — on 1.13 acres. The rest is empty land.

The town “looks forward to the construction of more medical office space,” said Phillip R. Holste, assistant town administrator and interim director of the Community Redevelopment Agency.

He said there’s demand with the construction of the new HCA hospital on the campus of Nova Southeastern University that begins later this year.
Source: Sun Sentinel

Florida Regulators Struggle To Keep Up With Medical Marijuana Industry

Florida’s embattled medical marijuana office continues wading through rulemaking—two years after Florida voters approved the system. But the industry is moving faster than regulators’ ability to govern it, leading to problems.

Last week a California-based medical marijuana company purchased a Florida one for $53 million. There have been a couple of these sales already. Yet only now is the Florida Department of Health’s Office of Compassionate Use coming up with rules to govern ownership transfers. The Office’s Director Christian Bax says the rule is aimed at quality control.

“And so we’re asking for the same information as we would ask another MMTC [Medical Marijuana Treatment Center] applicant,” he said.

The department wants new owners to go through a similar process as the original ones did, including background and financial checks. In the absence of firm rules on everything from how much licenses will cost, to ownership transfers, the Department is trying to put in temporary policies to fill the gap. These temporary rules are called variances.

The Office of Compassionate use has been under fire from all sides. It’s been accused of moving too slow, and earlier this year Florida lawmakers threatened to cut its funding. Some players, such as the Lockwood law firm which represents Medical Marijuana companies, want the department to speed up rule development.

“We have two major concerns with the proposed rule today. The first is that it lacks a turnaround time,” said the Lockwood firm’s Devon Nunneley. She wants to see changes that will get new products to patients faster.

“Any delay in the variance approval process really slows down our client. So we were hoping to see a rule that gives the office a certain timeline—something like 15 days—to approve or deny a variance request so that we could have some certainty in that regard.”

More recently a Leon County Circuit judge gave the state a week to make rules regarding smoke-able marijuana, after the same judge earlier found the state’s ban on smoke-ables unconstitutional. The deadline to make those rules was Monday. The state appealed the decision Friday. In a statement, a Health Department spokesman says patients have access to medical marijuana in different forms under the law and that its making progress in making medical marijuana available to the more than 117,000 Floridians who have licenses.

Source: Florida Trend

Wellness Real Estate Has Blossomed Into A $134 Billion Industry Worldwide – And It’s Growing Fast

It’s the non-stop pace of our digital lives. An increasingly isolated and aging population. Rising chronic illness. Climate change. Given the pressures of the modern world, a gym membership and taking the occasional “mental health day” often just aren’t enough to maintain a healthy lifestyle.

One way to achieve optimum wellness, experts and developers say, is by choosing a home that is designed for it.

The wellness real estate boom worldwide, which took off in commercial buildings with the introduction of the WELL Building Standard in 2014 as workers sought healthier office environments, is now poised to explode into the residential market, according to a 2018 report by the nonprofit Global Wellness Institute.

Homes designed for wellness usually start with energy-efficient and sustainable construction. Indoor components like natural lighting, air quality, acoustics, proximity to green spaces and exercise facilities, as well as non-toxic paints and finishes take it to the next level.

Researchers at the Miami, Florida-based Global Wellness Institute say the international wellness real estate market is now a $134 billion industry. The number of wellness-oriented properties (including residential, mixed-use and commercial) has grown 6.4% annually since 2015 and is expected to continue growing at that pace through 2022, to reach $180 billion—half the size of the global “green” building industry, according to the report, which was released in January.

The U.S. leads the market share at $52.5 billion, followed by China, Australia and the U.K. According to the report, there are more than 740 existing or planned residential projects in 34 countries that include large-scale master planned communities and urban/suburban mixed-use developments.

Particularly in the U.S., while health care spending soars, “we’re becoming more unhealthy as we live longer,” said Ophelia Yeung, a senior research fellow at the Global Wellness Institute who co-authored the report, called “Build Well to Live Well: Wellness Lifestyle Real Estate and Communities.” Naturally, Ms. Yeung said, this conflux has led to people asking themselves “why they invested their life savings in a home that is not keeping them well.”

In the heavily polluted metropolises of Asia and India, homebuyers are increasingly looking for a refuge from gritty city streets, so high-end air and water purification systems, indoor landscaping and natural furnishings are priorities.

“In these urban areas, the indoor environment is going to be so important for them — it’s a sanctuary where they’re going to escape to,” Ms. Yeung said. “It’s not just about pampering.”

The luxury real estate industry’s answer to that need is a slate of wellness-oriented properties ranging from shiny beachfront condos to self-contained urban high-rises to private villas nestled within lush private resorts.

The common denominator, developers, sales managers and researchers told Mansion Global, is that residents’ overall health and well-being is central to the design and function of the home.

That translates to a variety of amenities and services—from the standard on-site restaurant serving gourmet organic meals—to the cutting edge, like a personalized wellness plan for each member of the household, offering professional assistance on nutrition, weight loss goals, meditation practices and more.

“There is a recognition that building for human health is going to be the core (value),” in the real estate market going forward, Ms. Yeung said. “When you look at it from that perspective, it’s a whole lot bigger than the luxury apartment with the spa, the gym, the swimming pool.”

Indeed, at some newer high-end developments, staff begin assessing a homeowner’s health and wellness needs the moment a contract is signed.

Individualized Offerings

At the 120-acre Canyon Ranch resort in Lenox, Massachusetts, residents moving into one of the 19 new condominiums consult with a personal wellness adviser who then assembles a team of specialists to carry out their individualized wellness plan— including on-site physicians, nutritionists, exercise physiologists, behavioral counselors and spiritual wellness experts. Memberships with access to the full range of personalized wellness services are $9,000 annually for one person or $12,000 for a couple, in addition to homeowners association fees, spokeswoman Alexis Chernoff said.

The resort, located in the mountainous Berkshire region of Massachusetts, lends itself to multiple outdoor wellness activities. Residents can partake in weekly yoga sessions on the estate’s sprawling lawn or interactive six-course dinner parties that include lectures by a local farmer as diners gather their own ingredients from the garden, General Manager Mindi Morin said. Access to kayaking, hiking and biking is close by.

The one- and two-bedroom units are priced between $1.35 and $3.5 million; 10 out of 19 have sold since sales began last year. For many residents, the condo is their second or third home, but at least one resident decided to live there full-time after visiting the resort for years, Ms. Morin said.

“It’s the lifestyle that they want to live, and it’s really hard when you’re (only) here for a small amount of time,” she said.

The Canyon Ranch brand has several properties around the U.S., including the long-established Tucson, Arizona, resort, which has 100 luxury residences. The company calculated that prospective buyers who already have a home elsewhere would be willing to pay a premium to hold the keys to a resort property in the Northeast.

The Global Wellness Institute data supports that. According to the report, prospective homeowners are willing to pay 10% to 25% premiums for homes in wellness developments at the middle and upper end of the market, partly because supply hasn’t yet met demand. One survey cited in the report claims an estimated 1.3 million annual potential buyers for “wellness-infused homes and communities” in the U.S.

Wellness is Ageless

While these developments are a natural fit for many active retirees, a significant population of younger buyers is interested in the wellness lifestyle, experts said.

Texas native Will Robinson, 45, bought a two-bedroom, two-bathroom condo overlooking a golf course and pool at Tao Ocean Residences in Mexico, about a 90-minute drive south of Cancún. While beachfront villas at Tao are priced up to US$750,000, Robinson bought his inland unit for a song—$184,000—in 2012, following a decision to pack up his Denver home and retire early from a successful career in sales.

“I liked the idea of living in a community with like-minded people who were healthy and wanted to work out—that was a huge aspect,” said Mr. Robinson, who starts most days in the gym at Tao’s Wellness Center.

About 80% of residents are Canadian and American, sales director Paulina Almeida said, noting that Tao’s unique wellness lifestyle is not for everyone.

“We are not just selling a residence,” she said. “We’re actually selling a community,” comprised of homeowners who are interested in interacting with their neighbors and their environment.

Residents are invited to take Spanish classes on site and volunteer in the surrounding Mayan communities, maybe by teaching English to local children, caring for the endangered sea turtle population or participating in beach clean-ups, Ms. Almeida said.

Wellness Via App

Developers of the Amrit Ocean Resort & Residences in Palm Beach County, Florida, are building twin beachfront towers on Singer Island where all residents get a personalized wellness assistant, via app, that is available 24/7 to guide them on a chosen wellness plan. One might ask for a reminder to eat a healthy lunch and then have the “assistant” search local eateries and order the meal for delivery, said Dilip Barot, CEO and Founder of Creative Choice Group, which is developing the property.

“More and more people have started prioritizing their health, almost like part of a balance sheet,” Mr. Barot said.

The app will be designed exclusively for the property, Mr. Barot said, though it could function similarly to those found on the general market like 8fit.

Sales recently opened at Amrit on 182 units priced between $700,000 and $4 million, with the first occupants expected in 2019. Plans include a meditation garden and outdoor yoga studio, with classes available through a partnership with the Himalayan Institute.

Indoors, options such as heated reflexology floors, remote-controlled aromatherapy walls and vitamin C-infused showers can add an extra $10 to $15 per square foot to the price of the condo, Mr. Barot said.

In New York City, residents of the new Gramercy Square development can use an app to book meditation classes in a tranquil 600-square-foot sanctuary a short walk from their homes. The classes are offered by the MNDFL meditation studio through an exclusive partnership with the property. Residents get two free 30-minute meditation classes per month, with additional classes, private sessions and special events priced a la carte, said Heather Cook, a senior vice president and managing director at Douglas Elliman Real Estate.

Wellness for all?

For now, the high end of the real estate market seems to have a firm grip on the value of wellness properties, but experts agree it will soon gain wider appeal in lower segments of the market. As the products and materials used to construct such homes become more popular, costs will come down, said Kavita Kumari, principal engineer at Cundall, a London-based multidisciplinary engineering consultancy, who works with developers of ultra-lux sustainable properties in the UK, Asia and elsewhere.

“That’s where … the lower end of the real estate market will catch on,” Ms. Kumari said.

Ms. Yeung, the Global Wellness Institute researcher, said broad consumer awareness is “just being awakened.”

Within three to five years, she said, the mid-market will catch up with the luxury segment and it is “going to come like a tsunami.”

Source: Mansion Global

Healthcare Systems, Physicians ‘More Sophisticated’ When It Comes To Real Estate, Says InterFace Healthcare Panel

Healthcare systems and physicians groups once viewed their real estate operations as a line item on a ledger and not as high a priority as staffing, education or equipment. In the years since reimbursements from Medicare began tightening as it went from a fee-for-service model to an outcome-based one, healthcare systems and physicians are getting more savvy when it comes to their real estate strategies.

“With respect to real estate, healthcare systems used to be naïve,” said Mark Curtis, director of Greenville Health System, a not-for-profit system serving the Upstate South Carolina area. “Now they’re far more sophisticated than they were five years ago.”

Curtis was one of five healthcare real estate experts on stage at a panel entitled “What Do Hospitals & Systems See Coming in 2018?” Rex Noble, senior vice president of asset management at Flagship Healthcare Properties, moderated the discussion.

The panel was the closing act at the eighth annual InterFace Healthcare Real Estate Carolinas show, which took place on May 31 at the Hilton City Center hotel in Uptown Charlotte. The event drew 160 attendees in the healthcare real estate space from across North and South Carolina.

Operations Are Under The Microscope

Spurred on by lower reimbursements and increasing expenses due to inflation, healthcare systems are taking a holistic view of their business strategies. As a result, a higher priority is given to real estate than ever, according to the panel.

“We’re absolutely trying to be more sophisticated with our real estate,” said Tony Perez, vice president of real estate at Atrium Health. Formerly known as Carolinas HealthCare Systems, the not-for-profit group operates more than 7,600 beds across 900 care locations. “Five years ago we weren’t talking about yields coming in and cap rates going out, we were talking about rental rates.”

Atrium Health recently announced it plans to invest more than $1 billion in the next seven years around the metro Charlotte area. At the same time, Perez said the company is focused on cutting expenses, including on the real estate side.

“We are absolutely trying to cut expenses — $300 million by 2020,” said Perez. “Last year we did $35 million and we’ve already done $35 million this year, but our goal this year is $95 million. Everyone is going to bleed, and on the real estate side, capital is scarce.”

Healthcare real estate professionals are looking internally at doctors’ daily practices in order to drive efficiencies as well. Elisa Cooper, director of property management at Roper St. Francis Healthcare, a nonprofit healthcare system in Charleston, says that real estate sustainability is now prioritized over expansion.

“We’re driving down operations to the metrics of how many patients touch an exam room,” said Cooper. “If a physician can’t put five patients a day in that exam room, they don’t need it. We take it out and add another doctor’s office.”

On the development side, site selection is in the limelight for healthcare real estate professionals because patients now want ease of access to their medical care more than anything, according to the panel.

“The ‘build it and they will come’ days are long gone,” said Greenville Health’s Curtis.

Perez says that healthcare groups are still novices when it comes to site selection for hospitals and medical centers, but soon they will have the capabilities and resources on the same level as major retailers.

“I don’t theorize a lot, but I’d say that large health systems will be as proficient as Target and Walmart about sites in the future,” said Perez.

Physicians themselves are looking at real estate in a different light too, according to the panel. Curtis said that physicians are more actively involved in operation expense discussions as they look to get better returns on their real estate investments.

“If I look at where physicians are in those conversations, they’re partners at the table,” said Curtis. “Physicians are looking at what we do and how we deliver care and what that cost is.”

“When I first came into the business 14 years ago, our meetings with the doctor groups were all about how big could we build it and how pretty could we make it,” added David Park, senior vice president of Novant Health. The Winston-Salem, N.C.-based healthcare network operates 14 medical centers and more than 500 physicians clinics and outpatient centers across North Carolina, South Carolina, Georgia and Virginia.

“The conversation today with the doctors are more around trimming the size down and cutting the costs,” said Park. “It’s a new level of education for the entire core of the healthcare industry.”

Caring for Millennials

In addition to dwindling reimbursements, healthcare systems are also feeling the pinch from the rise of millennials, who by and large are shifting the way healthcare is provided. Atrium Health’s Perez doesn’t think that millennial preferences will eliminate the need for brick-and-mortar medical office buildings, but their presence is certainly felt.

“Millennials will bend the curve for some specialties, family practices and maybe urgent care,” said Perez, who emphasized what Atrium Health is preparing for in its consumer readiness program. “Our view is that one day you’ll be able to use your phone, be able to virtually talk with a physician who will order your drugs and then a drone will drop it off at your house.”

“We’re planning for today, but really we can’t plan for today. We have to plan for 10 years from now,” added Cooper of Roper St. Francis.

Cooper said that millennials are propping up the urgent care business model and are electing not to visit or even select a primary care physician. She doesn’t envision this as a long-term trend as millennials are aging and will eventually need more services than they currently receive.

“They don’t go to primary care doctors unless they’re really sick and they don’t go in for checkups unless they’re forced to by their employer,” said Cooper. “Millennials today will actually need the healthcare service that they don’t think they need today.”

Jeff Brown, principal of healthcare real estate advisory firm Meadows & Ohly LLC, said that millennials’ preferences for healthcare are forcing healthcare systems to walk a tightrope between planning for an uncertain future and making sure that the current needs of aging baby boomers are being met.

“It’s going to be a balancing act,” said Brown. “Being on the real estate side, we’re trying to figure out where the right bets are.”

In the near-term, Brown said that millennials are changing the way healthcare groups are looking at their operations as they strive to maximize traffic in that age cohort.

“More than anything healthcare systems are talking about their ambulatory and digital strategies,” said Brown. “It’s been proven urgent care doesn’t work from a profitability standpoint, but from a need and access standpoint it does work for millennials.”

Source: “>RE Business

Industry Sources Say CNL Healthcare Properties Plans To Sell Its MOBs

In what could be the largest medical office building (MOB) portfolio sale since last year’s Duke Realty sale, multiple healthcare real estate (HRE) industry sources tell Healthcare Real Estate Insights that CNL Financial Group plans to sell the MOB portfolio owned by its Orlando-based CNL Healthcare Properties real estate investment trust (REIT).
Sources say CNL has hired HFF and KeyBank to market the properties.
Efforts to contact executives of CNL, HFF and KeyBank have been unsuccessful. However, multiple HRE industry sources have told HREI that they have heard that a sale is in the works.
Not to be confused with CNL Healthcare Properties II, which was launched in 2016 and is still open to new investors, CNL Healthcare Properties is a non-traded REIT closed to new investors on Sept. 30, 2015.
According to a fact sheet available on its website, CNL Healthcare Properties developed and acquired properties with a total investment of about $3.02 billion from 2012 to 2015. The REIT consists of 58 percent senior housing, 31 percent MOBs, 6 percent post-acute and 5 percent acute care facilities, based on purchase price, development budget and/or capitalized cost.
Sources say that at this time CNL plans to sell only the MOBs, not the other assets. The REIT’s portfolio includes 54 MOBs totaling about 3.26 million square feet, according to the fact sheet.
The MOBs with the greatest valuation include: Midtown Medical Plaza, Charlotte, N.C., $54.7 million; Presbyterian Medical Tower, Charlotte, N.C., $36.3 million; Bend Memorial Clinic MOB, Bend, Ore., $36 million; Center One, Jacksonville, Fla.; $34.4 million; and UT Cancer Institute Building, Knoxville, Tenn., $33.7 million.
The total investment amount for the MOBs was $931.4 million, according to the fact sheet, which would almost certainly mean they would fetch more than $1 billion if sold in a competitive bidding situation.
Source: HREI

When It Comes To Location, Medical Offices And Retail Stores Aren’t That Different

As head of Kaiser Permanente’s real estate division, Ethan Sullivan receives phone calls on a daily basis from developers, landowners and retail strip owners about wanting a Kaiser medical facility to anchor their properties.
But before those anxious owners get too excited, Sullivan immediately lets it be known that bringing in a Kaiser Permanente medical office or any kind of medical facility as a cornerstone of a retail strip or shopping mall is a serious commitment.

“When we make a decision to go somewhere, it is a lifetime decision,” said Sullivan, who serves as the executive director of real estate, national facilities services at Kaiser Foundation Health Plan. “We are making a commitment to that community to be in that location,” he said.

Much has been made about healthcare being the new retail that could eventually replace many of the big-box stores that have been struggling and closing. Trends influencing healthcare facilities will be discussed at Bisnow’s National Healthcare West event on June 7.
The U.S. healthcare industry is a $3.5 trillion business, said JLL Managing Director of Healthcare Solutions Chad Pinnell.
In 10 years, that number is expected to grow to $6 trillion, Pinnell said. He said the healthcare industry has moved toward preventive care, which can mean more visits to the doctor’s office.
Pinnell and Sullivan were part of a panel at the International Council of Shopping Centers’ RECon convention last week.
Over the past several years, there have been cases of big-box stores closing and being replaced with medical facilities. In 2010, when Blockbuster went out of business, Johns Hopkins Medical Management Corp. and Patient First opened four urgent care facilities in Maryland at locations the video store once occupied.
In New York, a Mount Sinai Urgent Care facility replaced a closed McDonald’s.

“They are a bigger industry than retail,” Pinnell said. “They touch more people. There are 300 million people in the U.S. and they all have healthcare needs.”

Pinnell said the biggest challenge healthcare providers have is distribution. Many networks are scattered, he said.

“In the next five to 10 years, what you are going to see are partnerships with retail centers and healthcare companies,” he said.

But for Kaiser Permanente, partnering with a landowner or developer to build a medical facility is not as easy as it seems, Sullivan said.
With 12 million members and rising, Kaiser Permanente operates a 71M SF real estate portfolio that includes nearly 40 hospitals and 700 medical facilities across eight states. The company owns 80% of its real estate and almost never sells, he said.
Sullivan said the healthcare company has plans to open 20 to 25 more medical facilities, averaging about 50K to 60K SF, within the next two years.
When it comes to choosing a site, Kaiser Permanente is very particular about the location.
He said much like retailers the healthcare company looks for areas where there is a heavy concentration of its members. Kaiser also looks at drive time — how long it is going to take members to get there, the parking situation and what retail stores are in that development or nearby.

“We love visibility,” Sullivan said. “We want people to be able to see us from the freeway, the corner, so our members know where we are in this town.”

Other challenges include getting city approvals and getting the right design for the facility. The average lease the company signs is for 10 years, but Kaiser builds facilities that could last for 50 to 100 years.

“My first question [to developers and landowners] is: Have you actually ever built a medical office building before?” he said. “It’s incredibly hard if you have never done it before. It is a significant investment.”

He said building a medical facility is not like developing a Toys R Us.

“You need to have an understanding of the right mechanical systems, know the intricacies of the machines we use and the lab usage,” he said, adding that the company’s design guideline is 132 pages long.

The type of services the medical facility offers will also dictate Kaiser’s demands.

“Primary care or specialty care or oncology all have a different set of walk-throughs with the city and design,” he said.

But if Kaiser Permanente does choose a property owner’s site, it can be a fruitful relationship.
Kaiser Permanente is a multibillion-dollar company and it is a good credit tenant. Having a medical facility anchor a place could drive people into the retail property, benefiting the surrounding businesses, Sullivan said.

“It’s a partnership. It’s a collaboration,” he said. “You are going to help bring our vision to life but you’re going to know early on what you are getting into.”

Source: Bisnow

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