Tag Archive for: mob

Hospital Expansions Surge, MOB Transaction Volume Doubles

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As the population grays, with older Americans projected to outnumber children in 2035, according to the Census Bureau, hospital systems are looking to build and investors are looking to get a piece of the action by buying medical office buildings — a sector that saw acquisition volume more than double year-over-year.

Hospital construction is up, with 45.1M SF of new construction in progress, up from a pipeline of 37.4M SF in Q2 2021 and 28.7M SF in Q2 2020, according to healthcare real estate specialist RevistaMed.

Hospitals are expanding at a brisk rate as well. Expansions totaling 50.4M SF are underway, up from 44M SF during the second quarter of 2021, though down from Q2 2020, when total expansions underway reached 53.9M SF.

Of the 163 new hospital projects underway, 30 projects are microhospitals of fewer than 25 beds, which are part of the trend toward community-oriented healthcare, RevistaMed reports. Most hospital developments are still standard in size, however, with an average of 134 beds.

Among the largest projects, the University of California, San Francisco received permission to build a $4.3B hospital at UCSF Helen Diller Medical Center, and Sacramento-based University of California, Davis Medical Center began work on a new $3.8B facility, according to Becker Hospital Review.

Work is also underway on $500M-plus hospital projects in New York, New Jersey, Massachusetts and Texas, Becker reports.

Amid an emphasis on health and well-being, investors are also eager for medical office buildings. RevistaMed reports that there were $4.3B in MOB acquisitions by investors in Q1 2022, up from $2.1B during the same quarter last year.

In 2021, the medical office sector saw $15.4B in transactions, according to Newmark, a record amount, up from the prior record of $14.9B in 2017. Last year’s total was also up from $13.5B in 2020.

The sector has benefited from stickier tenancy and an aging population, healthcare real estate experts say. A record amount of capital for alternative commercial real estate sectors has also led more investors toward MOBs.

“There’s been a steady increase in the amount of institutional capital that has been allocated to medical offices,” Newmark Senior Managing Director Michael Greeley said during Bisnow’s Boston Healthcare Summit earlier this month. 

 

Source:  Bisnow

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BridgeInvest Lends $64M for South Florida Assisted-Living Development

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Rieber Developments has landed an $83.8 million debt package to build an assisted-living mixed-use development in metropolitan Miami.

Miami-based BridgeInvest supplied a $63.5 million senior construction loan for Rieber’s 400,000-square-foot project called 1212 Aventura in Aventura. It will feature 163 luxury senior residences, 29,684 square feet of retail and 25,796 square feet of medical offices. An additional $20.3 million mezzanine loan was provided by an undisclosed international lender for the development.

“We are thrilled to finance an innovative project that will not only transform Aventura’s landscape for generations to come but also caters to the local underserved senior-living market,” Alex Horn, BridgeInvest’s founder and managing partner, said in a statement.

A Colliers International structured finance team led by Jeffrey Donnelly and Dmitry Levkov arranged the transaction.

The 1212 Aventura project, at 21290 Biscayne Boulevard, is located adjacent to Rieber’s 100-room Hilton-branded Serena Hotel Aventura. Colliers is also working on closing a $29 million refinance for the hotel which, along with 1212 Aventura, encompass the first two phases of Rieber’s planned master plan development that will incorporate multiple city blocks.

Donnelly said multiple lenders competed for the deal and credited Rieber’s creativity with designs for 1212 Aventura that gives it a “sexy Miami treatment” for an assisted-living development with floor-to-ceiling windows along with a resort-caliber pool and gardens.

“It’s very much a non-assisted living assisted-living project,” Donnelly said. “It has all the amenities in what is normally a very boring, very staid, very uninteresting asset class and I think that also helped with generating excitement with this financing opportunity.”

Construction for 1212 Aventura is slated for completion in early 2023. Pre-leasing and sales of the office and retail space are ongoing with limited inventory available, according to Bernardo Rieber, founder and CEO of Rieber Developments.

“With construction financing in place, we now have the resources to complete the construction of this state-of-art project designed by Arquitectonica and make our vision come true,” Rieber said in a statement.

 

Source:  Commercial Observer

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Cape Coral Slated To Land Victory Park Hotel, Medical Office, Warehouse Space Project

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Plans are in the works for Cape Coral to get a massive, 140-acre commercial development project called Victory Park.

Blue Waters Development Group LLC announced the plans last week to anchor the project with a 125-room Wyndham Garden hotel, commercial space and 110,000 square feet of warehouse and medical office space at 2313 NE 24th Ave.

The southeastern-most lot, sitting at the northwest corner of Diplomat Parkway and NE 24th Avenue, could become a beacon of construction activity sometime later this year. It is just next door to the Veterans Administration clinic.

“The VA medical center is bringing over 350,000 patients per year on a regular basis,” said Danny Aguirre, manager of Blue Waters Development, which was established in Cape Coral about two years ago. Aguirre said he previously developed projects on the east coast of Florida. This will be the group’s first project in Cape Coral.

“The army reserve base is doing reserve troop training on a monthly basis on the weekends,” Aguirre said of another draw to the hotel. “That is a driver that we felt competent in being able to service them by putting a quality hotel product there.”

Aguirre said he wasn’t sure on a timetable for breaking ground. He remained hopeful to do so by mid-summer if not sooner.

“With COVID going on, it just set the permitting process in a tailspin,” Aguirre said. “We really don’t know. With some of the workers working remotely, it’s going to be what it needs to be. I wish I could set a timeline to it. If we can get it taken care of by the second quarter or third quarter, we’d like to move forward in that direction.”

The hotel would be the first phase of what could become a major development, as the land stretches north to where Kismet Parkway becomes Littleton Road at NE 24th Avenue. The property continues east to Corbett Road.

The northernmost lot sold for $2.3 million in July 2019, purchased by Alex Diaz Trust according to Lee County property records.

The same trust went on to purchase the southern two parcels for $5 million and $3.6 million in September 2019, records show.

Real estate broker Steve Komondorea of Real America Realty is handling pre-leasing for the office and warehouse space.

The new development will feed off the V.A. clinic and form a synergy with it, he said.

“It has the second-highest volume of veteran appointments in the state of Florida,” Komondorea said. “We have had conversations with the people who are directing the V.A. Clinic. We wanted to be a compliment to them. So veterans who come with family members, they will have a place to put up their heels. That was one of the main inspirations to do this at that location.”

Blue Waters is marketing the development in preparing for groundbreaking.

“We want medical professionals to know that we have this medical facility coming up,” said Komondorea, who hopes medical professionals will recognize that area could fulfill a need.

“There’s some things the VA does, and there’s some things the VA doesn’t,” he said. “We’d like to be able to generate interest to compliment what they do. We’ll be working real hard to develop a quality product.”

 

Source: News-Press

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Healthcare Real Estate ‘Remains A Sector Of Change’ Amid Pandemic

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A new report from BTIG shows that health care REITS are down nearly 26% year-to-date as opposed to the wider REITS sector, which is down about 14%.

The report states that health care “remains a sector of change.”

“The acute phase of the COVID-19 pandemic has led to different levels of operating stress across the healthcare system,” the report states…. “Potential disparities in outcomes based on insurance coverage during the pandemic could also lead increased calls for changes to government healthcare programs.”

The same report does show that medical office building REITs have held up pretty well and have been “relatively resilient.”

The report says that since April during the midst of the coronavirus pandemic, “outpatient volumes have risen to 69% of pre-COVID levels… Accordingly, our MOB (medical office building) coverage has collected 95% of second quarter rent on average, stability which is reflected in unchanging MOB dividends.”

As it pertains to senior housing trends, BTIG says senior housing facilities and their residents are taking the advice of health experts.

The numbers of seniors in such facilities who have contracted the virus has declined, BTIG says.

“Specifically, for SNR, less than 0.2% of residents and employees are positive for the virus, and the new case rate has declined 91% from peak levels in April,” the report says. “Thus, 90% of SNR properties have begun lifting restriction using a phased approach so that residents can return toward normality and new residents can begin moving in.”

The report concludes: “We expect this same-store operational and occupancy focus to remain at the forefront until REITs’ cost of capital improves enough to return to the acquisition market.”

 

 

Source:  GlobeSt.

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Medical Office Buildings Remain in Demand Among Investors

There continues to be very strong investor appetite for medical office buildings (MOBs), according to several industry sources.

Roughly $4.7 billion’s worth of medical office buildings traded in the first half of 2019, according to Mike Hargrave, principal at Revista, a medical research real estate firm. While investment volume in the sector is off its recent highs of 2017 and 2018, that’s been due to fewer portfolios coming on the market recently, says Hargrave. Investment sales volume in the MOB sector reached $6.5 billion in the first half of 2018 and $12.4 billion for the whole year, according to Revista data.

Investment sales activity for the second quarter of 2019 totaled $3.0 billion, Revista reports. A large portion of this total came from Welltower’s $1.25 billion purchase of 55 medical office buildings from CNL Healthcare in June.

“It remains to be seen if 2019 will rival the past two years [in] total transaction volume. If it falls short, it will be due to not as many large portfolio transactions, which could have been impacted by higher interest rates during the earlier part of the year,” says Matt Withey, managing director of acquisitions at Virtus Real Estate Capital, a private equity real estate firm. “But appetite remains very strong, especially for high quality medical office buildings. Investors remain drawn to the durability of the cash flow stream, especially those who think we are in the later stage of the current economic cycle.”

Pricing remains tight for medical office building, with cap rates averaging 6.6 percent in the second quarter of 2019. Earlier in the cycle, cap rates for medical office buildings were much closer to those for suburban office buildings, according to a report from research firm Real Capital Analytics (RCA).

According to Revista, cap rates on MOB properties have averaged at 6.4 percent over the past 12 months. But they can range from the low 4.0 percent to high 7.0 percent, with the “low end representing larger core medical office buildings in well-located markets” and the “higher end representing value-add plays,” says Hargrave. Withey says many medical office buildings trade at cap rates of between 5.5 percent to 7.0 percent.

“There’s still a lot of transaction activity. If there was a huge gap with buyers holding firm and not selling anything and bidders wanting a discount, you would see a sharp drop in deal activity and cap rates flat” says Jim Costello, senior vice president with RCA. “But we’ve got elevated cap rates and single asset sales, so the bedrock of the market is still doing great and growing.”

Medical office building completions in the U.S. average roughly 20 million sq. ft. annually. New construction in the space has gone through ups and downs since 2017, largely due to factors such as HVCRE regulations, high construction costs and labor shortages. For this reason, MOBs are “not facing an oversupply problem like a lot of other sectors.” according to Withey.

“The services delivered within medical office buildings [are] growing faster than the space [they are] delivered in. Additionally, increases in technology [are] allowing more and more procedures that were traditionally delivered within an in-patient setting to be delivered in an outpatient setting,” says Hargrave. “So, demand for new state-of-the-art space is consistently increasing within the medical office building sector.”

Most healthcare REITs, including Welltower, Ventas, HCP, as well as REITs focused specifically on medical office buildings, such as Physicians Realty Trust, Healthcare Trust of America, and HR, continue to have an appetite for buying medical office buildings, says Hargrave. Additionally, several large institutional investors, including Harrison Street Realty Capital, MB Real Estate and LaSalle, have a focus on the sector.

Despite some unpredictability in large portfolio activity in the MOB sector, Withey says “private and institutional investment has been consistent and growing.”

 

Source: NREI

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