Jim Maloney<@SM>PJ Camp<@SM>Scott Evans

Since 2008-09, health systems have been holding on much more tightly to their medical office buildings.  While the late 1990s and early 2000s saw a number of hospitals and health systems sell the MOBs they occupy to third-party investors – sales often referred to as monetizations  – such transactions have become quite a bit more scarce in recent years.

From the end of 2009 to the start of 2012, for example, there was just a smattering of such deals. However, 2012 saw the return of several large monetizations. Those included: Boston-based Steward Health Care’s $100 million sale of 13 buildings to Healthcare Trust of America; Rome, GA-based Harbin Clinic’s sale of seven buildings for $90 million to Duke Realty Corp. and Scottsdale Healthcare’s sale of eight buildings to HCP Inc. for $81.4 million.

Healthcare Real Estate Insights talked to three investment bankers involved in large monetizations of the past decade to find out if they believe an  uptick is on the horizon. They are Philip J. “P.J.” Camp of Hammond Hanlon Camp LLC, Scott Evans of Realty Trust Group and James M. Moloney of Cain Brothers & Co. LLC.

All three say they that while the number of monetizations might not take off in the near future, more and more health systems are at least looking into selling properties. They anticipate that 2013 and 2014 will see a number of such closings, including sales in the $50 million to $100 million range.

“While I’m not sure we’ll ever get back to the same level of monetizations that we saw in the early 2000s, it does look to be ramping up again,” Evans says. “Health systems are … going through the evaluation process.”

Evans brokered what is believed to be largest monetization of the past decade: Carolinas HealthCare System’s 2008 sale of 15 buildings for $162 million. The sale, he notes, provided Carolinas with an influx of cash while in the throes of the financial crisis.

Moloney of Cain Brothers has been involved in a number of monetizations over the years, including Dallas-based Baylor Health System’s sale of 20 buildings for $133 million 2004. “(Baylor) was growing footprint rather quickly, which puts a lot of financial pressure on a system, even a healthy one,” he recalls. “Baylor was having great success in a partnership it had formed with United Surgical Partners (UPS) and … it realized that it … could (garner) a greater return on its investment by investing in that partnership and in growing service lines than it could in keeping capital tied up in facilities.”

Camp was involved in four of the top 10 monetizations of the last decade. “In all of the deals we’ve been involved in, the health system has used the capital it raised very well,” he says. “And in some cases, it’s helped the systems in terms of their credit ratings. In one of our monetization deals, we learned that the health system would have received a downgrade from the ratings agencies had it not raised the capital.”


John Mugford is the Editor of Healthcare Real Estate Insights™, the nation’s first and only publication totally dedicated to covering news and trends in healthcare real estate development, financing and investment. For more information, please visit www.HREInsights.com.