Douglas M. Pasquale, the REIT's president and CEO, pointed out"statistics reflect that during the dot-com bust of 2000, recessionof 2001 and the jobless recovery of 2002 and 2003, asking rentalrates for medical office fees barely budged." At the same time,however, standard office rates fell by 21% from their peak in thecycle, he noted.

|

NHP's medical office building portfolio is closing in on threemillion sf, steadily adding to holdings and ensuring a pipeline ofnew space through a deal that it signed in February with SanDiego-based Pacific Medical Buildings. The deal calls for NHP toeventually acquire up to up to $2 billion in existing and plannedmedical office properties from PMB. Specifically, it calls for NHPto acquire 18 multi-tenant medical office buildings, including sixthat are under construction, for $747.6 million. The buyer alsowill assume about $282.6 million of mortgage financing.

|

During the first two quarters of this year, NHP acquired eightof the 18 buildings for $198.3 million. Potential futureacquisitions of properties from PMB could then push the total to $2billion.

|

"We are getting more than our fair share of investments in achallenging market, which we expect to continue due in large partto our exclusive acquisition pipeline with Pacific MedicalBuildings," Pasquale said. He added that, including the PacificMedical Building purchases, NHP's total investments in the secondquarter totaled $250 million.

|

According to Pasquale, NHP is in a good position to continue itsacquisitions. He said the REIT "has a strong balance sheet withample capital available to make quality investments as they presentthemselves, without any to access to the capital markets."

|

Donald D. Bradley, NHP executive vice president and chiefinvestment officer, said medical office buildings are holding theirown in terms of values. They continue to sell at cap rates ofaround 7% on average, he said, with the highest-quality assetscommanding cap rates of 6% and lower.

|

The NHP execs commented on the medical office building portionof their business during a conference call in which the company,which also owns seniors housing and long-term care facilities,reported higher FFO and net income for the second quarter.Quarterly FFO grew to 56 cents per share from 51 cents per share ona year-to-year basis, while net income grew to $1.69 per share from93 cents.

Want to continue reading?
Become a Free ALM Digital Reader.

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.