SCOTTSDALE, AZ—While the healthcare market remains a steadfast choice for many investors, the surge in inflation and interest rates has prompted a temporary pause in investment—at least for some. The uncertainty stemming from inflation has left investors eagerly anticipating developments in cap rates, with many closely monitoring the situation.
During Tuesday's GlobeSt. Healthcare conference, a panel of experts shared their perspectives on the market, advising the audience to explore creative deal structures and innovative financing approaches to secure optimal deals. Travis Ives, executive director of Healthcare Capital Markets at Cushman & Wakefield, expressed his eagerness to shift away from the role of an economist.
When discussing sector fundamentals, he said that they are robust, emphasizing the resilience of the medical office space. National occupancies exceeding 90% and accelerating rent growth underscore the strength of the medical sector, he said.
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While the capital markets currently pose limitations on transactions, Ives also noted that improvements are underway during this period on the sidelines, positioning the market for sellable products once liquidity returns.
Panelist Natalie Sproull, Senior Vice President at Capital One, reported an increase in deals leading into Q4, including the refinancing of existing debt. Looking ahead to 2024, she expressed optimism, citing the resilience demonstrated by major public REITs during the challenges of COVID. Sproull mentioned the importance of developing creative financing structures aligned not only with the bank's comfort level but also with the borrower's business plan.
According to Blake Williams, COO of National Healthcare Services at Transwestern, the recent focus on ground-up analysis involving health systems and private equity clients has been key for Transwestern. Strategic repositioning and optimization efforts are taking precedence, occupying a substantial portion of the company's time, he said.
Like Ives, Williams also affirmed the ongoing strength of medical office fundamentals, observing a growing demand for tenant improvements as a landlord, offset by favorable rental rates that support TI investments.
Overall, panelists look forward to a promising 2024. Ives expressed the sentiment that the market is approaching a level of comfort, anticipating an uptick in transactions in 2024.
Check back with GlobeSt.com for more from the GlobeSt. Healthcare conference.
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Natalie Dolce
Natalie Dolce, editor-in-chief of GlobeSt.com, is responsible for working with editorial staff, freelancers and senior management to help plan the overarching vision that encompasses GlobeSt.com, including short-term and long-term goals for the website, how content integrates through the company’s other product lines and the overall quality of content. Previously she served as national executive editor and editor of the West Coast region for GlobeSt.com and Real Estate Forum, and was responsible for coverage of news and information pertaining to that vital real estate region. Prior to moving out to the Southern California office, she was Northeast bureau chief, covering New York City for GlobeSt.com. Her background includes a stint at InStyle Magazine, and as managing editor with New York Press, an alternative weekly New York City paper. In her career, she has also covered a variety of beats for M magazine, Arthur Frommer's Budget Travel, FashionLedge.com, and Co-Ed magazine. Dolce has also freelanced for a number of publications, including MSNBC.com and Museums New York magazine.
