This summer, Newport Beach, CA-based American Healthcare Investors and Griffin Capital Corp., the co-sponsors of Griffin-American Healthcare REIT II Inc., paid $106.7 million for 14 medical office buildings throughout the nation. Danny Prosky, a principal of American and president and chief operating officer of the REIT, said at the time of the deal that the firm continues to grow the portfolio and that most of those assets are on the campus of, in close proximity to or strongly affiliated with, major healthcare systems, a characteristic the firm values when evaluating potential purchases.
Hospitals have typically sold and leased back some of their on-campus properties to large healthcare REITs like Griffin-American, and those deals usually occur when there is a major expansion or the need for working capital in this tight credit market, points out Stephen Dok, a vice president in Voit Real Estate Services’ healthcare properties group. But lately, he says, it seems everyone wants a piece of this property sector.
“Investors want in on healthcare real estate because of the long-term stability of these assets,” Dok relates. “Physicians and their practices don’t easily relocate; therefore, they remain strong tenants for the long term.”
According to Craig Beam, a healthcare expert and managing director in the Newport Beach, CA office of CBRE, in spite of all of the uncertainty at the provider level, investors continue to be attracted to healthcare-related products, a sector that has traditionally experienced less cyclicality than other areas for real estate investment. “Given the overarching macro trends of an aging population and generally expanded insurance coverage, most observers of medical office space are optimistic about ownership and development.”
There’s growing investor interest because of national demographics, continued growth in outpatient services and relatively stable tenancy—and the Southern California region is certainly no exception…
…For the rest of the story, go to the September 2012 issue of Real Estate Forum online.
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