X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

SANTA ANA, CA-When Grubb & Ellis Healthcare REIT bought four properties in Texas earlier this month, the company tallied its 27th acquisition and chalked up $513 million in investments since it began acquiring properties about a year and a half ago. Through those 27 acquisitions, the REIT has taken title to 65 buildings comprising more than two million sf of medical office space, 270,000 sf of hospital space and 1,197 senior care beds.

Stefan Oh, vice president of healthcare properties for the Santa Ana-based REIT, tells GlobeSt.com that the company is looking for more acquisitions as it focuses on its goal of becoming a diversified healthcare REIT. Oh says that as it continues to expand its portfolio, about 50% of the REIT’s acquisitions will be medical office space, about 20% senior housing and about 20% hospital/skilled nursing facilities. The remaining 10% will be other healthcare-related properties, like the corporate office space that the company already owns, which is occupied by healthcare-related firms.

“We’re buyers in this market and we are very active,” Oh says. The REIT’s vice president outlines some reasons the company likes healthcare properties as investments. One is medical offices and other healthcare properties tend to do well in both good economic times and bad, maintaining their tenant base even when demand for other types of office space slows. Medical office space may lack the glamour of downtown trophy high-rise office buildings, but Oh points out they also lack the dramatic ups and downs of general purpose office buildings.

Another factor is the stability of the tenant base. “Especially if you have medical office space on or very close to a hospital campus, the doctors stay,” Oh explains. “They do not like to move their practices and they want to be close to where they are going to be performing their procedures so they tend to be long-term tenants.”

Healthcare facilities also offer investors the potential to diversify geographically. Before its Texas acquisition of seniors housing facilities, for example, Grubb & Ellis Healthcare REIT’s most recent medical office buys included the 32,000-sf Vista Professional Center in Lakeland, FL and 44,000-sf Liberty Falls medical office plaza in Liberty Township, OH.

Grubb & Ellis Healthcare REIT is a nontraded REIT, meaning that although its shares are offered publicly to qualified investors, the stock is not listed or traded on an exchange. Investors in nontraded REITs typically expect to hold their shares for a number of years until the REIT either disposes of the properties, elects to become listed on a public exchange or merges with a publicly traded company. In the case of Grubb & Ellis Healthcare REIT, the company expects to do this by Sept. 20, 2013, seven years from the date of the original prospectus for its offering.

Officially, today is the two-year anniversary of the REIT, even though the official date of its offering was in September 2006. “We were initially capitalized on April 28, 2006 and therefore we consider that our date of inception,” it says in a public filing. “We’ve done a lot of transactions in the past year and a half, and there will be even more going forward,” Oh tells GlobeSt.com.

As time goes on, the REIT will likely find there are more properties to buy too. This month, Grubb & Ellis Co. issued a report pointing out demand for healthcare facilities of all kinds is growing as Baby Boomers age and their demand for medical services increases. The report cites figures from Norcross, GA-based Reed Construction Data, which says that monthly spending on healthcare construction is 20% higher than a year ago. For 2008, Reed projects that healthcare construction will jump another 14%.

“Medical properties are positioned to outperform other property types over the next 10 years,” according to the study’s author, Robert Bach, the company’s chief economist.

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

Once you are an ALM digital member, you’ll receive:

  • 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
  • 3 free articles* across the ALM subscription network every 30 days
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?

Dig Deeper

GlobeSt

Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.