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CHICAGO-Medical office owners and healthcare systems that need to monetize their real estate might want to consider disposing of some of their properties because it’s a seller’s market, according to capital markets experts who spoke at the 2010 Medical Office Buildings & Healthcare Facilities Conference.

Nearly 600 healthcare real estate executives attended the conference, which was sponsored by the Building Owners & Managers Association. “There are a lot of distressed buyers out there that are under pressure to make a move [to acquire assets],” says Al Pontius, managing director of Marcus & Millichap’s healthcare real estate group. “There’s a window right now for sellers, but demand will moderate come next year.”

Pontius participated in a general sessions titled. “Capital Markets 2010: A Building Year”, which was moderated by Jonathan Winer, executive vice president of Seavest Inc. The panel also included: Jerry Doctrow, managing director of Stifel, Nicolaus & Co. Inc.; Jeffrey Cooper, executive managing director of Savills LLC; Jim Moloney, managing director and head of real estate for Cain Bros. & Co.; and P.J. Camp, managing director of Shattuck Hammond Partners.

Publicly-traded healthcare REITs are under pressure to invest the capital they’ve raised since the capital markets have loosened Doctrow notes. Over the past 18 months, these companies have raised more than $1.5 billion in debt and have more than $5.3 billion available on their balance sheets.

Moreover, the cost of debt for healthcare REITs is lower today than it was before the credit crisis – it’s down to 4.9 percent, according to Doctrow. “Healthcare REITs have dominated transactional activity, and they will be major investors,” he predicts.

It’s not only publicly-traded healthcare REITs that are flush with capital, either. Non-traded healthcare REITs have been very successful in raising funds from high-net worth individuals, according to Cooper. “They’ve been raising money at a fairly good rate,” he notes.

In fact, non-traded REITs were the most consistent buyers in 2009 and are active again this year, Moloney notes. For example, Grubb & Ellis Healthcare REIT II and Healthcare Trust of America Inc. have already made significant acquisitions this year.

However, many of these non-traded healthcare REITs are reaching the end of the investment life and will be required to executive their exit strategy – either an IPO or wholesale acquisition by another firm. “This is a relatively near-term event that will occur for these entities,” Moloney points out.

Depending on the course these non-traded REITs take, these portfolios could provide inventory for hungry medical office buyers. Moreover, as healthcare reform impacts hospital revenues and reimbursements, more healthcare systems will jump on the “monetization bandwagon” and sell off some of their medical office buildings, Camp says, providing additional medical office inventory.

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