Investors Continue MOB Love Affair in 2013

MINNETONKA, MN-As commercial real estate in general continues to go through rather tough times, medical office buildings and other types of outpatient healthcare facilities remain the darlings of many investors, including large institutions, real estate investment trusts and various equity funds and partnerships. In fact, so much money is chasing healthcare properties that many professionals say there will be shortage of available properties to meet demand. And that should keep pricing very strong for MOBs and other healthcare products in 2013.

“Cap rates should remain stable in 2013 with the best and newest (facilities) commanding sub 7% cap rates,” says Philip B. Mahler, a managing director with investment banking firm Savills in New York. “Older buildings on campus will still trade, but somewhere in the 7% to 8% range.”Others say the stability of medical tenants and the growing outpatient needs of health systems will continue to make MOBs an investment target. As an example of one company looking to sink a lot of capital into healthcare real estate in 2013, New York-based unlisted REIT ARC Healthcare Trust, which spent more than $500 million on such assets in 2012, plans to spend more than a $1 billion in the sector in 2013. This is just one example of many investors hungry for healthcare real estate.