The question of the day is all about using online investment services. In other words; Should You or Shouldn’t You? Naturally, as you might well expect with this sort of question, there is no one size fits all answer here.
By Jennifer LeClaire | December 11, 2013
SCOTTSDALE, AZ-Four hundred commercial real estate professionals flooded the Phoenician on Wednesday to find out from the deal makers what’s hot in healthcare real estate at RealShare Healthcare Real Estate. Players in the brokerage world, REITs, investment and finance, developer and healthcare real estate and hospital system leaders were on hand to share what they are seeing in the market.
David Wilson, EVP, Lockard Development Inc., moderated the opening Transactions Panel. The panel explored what lenders are looking for, what cap rates to expect and the most important rates and trends. Panelists also talked who’s buying and selling and whether the mix is changing from the past. But the conversation kicked off with the all-important cap rate question.
“We think cap rates will remain stable the next 18 months because interest rates will probably remain stable,” said Chris Bodnar, an SVP of healthcare capital markets investment properties at CBRE. “There might be some tapering. Most analysts say Treasury rates have already priced in tapering soon to come. Even so, we don’t expect a big change in interest rates in the near future. And a lot of lenders base rates on LIBOR, not Treasury, and that’s actually gone down recently.”
With regard to opportunities for small players versus REITs on the acquisition front, Danny Prosky, president and COO, Griffin-American Healthcare REIT II, said small is “relative.” Even a firm like Griffin- American, he says, is small compared to many public REITs.
“If the large REITs really want an acquisition, our firm can’t compete. So we avoid competing with them, if possible,” Prosky says. “We focus on $10 million-plus assets, so less than that is an opportunity for smaller investors.”
In the Provider Update panel, experts shared thoughts on how health care real estate owners need to adjust as hospital systems changing their strategies. The audience heard from providers about what they want from real estate professionals and how real estate professionals can help providers navigate the changing industry.
David Rutson, president and founding principal of Globe Medical Realty Advisors, moderated. A key part of the discussion was around provider consolidation. Kurt Mosely, VP of strategic alliances at Merritt Hawkins, pointed to Baylor Scott & White as a unique merger in that it’s very large but now overlapping, “now 5,900 hospitals and shrinking.”
When asked if his group would continue to sell real estate as it expands into other markets, Joseph Robert Wyatt, chief medical officer and managing director at Forest Park Medical Centers, said he doesn’t see any reason to change the model. “Each is a one-off, physician-owned operation,” he said. “That’s the sensible way to do it—build it and sell it. As for where they focus on the states without regulation. Also, they need a friendly legal environment. Then you have to look at the competitive environment and you need a diverse insurance environment.”