What Makes a Top Shelf MOB?
Investors are into outpatient medical centers, but they've got to be affiliated with a hospital system. (Buying store brand is a fun adventure when it comes to cereal, but for ambulatory care centers, capital wants the real thing.)
Yesterday, 225 attendees were on hand at Bisnow's second annual New York Healthcare Real Estate Summit at The Roosevelt Hotel. Lend Lease development head Gary Buechler explained that institutional investors--and not just niche players like healthcare-specific REITs-- want MOB properties. But their wish lists are a bit more specific than that.
Health Care REIT's Will Roberson, whose firm has been in the biz for 43 years, says his company wants to buy bigger MOBs and complexes (75k to even 200k SF) as hospitals gobble up physicians' practices. The REIT is also tracking the performance of wellness centers and post-acute care centers, but the jury is out on the Affordable Care Act's effect on reimbursements for those services. Will says the company is spending a lot of time on labor-intensive, one-off building buys, developing the relationships that will position it for bigger buys in the future.
ProMed Properties COO Christopher Montello (second from left with Gary, Simone Healthcare Real Estate prez Joe Kelleher, Arent Fox's Rick Krainin, Duke Realty's Keith Konkoli, and Will) says his Eastern Seabord-focused firm wants urban, high-barrier-to-entry markets, though it'll expand to the suburbs if hospital systems it already works with want to. Hence its entry into Westchester five years ago alongside WestMed. No regrets from Christopher: That outpatient center has become the county's healthcare hub, he says.
Keith, holding court after the event, says the systems with which Duke works are reaching into outlying markets--to find patients, yes--but also to ease costs. An off-campus rehab hospital, for instance, can provide the same service for as much as 20% less, he says.
Joe (right) says Simone is building a 280k SF off-campus ambulatory care center for Montefiore,where the hospital system can move same-day procedures. That frees up the Bronx flagship campus for the super-serious stuff. Gary, who hopes to increase his firm's MOBs under construction from just one to five by the end of Q1, says outpatient centers housing multiple physicians groups can provide space flexibility as the industry morphs. Chris's example: A pediatrician's practice hopes to double its space and capture some of the newly insured children; if that doesn't work out, though, it needs to be able to return to its original footprint.
We also snapped SOM's Paul Whitson and Bohler Engineering's Buck Collins and Jim Powers, whose firm just opened the 224-bed Albert Einstein Regional Medical Center in suburban Philly.
Cannon Design's Eric Jaffe (with Walter P Moore's Blair Hanuschak) tells us his firm is working on the VA's spinal cord injury facility in the Bronx and ambulatory care center in Manhattan; North Shore-LIJ's traumatic brain injury facility; and NYU Langone Medical Center's clinical core lab. Blair's company is working on expansions at Stamford Hospital, Ocean City Medical Center, and Buffalo-Niagara Medical Campus.
