Hammes Smashes $350M Target With Healthcare Real Estate Fund
Hammes Partners raised $445M for healthcare real estate, blowing past its $350M target, the Milwaukee-based investment firm said Thursday.
The equity commitments from institutional investors for the newly created fund will be used to target core-plus healthcare real estate assets with resilient and predictable cash flow. Hammes is looking to expand the fund, its first open-ended investment vehicle, over time.
“We believe this platform will enable us to provide our investors with exposure to quality, highly stabilized U.S. healthcare real estate assets while supporting the facility objectives of our healthcare provider partners nationwide,” Hammes Managing Principal Patrick Hammes said in a statement.
Some capital from the fund has already been committed for investments, according to a spokesperson for Hammes, who added that the firm was targeting “well-positioned healthcare facilities that are integral to the real estate footprints of leading healthcare providers.”
The firm was established in 2001 and lists 11 investment properties on its website, including a three-asset portfolio spanning 177K SF in New York. Its portfolio has a broad geography, with a 64K SF sports medicine and outpatient orthopedic center in northeast Texas, a 163K SF medical office in Los Angeles and a 47K SF office property in Dallas.
Hammes Partners — which raised $739M in 2022 for its third closed-end fund, a record for a healthcare-related fund at the time, according to PERE News — is part of a broader group of firms focused on medical buildings. Hammes Healthcare offers real estate consulting, and Hammes Realty Services offers property management.
Medical office buildings have proven to be resilient commercial real estate assets over the last five years, and tenants in the sector continue to enjoy high margins that can support rising rents.
Developers in some cities with strong population growth, including Dallas, are struggling to keep up with demand for space. National occupancy has steadily ticked up since 2021, hitting a cycle high of 92.6% at the end of the second quarter, according to Avison Young.
Medical office investment volume was up roughly 40 basis points year-over-year at the end of June despite tight lending conditions helping to keep all but 5% of transactions under the $10M mark, according to Marcus & Millichap.
President Donald Trump's recently passed tax and policy package is expected to strip roughly 16 million Americans of healthcare coverage, a broader headwind for the healthcare sector. But the patient mix for medical office buildings is likely to insulate tenants, and therefore landlords, from much of the pain.
The decline in healthcare coverage “is likely to result in an uptick in uncompensated care costs; however, an outsized portion of these costs — historically over half — falls on hospitals,” Marcus & Millichap researchers said in a recently released midyear report. “Community-based providers perform roughly one fourth of this care, while office-based physicians provide the smallest portion, positioning MOBs to better withstand a potential drop in coverage.”
