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For healthcare systems today, their real estate portfolio has become a fluid asset.
A decade ago, real estate assets owned by a hospital system were the “second-largest item on their balance sheet and got the least amount of attention,” Novant Health senior vice president of construction David Park said.
Today, Novant and other health systems see it as a manageable asset, one where owned facilities can be sold as cap rates decline and then repurchased when those rates begin to rise.
“We are learning today that real estate can be a fluid asset,” Park said. “You're only doing it because you need the cash or you want to deploy the cash in some other service.”
Park's comments came during Bisnow's Atlanta Healthcare Leadership Forum this week. Piedmont Healthcare has been cashing out portions of one of its medical office portfolios. By monetizing a medical building it owns, Piedmont can free up capital for other projects, Piedmont vice president of real estate Robert Simmons said.
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For investors, medical office facilities are becoming a hot target because of the “Silver Tsunami,” or the sheer number of Baby Boomers who are aging and requiring more trips to the doctor, CBRE Healthcare Capital Markets executive vice president Lee Asher said.
“We've viewed it that today and going forward … there are some fundamentals you can't avoid,” Asher said. “There's going to be a huge amount of innovation and investment in the sector, because the fundamentals are there.”
As a result, Asher said he expects more healthcare systems to cash out of their owned real estate to free up capital.
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