Of late, medical office buildings have proved to be a savior for some health systems who, by selling and leasing back the buildings, get to keep their doctors on hand and get capital too. Now, according to at least one firm, the party could already be quieting down.
Investment banking firm Cain Brothers says that while a growing number of hospitals and health systems have decided to put their medical office buildings on the market, few MOB sales took place during the first quarter of 2009. What's more, the level of competition between hospitals eager to sell is likely to rise in coming months, the firm suggests.
For the moment, MOBs are still commanding fairly high prices, but given the growing volume of properties for sale, those prices probably aren't going to last, Cain Brothers analyst Tim Schier notes.
Unfortunately for healthcare organizations, the biggest potential MOB buyer--real estate investment trusts--are dialing back their buys a bit. Some are opting to use their cash to pay down near-term debt, which could sit at 12 percent or higher, instead of buying a MOB with a lower potential payback.
When REITs do invest in MOBs, they're primarily interested in buying one or two buildings whose tenants have good credit. Local and regional banks are financing some of these deals, in the 60 to 70 percent of value range.
To learn more about these deals:
- read this Cain Brothers report (.pdf)
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