JUNE ISSUE: Rx for Growth

New Players, Systemic Change Fuel Healthcare Investment

By Paul Rosta, Senior Editor

Investors in an emerging asset class should always be ready for a touch of volatility, and the healthcare real estate field is no exception. The multibillion-dollar portfolio deals that characterized the initial rise of the healthcare real estate sector may have slowed considerably, yet the field as a whole remains among the most dynamic in commercial real estate. Changes brought on by the Affordable Care Act, a vast pool of untapped assets and demographic trends are all fueling intense interest in the sector.

“Healthcare has gone from a niche, highly specialized (area) to being more accepted,” said Mindy Berman, a managing director in JLL’s capital markets group. A major new player joined the lineup of equity REITs in early April when American Realty Capital Healthcare Trust Inc. made its debut on NASDAQ. An affiliate of American Realty Capital Properties Inc., ARC Healthcare had aggregated 141 properties in three years after its initial public offering as a non-traded REIT. In April, Brookdale Senior Living and HCP Inc. formed a $1.2 billion joint venture to own and operate entry-fee continuing-care housing for seniors.

On the public side, industry insiders often speak of the big three: in alphabetical order, HCP Inc., Healthcare REIT Inc. and Ventas Inc. While these powerhouses may control the lion’s share of the assets that are owned by publicly traded companies, new players are aspiring to the elite circle of top healthcare real estate investors. American Healthcare Investors and Griffin Capital Corp., the co-sponsors of Griffin-American Healthcare REIT I and II, have jointly acquired more than $2.8 billion worth of healthcare-related properties since 2009. One noteworthy 2013 deal involved the acquisition of a $1 billion portfolio of 44 seniors housing facilities in the United Kingdom, a sign that healthcare real estate investors are willing to venture beyond U.S. borders to find yield.

Read the full article in the June 2014 issue of CPE. Access is free!