Capitalizing on Healthcare Real Estate: A Look at Seniors Housing and MOB Investments
TL/DR –
Artemis Real Estate Partners sees significant investment opportunities in healthcare real estate, especially in seniors housing and medical outpatient buildings, given an aging population. The sector’s fragmentation often leads to mispricing of assets, creating opportunities to build high-quality portfolio, and it is relatively resilient to geopolitical events and economic cycles. However, investing successfully requires operational expertise and the ability to navigate regional variances, as seniors housing is seen as a local or regional business.
Capitalizing on Healthcare Real Estate: Insights from Artemis Real Estate Partners
With healthcare accounting for 18% of US GDP and healthcare real estate being a plus $1 trillion asset class, opportunities are ripe in seniors housing and medical outpatient sectors to leverage the demographics of an aging population. Anar Chudgar and Kevin Nishimura of Artemis Real Estate Partners discuss the tailwinds favoring this niche sector.
The Evolution of Healthcare Real Estate Investment Strategies
Kevin Nishimura explains healthcare real estate as two complementary sectors: seniors housing and medical outpatient buildings (MOBs). With a fragmented ownership structure, the Artemis team has been investing in healthcare for over 25 years by diversifying beyond office, industrial, retail, and multifamily real estate groups, creating a cohesive portfolio of high-quality assets.
As healthcare spending grows by 6% annually and it remains largely needs-based, it proves to be more recession-resistant compared to other types of property.
The Role of Operations and Real Estate in Healthcare Investments
Anar Chudgar points out that the asset class is divided into operations and real estate. Artemis has built an operational expertise by developing an in-house specialized healthcare asset management team. These professionals provide a competitive edge in seniors housing asset management, upfront underwriting, and due diligence on new investments.
Response to Covid-era Disruptions in Senior Housing Investments
Despite a nearly five-year recovery in the seniors housing industry, Artemis managed to weather the pandemic’s challenges due to their specialized asset management team. This in-house expertise allowed them to effectively communicate with operating partners, share best practices, and react quickly to challenges.
Amid regulatory challenges, operational complexities, staffing issues, and rising labor costs, the team’s specialized expertise proved invaluable. Their diversified approach across seniors housing and MOB, coupled with their ability to capitalize on credit opportunities, was a key differentiator.
Transaction Challenges During the Covid Era
During the challenging Covid era, the transaction market was largely frozen as seniors housing owners focused on re-stabilizing their portfolios. However, Artemis seized the opportunity to enhance value by lending on fundamentally solid healthcare assets that had significant equity subordination protecting their position.
The Future of Seniors Housing and MOB Investing
Going forward, Artemis envisions a strong future for seniors housing due to healthy occupancy levels and historically low supply. They also continue to believe in portfolio aggregation in fragmented spaces like the MOB sector. This is complemented by a disciplined approach to diversification and operational expertise in property types which has been key to their success.
Improving the Stability of Seniors Housing Assets
Artemis puts a lot of emphasis on partnering with operators that deliver high quality care to ensure long-term stability. They also focus on assets delivering a continuum of care, which includes independent living, assisted living, and memory care. This approach stabilizes assets as it enables residents to age in place, leading to more stable occupancy and performance.
—
Read More Health & Wellness News ; US News