Redistribution of Medical Office Buildings under Health Care Reform
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Redistribution of Medical Office Buildings under Health Care Reform

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Redistribution of Medical Office Buildings under Health Care Reform Redistribution of Medical Office Buildings under Health Care Reform Presentation Transcript

  • Redistribution of
    Medical Office buildings (MOBs)
    UNDER HEALTH CARE REFORM
    2/28/2011
    © Street Sotheby’s International Realty
  • Historical Perspective
    2008
    Commercial real estate values are down 40 to 50%
    2009
    MOBs buffered from the real estate slide
    Credit terms for physicians wanting to buy are tightening
    Physicians joining hospital based employment
    2010
    60% of physicians are hospital based or salaried
    Only 40% are fee for service or private practice
    There is currently an abundance of medical office space for sale or lease due to changing practice patterns
    2/28/2011
    © Street Sotheby’s International Realty
  • Current Trends
    • Stocks, bonds, raw land, precious metals and commercial real estate in general are all under performing
    • Quality MOBs are turning out to be a bright spot in an otherwise dismal real estate market
    • Traditional real estate investors and Real Estate Investment Trusts, REITs, need to keep investing on a regular basis as part of their business model
    • According to National Real Estate Investor® health care REITs continue to be in high demand
    2/28/2011
    © Street Sotheby’s International Realty
  • Current Trends
    • U.S. REITs own up to 15% of all institutional quality commercial real estate in major markets
    • REITs are a financial powerhouse with a total market capitalization of $300 billion
    • Commercial real estate braces for lease accounting changes which could have a detrimental effect on sale/lease back options
    • Reimbursement will not keep pace with inflation, therefore the need to cut costs will increase
    • Liability reform is needed to reduce costs
    • Movement toward mergers and acquisitions, “Bigger is Better”
    2/28/2011
    © Street Sotheby’s International Realty
  • Cain Bothers Newsletter Perspective
    Timing still good to sell medical office buildings
    Provide cash for mergers and acquisitions
    Buyout exiting physicians
    Cash to hire replacement physicians
    Relocate practices to more strategic locations
    Meet Health Care Reform goals:
    Patient safety
    Low cost
    Efficient
    Capable to handle large numbers of patients
    Industry Insights Aug. 9, 2010 Issue 682 Cain Brothers Newsletter for Health Care Industry
    2/28/2011
    © Street Sotheby’s International Realty
  • The Physician’s Case FOR Sale/Lease Back
    The entire lease payment is deductible
    Cash available to invest in business expansion plans including additional locations
    Lack of property mortgage affecting tenant’s balance sheet
    Reduced liabilities on the tenant’s balance sheet
    Continued long term operational control of the property
    Reduced upfront cash requirement
    2/28/2011
    © Street Sotheby’s International Realty
  • The Investor’s Benefit FOR Sale/Lease Back
    Regular assured stream of payments
    Depreciation deductions from taxable income
    Little or no time commitment
    All the benefits of appreciation over the life of the property
    Higher return than other investment alternatives
    Investing in Medical Office Net Lease Properties, October 2008;: www.stanjohnsonco.com
    2/28/2011
    © Street Sotheby’s International Realty
  • For a valuation of your MOB and possible sale lease back contact:
    Gerard M. Papp D.O.
    gerard.papp@sothebysrealty.com
    O-614-538-8895 EXT 188
    C-614-531-8887
    TOM DALCOLMA
    tom.dalcolma@sothebysrealty.com
    O-614-538-995 EXT 180
    C- 614-439-5311
    2/28/2011
    © Street Sotheby’s International Realty