Excerpt of article originally published by Commercial Property Executive Northmarq has completed its acquisition of Stan Johnson Co., a purchase that also includes Four Pillars Capital Markets, a debt/equity intermediary for CRE assets.  Founded in 1985 by its namesake, SJC has grown to become a leading middle-market net-lease investment sales brand and a top 10 U.S. middle-market firm. The company reportedly has seen an approximately 600 percent increase in revenue since 2005.  In recent years, SJC acquired Shane Investment Property Group to help support a growing multi-tenant retail focus, entered the self storage sector, and launched Four Pillars Capital Markets, which secured about $500 million in loan volume during its first year.  FPCM is a key component of the acquisition, according to Northmarq, given FPCM’s alignment with Northmarq’s established debt/equity financing team.  An SJC spokesperson told Commercial Property Executive, “Stan Johnson will remain with the company for several months to aid in the transition.”  Plans for the acquisition had been announced at the beginning of September. Industry experts at that time gave the deal a thumbs-up, indicating that the expanded Northmarq would have a stronger end-to-end investment sales platform and that SJC was not likely to break into the top tier of the net lease investment sales market on its own.  Houlihan Lokey served SJC as its exclusive financial advisor in the deal, with Bass, Berry & Sims PLC providing legal advisory services.  With the addition of SJC and FPCM to its existing multifamily sales platform, Northmarq will now offer services across all major property types, including office, health care, industrial, retail, self storage and multifamily.  The acquisition of the two firms means that Northmarq will now have almost 1,000 professionals across its investment sales, debt/equity financing, loan servicing and fund management operations. The expanded company annually transacts $23 billion in debt/equity volume and $15 billion in investment sales volume and services a commercial loan portfolio in excess of $76 billion. 

The merger provides clients with increased opportunities within all domestic commercial real estate markets  Northmarq, a leader in commercial real estate capital markets, announced today the completion of its acquisition of Stan Johnson Company (SJC), a real estate brokerage and advisory firm that focuses on investment sales across multiple asset classes. The acquisition also includes the purchase of Four Pillars Capital Markets (FPCM), a debt/equity intermediary for commercial real estate assets.  With the addition of SJC and FPCM to its existing multifamily sales platform, Northmarq will now offer services across all major property types, including office, healthcare, industrial, retail, self-storage, multifamily and more.  The acquisition of these two firms means Northmarq will now have nearly 1,000 professionals across its investment sales, debt/equity financing, loan servicing and fund management operations. The expanded company transacts $23 billion in debt/equity volume and $15 billion in investment sales volume annually, and services a commercial loan portfolio in excess of $76 billion.  “The closing of this transaction ushers in a new era for our clients and employees,” said Jeffrey Weidell, chief executive officer at Northmarq. “We’re incredibly pleased with the growth our company has experienced since entering the investment sales space in 2018 and we look forward to continuing that momentum in the years to come.”  Stan Johnson Company was established in 1985 by its namesake founder and has grown to become the #1 middle market net lease investment sales brand and a top 10 U.S. middle market firm. The company has experienced significant growth leading to an approximately 600 percent increase in revenue since 2005.  “Our valued clients have been a singular focus since day one, and they have propelled our growth and diversification during these past few years,” said Stan Johnson, SJC founder. “As we join Northmarq, our clients will continue to receive the same level of superior service they’ve come to expect, while also benefiting from an expanded geographic reach and enhanced service offerings.”  In recent years, SJC acquired Shane Investment Property Group to help support a growing multi-tenant retail focus, successfully entered the self-storage sector and launched FPCM, which secured approximately $500 million in loan volume during its first year. FPCM is a key component of the acquisition given its alignment with Northmarq’s established debt/equity financing team. Houlihan Lokey (NYSE: HLI) served SJC as its exclusive financial advisor, with Bass, Berry & Sims PLC providing legal advisory services.  “This transaction brings together our shared vision and values in a way that helps us better serve our clients’ needs,” said Travis Krueger, chief operating officer at Northmarq.  Northmarq, purchased by the Pohlad Companies in 1999, has grown steadily through a series of acquisitions. From its roots as a life company correspondent, Northmarq has added its complete agency and HUD business, new fund management and investment sales coast-to-coast.  Northmarq’s expansion into investment sales began in 2018 with just a handful of offices focused on multifamily properties. Leading up to the SJC acquisition, Northmarq had grown to 22 investment sales offices in 13 states, with plans to continue expanding this service into every market where it offers debt, equity and loan servicing. 

Originally published by Wealth Management Rising interest rates and the threat of an economic downturn have slowed real estate investment sales across the board, including in the medical office sector. But the decline in sales of medical office assets is not as deep as it has been in other sectors and the market is well-positioned to weather the latest down cycle, according to brokers.  Third quarter sales volumes for medical office from data firm MSCI Real Assets aren’t available yet, but the numbers are expected to be down from the $7.3 billion recorded in the first half of 2022. That total was up from the $5.6 billion in the first half of 2021, and higher than the $6.8 billion average recorded between 2017 and 2019.  The medical office sector “isn’t immune” to what’s happening in the broader market, according to Shawn Janus, national director, healthcare services, at real estate services firm Colliers. But healthcare is considered recession-resistant and as such isn’t impacted to the same extent as other sectors, he adds.  “We've begun to hear about some deals being delayed, as well as some re-trades,” Janus says. “The healthcare sector is still seeing capital formation seeking investment in the asset class. The belief is that healthcare will be less impacted than other asset classes and will stabilize sooner as well.”  Buyers of healthcare-related properties are adjusting to the same rising interest rates as buyers of other asset types, says Toby Scrivner, a partner and healthcare specialist at the brokerage firm Stan Johnson Company which will soon be a part of Northmarq. Because of the increased cost of debt, many buyers are sitting on the sidelines for now, looking for yields and sale prices that are more reflective of this new paradigm in the marketplace. That has slowed down the sale process, he notes.  “That said, healthcare real estate is not experiencing the same slowdown as other product types,” Scrivner says. “This is largely attributed to the limited amount of healthcare products coming to the market annually and the ever-increasing number of investors who want to invest in this sector. There is still supply and demand inequality in the market. While there have been cap rate adjustments for some assets coming to the market, there are still assets going under contract at pre-rate hike cap rates.”  Medical office is going to be more insulated than traditional office buildings from the trends in the larger marketplace because of its “recession-resistant nature,” says Travis Ives, co-leader of Cushman & Wakefield’s U.S. healthcare capital markets team. The sector has historically had higher tenant retention and rent collection. The one drawback is it can’t quickly recoup the costs of inflation, like multifamily, for example, which typically has annual lease renewals, Ives notes.  Cushman & Wakefield’s healthcare team has been hearing from its colleagues across the firm network for two or three months about the challenges they were facing in the office sector, and “we wondered when that was going to filter through to our product type, because we were not feeling it at the time,” he says. By now, however, it has become clear the increase in capital costs has hit demand for medical office sales and impacted property values. But the impact has been muted compared to the office sector.  Data on where the market is at right now is lagging because deals closing over the last few months were likely marketed and closed in the first half of the year, prior to conditions getting more challenging, Ives notes. That’s when investors pulled back and prices started to adjust.  “We’re not seeing in the stats yet a significant increase in cap rates, but we think there’s an adjustment coming,” he says. “We know firsthand from deals we’ve been working on that buyers have pulled back and lenders are more conservative.”  Nevertheless, the medical office sector is still considered a favored asset class among investors, according to Al Pontius, a senior vice president and national director for office, industrial and healthcare for real estate services firm Marcus & Millichap. Investors are attracted to the stability of medical office tenants, supply and demand fundamentals and demographic pressure on increasing medical services, he says, echoing other specialists.  “That being said, though, interest rates are up, borrowing costs are up 250 basis points from where they were only nine months ago,” Pontius notes. “You will not in a condition like that maintain the same kind of pricing. Cap rates are up across the product spectrum. They are up 50 to as much as 150 points—depending on the composition of the deal. That’s less of a rise in cap rates than a corresponding rise in borrowing costs.”  All of that has slowed sales activity in the short terms as buyers and sellers adjust to a new market, Pontius says. When conditions change as fast as they did this year, the bid/ask gaps that opens rapidly means prospective sellers aren’t as prepared to adjust to lower pricing than they would be under different conditions. Buyers, meanwhile, are waiting for price adjustments.  Marcus & Millichap is still working on a number of medical office transactions that are in motions right now and new investors continue to enter the sector, according to Pontius, “but there’s a number of considerations to making a deal right this minute.”  “It takes a level of seller understanding of the impact on pricing, and it takes buyers who are continuing to execute on their strategy for being involved in the medical office sector.”  Pricing expectations  Generally, cap rates on medical office transactions have risen in the range of 50 basis points, but the increases are market-, sponsorship- and location-specific, according to Janus. Assets that are located on-campus of larger medical office complexes have held up better and have seen only modest cap rate increases. For a while, there was a mismatch between sellers lamenting that they may have missed selling at market highs and what buyers were willing to pay, but that gap appears to have narrowed recently, he adds.  Scrivner says Stan Johnson is compiling sales transaction data that will show an “on average’ increase in cap rates of 30 to 40 basis points over the first and second quarter of the year. It’s difficult to set appropriate sale price expectations for a seller when the potential for a motivated 1031 buyer to enter the market and buy a property at yesterday’s pricing is a real possibility, he notes.  “We advise buyers that while the possibility of achieving yesterday’s pricing exists, hoping is a luck strategy,” Scrivner says. “If there is a real motivation to sell, deals should be priced to attract the broadest pool of sophisticated healthcare investors. This business strategy will ensure a competitive bidding process and the best surety of sale execution.”  There’s also an “interesting dynamic” with sellers of better properties holding onto them or not doing a deal if they fail to get the target price, according to Ives. They would rather own it than sell it at a discount and are under no urgency to do so, he adds.  “You don’t see an adjustment in those values because those deals didn’t trade,” Ives says. “But what you will see in the stats that show up are some of the more challenging projects that had some hair on them and a seller that had some urgency where they needed to sell and were willing to adjust their value expectation to get the deal done. That’s where we are going to see the adjustment in cap rates reported, but it could be misleading because it might not be indicative of where core-plus pricing would have been.”  Many of the buyers in contract over the last couple of months had locked in rates or had secured lines of credit and weren’t exposed to the volatility in the debt market, according to Gino Lollio, co-leader of Cushman & Wakefield’s U.S. healthcare capital markets team. That has since changed, he adds.  Financing  Financing for medical office acquisitions continues to be available, but underwriting has become more stringent, brokers say.  Healthcare has always been an attractive sector for lenders who love it for the same reasons that investors do—stability, demographic trends that boosts demand and resistance to recessions, says Scrivner. Lenders still want to make loans on healthcare real estate, but the debt terms that banks are willing to make will vary based on the project, the property use, the size, or affiliation with a healthcare system, he adds.  “Rest assured though, if there is healthcare real estate involved there are lenders eager to be involved.”  However, as debt has become more expensive, lenders aren’t as willing to provide debt on large portfolios, says Ives. Many big national banks “have put their pencils down,” and that means reaching deeper into the debt pool of local or regional banks who aren’t willing or able to finance such large acquisitions.  “There were a lot of big portfolios on the market the last six months that did not transact and got pulled, and they will probably come back out eventually,” Ives says. “They certainly did not hit their values.”  In response to higher interest rates, buyers have turned to all-cash transactions or lower leverage—for example, 50 percent vs. 65 or 70 percent previously, according to Pontius. This helps structure more economically sound deals. But even the all-cash and lower-leveraged investors are cognizant that the interest rate environment has pushed cap rates upward, he adds.  Buyer groups  During the first half of 2022, private buyers made up 54 percent of investors in medical office properties, followed by institutional funds at 24 percent and REITs at 15 percent, according to MSCI Real Assets.  Private equity groups continue to acquire medical office properties, provided they get the right terms, while REITs have been less active because of dividend yield constraints, says Janus. End-users are looking closely at lease versus own strategies, given their thin operating margins and the changing macro environment that has impacted them. All-cash buyers have a leg-up on competitors who rely on leverage, given the rising interest rate environment, he adds.  Generally, private investors are more active in the sector at this time and more expansive in their criteria than institutional investors whose acquisition criteria are tighter, notes Pontius.  Meanwhile, while some sellers are opting to stay on the sidelines, others are coming to the market anticipating interest rates will continue to rise and that it might be better to sell now than in 2023, he adds.  “Then others have event-based decision making,” he adds. “If I have a loan coming due in six to nine months, and I don’t like the interest rate market from a refinance, then that’s an asset that may come to the market because of that.”  Overall, however, “it feels like a wait-and-see mentality right now,” says Ives. “We’ve been putting this in a lot of our pitches to sellers in what’s going on in real time. If you are not in desperate need to deploy capital, you’re willing to sit back and hopefully see some kind of adjustment and opportunistically come back into the market at a lower value. If you are a seller that doesn’t need to sell, you’re hanging onto it. If you’re a seller that needs to sell over 12 to 24 months, the general sentiment is you’re better off going now rather than later.”  There are still opportunities  As conditions shift and push up yields, it has allowed certain funds that have historically had higher yield thresholds and were previously priced out to enter back into the marketplace, notes Cushman & Wakefield’s Lollio.  Scrivner says that while his team has seen buyers taking a step back, they have tended to be the funds and REITs focused on the healthcare sector. For them, it’s an opportunity to let the market cool and wait for sellers to adjust pricing expectations. For private buyers dependent on bank financing a higher purchase cap rate is required to achieve positive leverage, he says. However, that’s a sound strategy until you introduce the elements of private buyers with tax avoidance motivations, a popular asset class and a very limited supply of product.  “We estimate it will be six to nine months for the market to level out and close the gap between the expectations of the focused healthcare buyers and those of sellers seeking to achieve the record pricing of sale comps that closed in the first half of 2022,” Scrivner says. “During this time, I expect to continue to see certain types of deals that will generate strong interest and will subsequently trade at aggressive cap rates on par with 2021 and the first half 2022... Other deals will not garner the same level of interest and will ultimately trade at pricing more reflective of where the broader market is willing to buy investments in today’s environment.”  If inflation starts leveling off and a recession hits, the medical office sector will likely be sought out for its stability of cash flow, says Ives. He’s hearing from some people that the debt markets might become more liquid in January. Even though the rates will be higher and that will make transactions easier to get done, there will need to be some adjustments in values for people to step back, he adds.  “It would be the right investment to hide out for a while,” Ives says. “We call it a safe harbor where capital has sold something and is looking for a place to deploy with plans to be there for three to five years. It wants to know the cash flow they are buying is going to be sustainable.”   

Stan Johnson Company, one of commercial real estate’s leading investment sales brokerage firms, has completed the sale of a four-star skilled nursing facility located at 13960 Plantation Road in Fort Myers, Florida. The 57,650-square-foot building is fully leased to Lee Memorial Health, a Southwest Florida community-owned health system. The seller was a Florida-based developer. Stan Johnson Company’s Jason Maier represented the 1031 exchange buyer, a private investor based in New York. The asset was acquired for $46.7 million.   “We are excited to have been a part of this dynamic transaction. Fort Myers has been a strong growing market in Florida and has undergone a very rapid expansion in recent years. Lee Memorial is by far the dominant and most prestigious hospital in the area with an unbelievable management and executive team,” said Maier, Senior Director in Stan Johnson Company’s New York office. “We believe the acquisition of this state-of-the-art facility will provide our client with both long-term stable income and huge upside appreciation through rental rate growth and land value appreciation.”  The facility was built in 2018 and is situated on 4.28 acres in a southern suburb of Fort Myers on Florida’s west coast. The property is strategically located in the Gulf Coast Medical Park and is situated on the Lee Memorial Hospital Main Campus with direct access to the emergency room and main hospital building via a reciprocal access agreement. The building serves as a long-term acute care, inpatient, and outpatient facility serving Lee Memorial patients. The Gulf Coast Medical Center houses a trauma center and neuroscience institute, as well as orthopedic, oncology and cardiology services. The property was under a long-term triple net lease at the time of sale, with strong annual increases and is guaranteed by Lee Memorial Health Systems.  

We are excited to announce that industry news leader, GlobeSt.com, has named Ryan Butler, Managing Director and Partner, as a Net Lease Influencer for 2022. Ryan has a deep track record across the net lease sector, and with more than two decades of experience, he has made a consistent impact and significant contributions to the industry. Please join us in congratulating Ryan on this outstanding nomination!  Net Lease Influencers 2022 Excerpt of article originally published by GlobeSt Net lease has always been a stable asset class, attracting investors intrigued by its regular cash flow and strong fundamentals. Now it is wobbling a bit as the economic uncertainty clouds pricing but few believe that will last long. Still, it is times like these that require the best of the best to navigate the space and we are confident we have picked that crew in our 2022 net lease influencers. We hope you enjoy their stories as much as we did as we made our selections.   Ryan Butler Known for finding deals and solving problems, Ryan Butler is focused on helping clients acquire and divest net lease assets across the retail, industrial, office and healthcare sectors as managing director and partner at Stan Johnson Co. Butler’s 22 years of experience have helped him develop deep relationships in the net lease arena. During his career, he has closed $2.55 billion in sales, and in the past three years, he has sold more than $1.1 billion of investment properties across nearly 200 individual transactions. In recent months, Butler notably achieved record-low cap rates for a BJ’s Wholesale Club in Massachusetts and a McDonald’s restaurant that sold in Texas. In addition, he brokered the sale of three single-tenant retail portfolios for a combined $75.5 million. Butler’s production volume made him eligible to be inducted into the firm’s inaugural class of partners in 2020, an opportunity offered to SJC’s top sales producers that recognizes outstanding contributions and commitment to providing extraordinary service to clients. Butler serves as a thought-leader in the industry by frequently contributing to whitepapers and providing expertise on net lease for media outlets.  Reprinted and excerpted with permission © 2022 ALM Global Properties, LLC. All rights reserved. 

We are excited to share that Stan Johnson Company has been recognized as a Net Lease Influencer by industry news leader, GlobeSt.com. With more than four decades of experience, you can count on our team of professionals to help you navigate the nuances of the net lease sector.  Net Lease Influencers 2022 Excerpt of article originally published by GlobeSt Net lease has always been a stable asset class, attracting investors intrigued by its regular cash flow and strong fundamentals. Now it is wobbling a bit as the economic uncertainty clouds pricing but few believe that will last long. Still, it is times like these that require the best of the best to navigate the space and we are confident we have picked that crew in our 2022 net lease influencers. We hope you enjoy their stories as much as we did as we made our selections.  STAN JOHNSON CO. With a historical focus on the single-tenant net lease sector, Stan Johnson Co. is in its fourth decade of operation and has expanded its service platform. Founded in 1985, the firm, led by president and CEO Stan Johnson, provides acquisition, disposition, sale-leaseback, capital markets and advisory services for institutions, developers, investment funds, corporate occupiers and private investors across the US. The firm’s expertise includes single-asset and portfolio sales, as well as sale-leaseback transactions, 1031 exchanges and zero cash flow transactions that span all types of commercial assets including retail, office, industrial, healthcare and specialty properties. The firm has closed more than 6,700 net lease transactions totaling more than $42 billion in sales activity. In the past three years, Stan Johnson Co. closed more than $11.5 billion in net lease transactions, including a two-location portfolio of Midwest grocery stores for $18.7 million, a $12 million Home Depot ground lease in Ohio, a newly-built freestanding restaurant in Nashville that set a new cap rate record for the metro area, and a three-transaction portfolio that included 40 net lease properties across seven states that sold for $75.5 million. In 2021, the firm also launched an affiliate company, Four Pillars Capital Markets  — a real estate capital markets brokerage firm that provides debt and equity financing to commercial real estate investors as they acquire or refinance assets.  Reprinted and excerpted with permission © 2022 ALM Global Properties, LLC. All rights reserved. 

Across the single-tenant marketplace, office and industrial are currently the dominant property sectors in terms of sales volume contribution. With healthcare – a subset of the office sector – playing such an essential role in recent years, along with continued red-hot demand for industrial and logistics space, these sectors have combined to contribute approximately 80 percent of single-tenant property sales volume each quarter for the past four years. This percentage is up from 67 percent just a decade ago. Within the industrial market alone, we’ve seen transaction volume increase from 35 percent of the overall market in 2012 to 52 percent year-to-date 2022, illustrating a significant shift in buyer demand. Single-Tenant Office Sees Spotty Rejuvenation Post-Pandemic The single-tenant office sector had an impressive start to the year in 2022. The sector posted more than $8.0 billion in investment sales activity, securing first quarter 2022’s place as the fourth strongest quarter on record. In fact, post-pandemic activity for the office market has led to three of the top-five performing quarters in history. Despite the recent momentum, it wasn’t able to carry over into second quarter 2022, when just $3.8 billion in transactions were logged. Quarter-to-quarter, this represents a 53.1 percent drop in activity, and it’s also the lowest level of sales volume reported since the height of the pandemic. As is typical, the quarter was dotted with several higher priced transactions including the $205.5 million sale of the former Xerox facility in El Segundo, California, as well as AT&T’s corporate office in the Buckhead submarket of Atlanta that sold for $137 million. However, the highest profile transaction of the quarter was the four-property Meta campus in Silicon Valley that traded for nearly $707 million. Overall transaction count was down, but the vast majority of activity for the quarter involved smaller transactions, primarily under $25 million, with numerous sales falling below the $10-million mark. While this trend isn’t necessarily unusual, especially in the single-tenant sector where many office properties are of smaller size and price point, there was a noticeable absence of larger portfolio closings that have been prevalent in recent quarters.  Without these substantial transactions, overall sales activity naturally falls, but it doesn’t necessarily indicate a reduction in buyer demand for the sector. In just the first half of this year, private investors have taken market share away from REITs and institutional investors by being very active in the small deal space. If we study the historic dominant players for single-tenant office properties along the spectrum – from small freestanding facilities to massive corporate offices and campuses – the reduction in sales volume doesn’t feel so surprising. Could Second Quarter Activity Indicate an Industrial Slow Down? Industry experts have been suggesting for months that a slowdown is looming for the industrial sector. A number of headwinds continue to impact the market, and investment sales activity in the first half of 2022 has indeed witnessed a decline from recent record-setting periods. In second quarter 2022, the single-tenant industrial sector reported $8.4 billion in transaction volume. This was down 32.2 percent from first quarter 2022, when approximately $12.4 billion in sales were reported. When compared to the astronomically high activity reported at year-end 2021, and studying the $52-billion year as a whole, the industrial sector looks to be significantly off-pace midway through 2022. However, strip out just fourth quarter 2021, and the market is actually performing equal to the five-year trailing quarterly average and outpacing the 10-year average. Current activity appears to be right-sizing, returning to levels more in-line with a hot, but not overly frothy, market. Additionally, if investment activity doesn’t decline further in the second half of the year, 2022 could easily become the second strongest year on record. As tenants grapple with increasing rents and low vacancy, investors are watching interest rates and inflation, trying to make deals make sense. Part of today’s pullback in sales volume is likely influenced by the repricing of deals as buyers are no longer able to lock in debt at yesterday’s costs. However, with demand still very high and new supply lagging, there is no shortage of bidders on most of today’s offerings. To download a copy of this report, please provide the following information: hbspt.forms.create({ region: "na1", portalId: "7279330", formId: "e0a86c38-f147-4bd4-8dba-8b92e71fa857" });

Originally published by GlobeSt Seeking further investment in recession-proof real estate, CBRE Investment Management has entered the medical office sector.  Its managed fund announced this week that it acquired a four-building medical office portfolio totaling 282,683 square feet in Orange County, Calif., through a joint venture with Healthcare Realty Trust.  Larissa Belova, portfolio manager, CBRE Investment Management, said in prepared remarks that, similar to the life science sector, “the medical office sector is attractive because the aging population coupled with the world pandemic have increased spending on healthcare.  “Our strategy focuses on assets located within or adjacent to thriving hospital systems that create ecosystems that benefit doctors and their patients.”  Sondra Wenger, head of Americas commercial operator division, CBRE Investment Management, said in prepared remarks that medical office has high barriers to entry due to the increasing complexity of the assets, resulting in an undersupply of state-of-the-art assets.  “Tenant retention rates tend to be higher because of the cost of tenant improvements and the need for a recognized location,” Wenger said. “This acquisition gave us an opportunity to gain immediate scale of historically strong-performing medical office building assets in a top cluster within the healthcare sector, and we are looking to increase our investment nationally in this sector that has performed well through market cycles.”  Medical Assets Expected to Outperform Office Market  Medical office properties have proven relatively resilient with vacancies averaging about 2% lower than traditional offices as the work of medical practitioners often requires an in-office presence, according to a CBRE release. “For these reasons, medical office assets are expected to outperform the office market overall,” the company said.  Brett Buchwald, Vice President at SK Commercial Realty in Atlanta, tells GlobeSt.com that acquiring on-campus or campus adjacent medical office facilities is an excellent strategy to bolster the stability and maintain a portfolio’s value.  “There is always demand for medical office tenants to be near hospitals,” Buchwald said. “During the pandemic, very few medical office tenants requested rental abatements or missed rental payments. So, these kinds of acquisitions are viewed as extremely recession resistant.”  Toby Scrivner, Partner at Stan Johnson Company, tells GlobeSt.com that campus-adjacent medical properties provide investors with two fundamentally valuable characteristics.  “First, these are irreplaceable real estate assets,” Scrivner said. “Second, they provide a source of future tenant prospects. The available supply of existing surplus medical real estate is very limited though. Prudent investors are currently searching for properties that can be acquired for an attractive basis relative to new construction.”  Acquired From Largest Healthcare Trust  The assets CBRE Investment Management acquired were part of the Healthcare Trust of America portfolio, which has merged with Healthcare Realty Trust to form the largest medical office building owner in the United States.  The portfolio includes Mission Medical Center Buildings 1-3 and Mission Medical Center Tower on the campus of a leading acute care hospital in affluent Mission Viejo.  Mitch Creem, principal, GreenRock, tells GlobeSt.com that many hospitals throughout the US own medical office buildings on or near their campuses.  “Hospital-owned MOBs are aging and often in need of major renovations to keep and attract physicians and patients,” Green said. “Partnering with real estate investment trusts and funds to infuse new capital into needed upgrades makes a lot of sense, especially during these times of declining hospital profits and cash flows.  “Additionally, these MOBs are good investments due to the ever-present trends of our growing aged population and a shift of medical care towards lower-cost outpatient settings. Moreover, the medical office fits the bill for physicians and patients to be closer to higher levels of care when needed.”  © 2022 ALM Global Properties, LLC. All rights reserved. 

Stan Johnson Company, one of commercial real estate’s leading investment sales brokerage firms, has completed the sale of a medical office property located at 330 Brandon Town Center Drive in the east Tampa, Florida suburb of Brandon. The 45,000-square-foot medical office property sold for $14.0 million. The property is currently leased to Rasmussen University, the largest national nursing and health sciences educator. James Ullrich and Michael J. Macchia of Stan Johnson Company represented the seller, a Florida-based developer. The buyer, a private investor from California, was represented by David Tower of Coastal Commercial Real Estate. “Tenant strength carried this transaction as the nation is suffering from a shortage of nurses, and Rasmussen endeavors to solve that problem,” said Ullrich, Director in Stan Johnson Company’s New York office. “Rasmussen’s extensive history portends a long future but possesses feel good ESG elements to be long-lasting.”  The education facility was built in 1994 and extensively built-out in 2021. The regionally accredited private university operates on a double net lease with 10 years remaining and is one of 24 campuses across the country.  

Stan Johnson Company, one of commercial real estate’s leading investment sales brokerage firms, announced today that Riley Sharman has joined the firm as a Director in Houston, Texas. With over 10 years of commercial real estate experience, Sharman has specialized in the sale of multi-tenant shopping centers, healthcare, and single-tenant triple net lease assets throughout Texas and the U.S.   “As an advisor to private clients throughout my career, I’m proud to be able to create and preserve wealth for them on a whole new level with the partnership Stan Johnson Company brings to the table,” said Sharman. “I’m very excited for the future of my existing and new client relationships.”  Prior to joining Stan Johnson Company, Sharman worked with Marcus & Millichap as a Senior Associate of Investments where he was a 2021 Sales Recognition Award winner. Sharman brings vast knowledge of the construction process, land development, site infrastructure analysis and financial modeling. His expert submarket knowledge and comprehensive underwriting skills provide a unique perspective for Stan Johnson Company. He has also held positions at Colliers International in retail investment sales and Pristine Bay Hotel Development Group. Sharman received his undergraduate degree from St. Edward’s University and grew up locally in Houston. He remains active in the community as a member of the Houston Livestock Show & Rodeo and Trees for Houston.  “We’re very excited to have Riley join the Stan Johnson Company team,” said Managing Partner, Harold Briggs. “Riley has been a broker for numerous years, and he brings a decade of real estate experience to his new role. We see a very bright future in front of him, and we’re incredibly excited about the growth of our Houston office with the recent addition of several new hires.” 

Originally published by GlobeSt Continued growth in the urgent care sector through 2029 will lead to more investments in real estate, according to a report issued this week.  According to Data Bridge Market Research, “the urgent care market will experience a compound annual growth rate of 5.35% between 2022 and 2029, which translates to a continued push to redevelop outdated retail into urgent care, along with new construction.”  Increasing incidence of sports-related injuries, reduced waiting times, and growing awareness about urgent-care centers are expected to expand the market, according to the report.  Medical Groups Seeking Capital  Mitch Creem, principal, GreenRock, tells GlobeSt.com that he believes investors see urgent care as an investment opportunity during this period of limited hospital access due to COVID and continued hospital closures in suburban and rural areas.  “There are many primary physician, nurse practitioner and physician assistant groups looking for capital for facility construction, upgrades and modernization,” Creem said. “In many cases, physicians are eager to monetize their real estate equity holdings to provide dividends to the group or provide funds for succession planning and retirements." “The outlook for these investments looks strong due to the converging trends of a growing aged population and a shift of medical care towards lower cost outpatient settings such as urgent care facilities, medical office buildings and outpatient surgery centers.”  In addition, the urgent care sector is continuing to evolve with the emergence of specialized urgent care facilities, Toby Scrivner, Stan Johnson Company Partner and healthcare specialist, tells GlobeSt.com. “Specialized operators provide services such as orthopedics, pediatrics, behavioral or pulmonology as examples. We should expect to see more of these specialized operators opening locations across the country, as consumers appreciate the expert focus and shorter wait times.”  Urgent Care an Ideal Niche  David Lari, partner, Cox, Castle & Nicholson, tells GlobeSt.com, “The urgent care sector is booming, and I think it will continue to be a high growth investment area for the foreseeable future.   “Urgent care facilities provide a niche service that doesn’t really exist in the hospital or medical office building arena. Patients with non-life-threatening illnesses can go to an urgent care when they need immediate medical help instead of potentially waiting hours in a hospital emergency room."  “Urgent care facilities really filled a void and showed their value during the pandemic, and they continue to be thriving. Today, many of the investors in the urgent care space are regional owners-operators as the sector is operationally intensive. Institutional investors seem to be making more inroads into this space and that trend will likely continue.”  Curt Pascoe, vice president of real estate development for Ryan Companies US, tells GlobeSt.com that by adding urgent and immediate care centers to their health systems, healthcare providers have experienced many benefits including lower healthcare costs, improved customer access to care and reduced emergency room wait times as patients with lower-acuity needs can be treated at urgent care sites.   “With these proven results, the urgent care market will continue to grow,” Pascoe said. “Urgent care centers increasingly serve as the patient’s first point of contact to the healthcare provider, so it is imperative to create a positive experience to retain the customer.”  As an example, Ryan Companies US, recently developed, built, and now serves as property manager of a new health center for tenant Edward-Elmhurst Health, one of Illinois’ largest integrated health systems.   The two-story, 36,100-square-foot health center opened in October 2021 at a busy intersection in Woodridge, Ill., and includes offices for primary care physicians and specialists. Other services include a walk-in clinic, behavioral health, physical therapy, laboratory and diagnostic imaging.  Shopping Centers a Worthy Location for Services  Simone Healthcare Development, an affiliate of Simone Development Companies, recently broke ground on a redevelopment of a 63,000-square-foot retail store for the creation of the Catholic Health Ambulatory & Urgent Care facility in Centereach, N.Y.  The Catholic Health center features primary care, women’s health, behavioral health, cardiology, neurosciences, orthopedics, and several other services.   “The rise of online shopping means that some retailers are downsizing their footprints,” Joanna Simone, Principal and President of Leasing and Property Management operations at Simone Development Companies, said in prepared remarks.  “This restructuring opens opportunities for providers like Catholic Health to deliver their services in consumer-friendly shopping centers that are established destinations.”  © 2022 ALM Global Properties, LLC. All rights reserved.   

Originally published by GlobeSt Healthcare real estate’s appeal continues to attract new investors, creating a high level of competition, both amongst institutions and private investors.   Last week, Vanbarton Healthcare Group joined with Tramview Capital Management to be among the latest, announcing a joint venture targeting healthcare investments in select markets throughout the country.  The new division is targeting approximately $100 million of healthcare investments in the near term.  Mindy Berman, Senior Managing Director, JLL Capital Markets, tells GlobeSt.com that real estate investment managers and their capital partners have been drawn to alternative property classes such as healthcare to complement their investment holdings.  “Medical office buildings offer stable occupancy—national occupancy has not varied from 91% to 92% for 20 years—and durable income—consistent rental rates with modest annual growth,” Berman said.  “The pandemic period, once again, bore testimony to the steady performance qualities of outpatient medical buildings, while some property classes experienced higher vacancy, lower rental rates and rent collection issues.”  Christian Vaughan, associate director with Stan Johnson Company, tells GlobeSt.com, that rising interest rates have made it more difficult for private investors to get as aggressive on pricing, allowing institutional buyers to compete and win more opportunities.   Capable and aggressive groups such as Vanbarton Healthcare Group and Tramview Capital Management will continue to win opportunities in the coming months and as such, have their eyes set on achieving a large quantity of healthcare real estate product, Vaughan said.   “In the months to follow, we expect to see an influx of activity from institutional investors who are eager to deploy capital,” Vaughan said.  Population, Size Driving Cypress West Partners  Chris Cumella, co-founding partner, Cypress West Partners, tells GlobeSt.com that the top MSA’s will always garner the most attention because of population size and growth.   “An asset’s physical relation to a hospital campus in a top MSA checks everyone’s box,” Cumella said.  “However, as more services get pushed out of the acute campus setting, then more asset types will gain favor and attention from investors.”  He said that Cypress West Partners has always been focused more on top systems and top doctors than just pure MSA plays.   “Healthcare real estate has benefited from a lack of speculative development and therefore more landlord friendly metrics in general,” Cumella said. “Coupled with high replacement and repositioning costs today we expect that advantage to continue.”  The venture’s first closing consists of two medical office buildings totaling approximately 19,000 square feet in Port Charlotte and Venice, Florida which are fully leased to one of the largest providers of eye care services in Southwest Florida.  Florida Markets Fit Ideal Demographics  Vanbarton’s acquisition included the flagship location for Community Eye Centers located adjacent to two major acute care hospitals with over 500 beds in Port Charlotte, Fla., and a second location in Venice, Fla.  Both feature an above-average population growth and a disproportionately high over 65 population.  Vanbarton Healthcare Group principal Steve Leathers said in prepared remarks, “These closings are indicative of Vanbarton Healthcare Group’s strategy of identifying overlooked pockets of value in an increasingly popular healthcare investment arena. Both properties offer steady cash flow with minimal landlord obligations coupled with attractive annual rental increases.”  © 2022 ALM Global Properties, LLC. All rights reserved.