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Sale signals continuation of high interest in healthcare real estate investment
CHICAGO, Feb. 20, 2018 – JLL's Capital Markets experts today announced the company completed the sale of an institutional-quality, multistate medical office portfolio known as the PHT portfolio. JLL represented the seller, Bentall Kennedy, on behalf of a state pension fund. Heitman LLC, a global real estate investment management firm, acquired the 17-building, 1.4 million-square-foot portfolio on behalf of an affiliate of Heitman. Denver-based NexCore Group will manage and lease the properties.
The sale builds on momentum that propelled sales of medical office buildings in 2017 to a record level of $9.5 billion, according to JLL experts, past the previous high-water mark of $9 billion in 2015, and substantially higher than the typical annual volume of $5 billion. The PHT portfolio is one of the largest medical office asset sales to have occurred. Investors' appetites are being fed by an industry that has been steadily migrating to lower cost outpatient settings. This is causing a spike in outpatient visits, which are expected to increase by 20 percent over the next decade, and now constitute more of hospital revenue than inpatient care for the first time in history. Annual healthcare spending is projected to grow by more than 5 percent a year, most of which is earmarked for ambulatory settings.
"Healthcare real estate is emerging from the shadows of alternative sectors and is increasingly being viewed as a staple asset," said Jonathan Geanakos, President, JLL Capital Markets, Americas. "Interest in medical office is at an all-time high given the robust capital available for real estate investment, especially from core investors and foreign capital seeking durable income from stable product offering attractive yields. Our JLL Capital Markets, Healthcare team is a recognized market sector leader, and global investors continue to seek our unique perspectives in this alternative asset class as they make investment decisions of scale."
"The PHT Portfolio is a high-quality, well-diversified portfolio of premier properties with near-100 percent occupancy and a collective tenancy of highly-rated, market-leading health systems," said Brian Pieracci, Heitman Managing Director. "The Class-A portfolio exhibits nearly all of the qualities that we look for when acquiring core medical office properties for our portfolio."
Bentall Kennedy carefully assembled the portfolio over the last 12 years through new development and acquisition. The properties are new Class A medical office buildings located on the campuses of highly rated, market-leading and academic health systems in seven states. The buildings are 96 percent occupied and located in desirable U.S. markets.
"This portfolio attracted a high level of interest from a roster of well-known private and public healthcare investors, as well as many institutional core funds and foreign investors," said Mindy Berman, Managing Director, JLL Capital Markets. "An investment of this caliber is further evidence of good supply of product for new investment in healthcare. As outpatient care in the U.S. expands and investment appetite supports the growth, large-scale opportunities like this will continue."
JLL Capital Markets is a full-service global provider of capital solutions for real estate investors and occupiers. The firm's in-depth local market and global investor knowledge delivers the best-in-class solutions for clients — whether a sale, financing, repositioning, advisory or recapitalization execution. In 2017 alone, the firm's 2,000 Capital Markets specialists completed $170 billion in investment sale and debt and equity transactions globally.
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Founded in 1966, Heitman LLC is a global real estate investment management firm with approximately $39 billion in assets under management. Heitman's real estate investment strategies include direct investments in the equity or debt capitalization of a property or in the securities of listed and publicly traded real estate companies. Heitman serves a global client base with clients from North American, European, Middle Eastern and Asia-Pacific institutions, pension plans, foundations and corporations and individual investors. Headquartered in Chicago, with offices in Los Angeles, London, Luxembourg, Frankfurt, Munich, Warsaw, Hong Kong, Seoul, Tokyo, and Melbourne, Heitman's more than 325 employees offer specialized expertise – from a specific discipline to local insight.
JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. A Fortune 500 company, JLL helps real estate owners, occupiers and investors achieve their business ambitions. In 2017, JLL had revenue of $7.9 billion and fee revenue of $6.7 billion; managed 4.6 billion square feet, or 423 million square meters; and completed investment sales, acquisitions and finance transactions of approximately $170 billion. At the end of 2017, JLL had nearly 300 corporate offices, operations in over 80 countries and a global workforce of 82,000. As of December 31, 2017, LaSalle had $58.1 billion of real estate assets under management. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit www.jll.com.
About Bentall Kennedy
Bentall Kennedy, a Sun Life Investment Management company, is one of the largest global real estate investment advisors and one of North America's foremost providers of real estate services. Bentall Kennedy (which includes Bentall Kennedy (Canada) Limited Partnership, Bentall Kennedy (U.S.) Limited Partnership and the real estate and commercial mortgage investment groups of certain of their affiliates) serves the interests of more than 550 institutional clients with expertise in office, retail, industrial and multi-residential assets throughout Canada and the U.S. Bentall Kennedy's Investment Management group has approximately $47 billion (CAD)/$37 billion (USD) of assets under management (as of December 31, 2017). We are one of the largest Real Estate Services providers in Canada, managing 60 million square feet on behalf of third-party and investment management clients (as of December 31, 2017).
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