2021 Mid year

The End Of Covid & The Beginning Of Inflation

The Dust Begins To Settle

Over the past year, the Covid-19 Pandemic has shown us both the good and the bad extremes across all market sectors. Short term uncertainty still remains as to what the ripple effects of the pandemic will be but there is a growing sentiment of long term optimism. In any market recovery there will naturally be winners and losers. The three current points of uncertainty that we see are:

• How the widespread deployment of the vaccine will affect the return to normal business activity.
• Will we see distressed assets hit the market? Especially in a market that currently carries record low inventory and high sales prices.
• Inflation causing other asset class investors to come into the market, out pricing healthcare investors.

So what does this mean for healthcare real estate? According to data acquired by Revista, 2021 was off to a slow start after a record number of closings in Q4 of 2020 and 2020 as a whole. However, it is not expected to last, as new investors come into the market with funds having been raised over the past year to deploy in 2021.

What supports this are the exceedingly large number of private equity buyers becoming more and more aggressive on pricing as new investors enter the market. According to Revista, “ private investors have increased their share of overall MOB buying activity from 55% in 2019 to 69% in 2020 and 70% YTD in 2021.” They are getting more aggressive on cap rates as competition begins to stiffen across desirable credit/term MOB’s in primary and secondary markets.