Blog and News

Commentary by: Eric Murphy, Managing Director, Global Healthcare Services


Medical office building (MOB) transactions slowed down again in the fourth quarter of 2022. Overall, the fourth quarter saw 252 medical office buildings transact totaling $2.9 billion. The average cap rate increased slightly to 6.1% compared to previous quarters of 5.8%. The average deal size for the properties closing in the fourth quarter was $11.8 million with an average price per square foot of $335.


Current Conditions


- Avg Cap Rate – 6.1%


- Avg Deal Size – $11.8M


- $ / SF - $335


2022 Recap


According to Revista, 2022 ended with $15.7B in total transaction volume with an average cap rate of 5.9%. Given the cur...

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Commentary by: Todd Perman, CCIM, Vice Chairman, Global Healthcare Services


The healthcare economic landscape has faced many obstacles in the past few years. Recession concerns continued inflation and increasing interest rates are several of the reasons healthcare investors have cautiously deployed capital as of late. 2023 looks to change that outlook, according to KPMG’s 2023 Healthcare and Life Sciences Investment Outlook. While certain economic factors will remain, 60% of the 300 healthcare executives surveyed expect to increase M&A activity this year. Strategic investment areas that are key to capital strategy for the year ahead include new offerings, operational efficiency and mile...

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Commentary by: Eric Murphy, Managing Director, Global Healthcare Services


Kauffman Hall reported in its 2022 M&A in Review report that the fourth quarter of 2022 was the most active healthcare mergers and acquisitions quarter transformative transactions since the beginning of the pandemic. A total of 17 transactions were announced in the fourth quarter, with four transactions occurring where the smaller party of the transaction has annual revenues of $1 billion+. The average smaller party size of announced transactions reached an all-time high of $852 million, well above the previous record of $619 million in 2021.


2022 Recap


In total for 2022, there were 53 announced transactions, up from 49 i...

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Commentary by: Todd Perman, CCIM, Vice Chairman, Global Healthcare Services


Commerce Healthcare’s Healthcare Finance Trends for 2023 annual report identified the high-impact trends affecting health system financial decisions in 2023. Constrained finances, increasing patient costs, cybersecurity woes and embracing digital technologies present themselves as both potential challenges and opportunities for health systems in the coming months.


As outlined in the report, care setting remains a key topic for health system real estate decision makers and the flee to outpatient versus inpatient care does not seem to be slowing down. This change in delivery of care has allowed hospitals to decreas...

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Commentary by: Eric Murphy, Managing Director, Global Healthcare Services


Medical office building (MOB) transactions slowed again in the third quarter of this year. Overall, Q3 saw 210 medical office buildings transact totaling $1.9 billion, a slight decrease from the second quarter’s volume of $2.7 billion with 261 MOB transactions. The average cap rate decreased marginally to 5.9% compared to 6.2% in the second quarter of this year. The average deal size for MOB properties in the third quarter was $14.4 million with an average price per square foot of $367.



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Source: MSCI Real Capital Analytics



Commentary by: Eric Murphy, Managing Director, Global Healthcare Services


In the third quarter, Kauffman Hall reported 10 healthcare M&A transactions in its “Healthcare M&A Activity Report: Q3 2022.” One of the major transactions announced was Pure Health’s $500 million minority equity investment in Ardent Health Services. The smaller/acquired party size averaged $834 million, up from $619 million for yearend 2021. We are continuing to see the same trend of fewer transactions overall, while the transactions that are occurring remain at all-time high revenues.


Transaction Spotlight:


The largest transaction in the third quarter was UChicago Medicine’s affiliation with Adve...

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Commentary by: Todd Perman, CCIM, Vice Chairman, Global Healthcare Services


Healthcare services private equity (PE) deal activity has surged so far in 2022, with the estimated deal count for Q1 through Q3 already exceeding 2020’s total, according to Pitchbook’s Q3 2022 Healthcare Services Report. Despite growing headwinds such as increasing costs and staffing shortages, the resiliency is promising for the sector. Across the variety of specialties, investments in dermatology and infusion practices are popular due to large platform trades and de novo openings. As PE firms become more sophisticated healthcare services investors, we anticipate they’ll explore investments into ne...

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Commentary by: Todd Perman, CCIM, Vice Chairman, Global Healthcare Services


Amid circumstances related to the pandemic, healthcare leaders are being tasked with setting strategic plans for 2023 and beyond. Rising costs, an unstable workforce and tightening margins represent a few of the challenges facing the industry. According to the Advisory Board, 69% of health system strategic planners report operating margins below pre-pandemic performance in 2022. Compared to 2019, providers are also reporting a 37% increase in labor costs per adjusted discharged for 2022. Financial and operational pressures such as these will require providers to evaluate cost-savings opportunities, redefine staffing s...

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Commentary by: Eric Murphy, Managing Director, Global Healthcare Services


Medical office building (MOB) transactions slowed down in the second quarter of 2022 with a 12% decrease in volume compared to second quarter of 2021. Overall, the second quarter of this year saw 264 medical office buildings transact, totaling $2.7 billion. The average cap rate increased slightly to 6.2% compared to previous quarters of 6.1%. The average deal size for the properties closing in the second quarter was $10.5 million with an average price per square foot of $345. Data for the quarter was analyzed through the transaction data in MSCI Real Capital Analytics.


Current Conditions


Avg Cap Rate – 6.2%


Avg Deal ...

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Commentary by: Todd Perman, CCIM, Vice Chairman, Global Healthcare Services


In a historic move earlier this month, the Center for Medicaid Services (CMS) announced the highest market basket update in the last 25 years. Due to higher expected growth in worker compensation, the agency announced that acute care hospitals will get a 4.3% increase in inpatient payment rates. This is a welcomed increase from 3.2% that CMS proposed in April of this year.


Because of this rule, CMS projects payments for 2023 to increase by 2.4%, or $71 million, aligning with CMS’ overall two-fold goal of providing access to healthcare for all Medicare patients and maintaining incentives for effective hospital ope...

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All information contained in this publication is derived from sources that are deemed to be reliable. However, Newmark has not verified any such information, and the same constitutes the statements and representations only of the source thereof, and not of Newmark. Any recipient of this publication should independently verify such information and all other information that may be material to any decision that recipient may make in response to this publication, and should consult with professionals of the recipient's choice with regard to all aspects of that decision, including its legal, financial, and tax aspects and implications. Any recipient of this publication may not, without the prior written approval of Newmark, distribute, disseminate, publish, transmit, copy, broadcast, upload, download, or in any other way reproduce this publication or any of the information it contains. This document is intended for informational purposes only and none of the content is intended to advise or otherwise recommend a specific strategy. It is not to be relied upon in any way to predict market movement, investment in securities, transactions, investment strategies or any other matter.

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