Our Health Care Real Estate Briefing is your comprehensive summary of weekly health care real estate highlights currently happening across the nation.
This week’s update includes legislation that, if passed by the U.S. Senate, could legalize marijuana and generate tax revenue to boot. Early reports suggest that the U.S. Senate plans to propose its own form of the bill on the topic. In other news, the cost of additional staffing that is being proposed at the state and federal levels could have a large financial impact on skilled nursing facilities (“SNFs”). One report suggests that SNF operating expenses could increase by 59%. The remaining updates revolve around health system data, including revenue data and investment data. We also included senior housing data from JLL’s most recent senior housing investor survey. Finally, a summary of several major health care real estate transactions are below.
- The House passed the Marijuana Opportunity Reinvestment and Expungement Act (“More Act”) last week. The More Act (a) legalizes marijuana, (b) expunges certain marijuana-related convictions from criminal records and (c) adds a nationwide sales tax of 5% on marijuana sales per CNBC.
- UnitedHealth Group’s Optum has been on a buying spree. Optum agreed to acquire a national home health provider, LHC Group, for $5.4B. LHC has 964 locations in 37 states per Forbes. Optum recently acquired Refresh Mental Health, a company that operates 300 mental health, substance abuse and eating disorder clinics in 37 states per Axios.
- The largest U.S. health systems in terms of revenue are Kaiser Permanente at $93B, HCA Healthcare at $58B, CommonSpirit Health at $31B, Ascension at $27B and Providence at $27B per data reviewed by Blake Madden.
- Hospital venture capital funds (“HV Funds”) were very active during the pandemic. Investment activity increased from $1.2B in 2019 to $2.7B in 2021. The most active HV Funds in 2021 were: Kaiser at $700M, Ascension at $527M and Intermountain at $440M. Most are investing in digital health services per Healthcare Dive: Healthcare and Health IT News.
- JLL published its Senior Housing Investor Survey in which 80% of respondents believe the worst of the pandemic is behind us. Additionally, occupancy rates are near 82% in primary markets, rent growth is up 2.4% and the average cap rate for senior housing facilities is 6.4%. The top construction markets include Austin, Jacksonville, Memphis and Miami, where 30% of the population is 55 years old or older (although the typical age of a senior housing resident is 83 years old.)
- The cost of implementing minimum staffing standards for SNFs is estimated to increase SNF operating expenses by 59% or $500,000, on average, per facility according to Skilled Nursing News.
- Hammes Partners closed a $739M investment fund that will focus on health care real estate acquisition and development opportunities.
- Ardent Health Services closed on the sale of an 18 property MOB portfolio with 762K sf of space to an undisclosed buyer per the Dallas Business Journal.
- Strawberry Fields REIT has filed to go public on the Nasdaq. The REIT currently owns 74 SNFs, several LTACHs and 3 assisted living facilities per Cision PR Newswire.
- Kaiser Permanente has acquired 37 acres in North Natomas (Sacramento) for $22M. They plan to build outpatient facilities on the land per the Sacramento Business Journal.
Hall Render blog posts and articles are intended for informational purposes only. For ethical reasons, Hall Render attorneys cannot—outside of an attorney-client relationship—answer specific questions that would be legal advice.
