NEW YORK--(BUSINESS WIRE)--Nontraditional buyers, principally foreign capital and private equity firms, are increasingly looking to acquire healthcare real estate as the largest REITs pare their portfolios, according to Fitch Ratings. The nature of the buyers has been as telling as the volume sold. Three separate recently announced transactions approached or exceeded $1 billion in value.
Foreign investors are increasingly looking to invest in US healthcare real estate, particularly those with longer term horizons such as sovereign wealth funds, pension funds and insurance companies.
Increasing institutionalization of healthcare real estate would be a credit positive for REITs to the extent it improves asset liquidity and financeability. These positive implications are tempered by the possibility that the rise of less-seasoned buyers as the highest bidders is a counterintuitive signal of peaking values and an aging cycle, as it has been in other sectors' cycles.
REITs continued to dispose of skilled nursing facilities in third-quarter 2016 amid operator challenges, and the purchases by owner-operators and healthcare-focused funds likely reflect a disconnect between public and private market valuations. Conversely, Blackstone's investment in underperforming Brookdale senior housing facilities fits squarely into their "buy it, fix it, sell it" mantra as they (Blackstone) do not fit into the aforementioned category of traditional healthcare-focused investors.
Additional information is available on www.fitchratings.com.
The above article originally appeared as a post on the Fitch Wire credit market commentary page. The original article can be accessed at www.fitchratings.com. All opinions expressed are those of Fitch Ratings.
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https://www.fitchratings.com/site/re/890574
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