Medical Office Building Data / UW question. 1) anyone know of a data source (publicly available?) for MOBs? 2) what do you consider in your UW of these properties aside from the typical items you'd review when analyzing an office property?
Thank you for your thoughts.
[{"id": "gay4die", "text": "1. Data source for what comps (Lease/Sale)?  Revista has some but there is a paywall for most of it.  Most of the large brokerage shops (CBRE/JLL) have reports you can download that give a more broad market view, but still are pretty useful.\n2. This is a big question as MOBs and traditional office have a number of differentiating features.  The tricky part is understanding and valuing the tenancy.  Not all medical tenants are created equal, properties with high dental, behavioral health, and PT uses don't tend to achieve the same valuations as more clinical tenancy even with similar financials. In terms of underwriting, the TI's tend to be higher but so does the term and renewal probability. One last thing is what is the acuity within the space (surgeries, imaging, etc.) aka how difficult is it for the tenant to relocate.  There is obviously more nuance to it than that but this works for broad strokes\n3. If this is a property you are looking to bring to market and the NOI is over $600,000 drop me a line (If it matters I am a principal, not a broker).", "replies": [{"id": "gb1i9im", "text": "1. Yeah, I took a look at Revista...seems great but a lot is behind paywall. Their recent webcast is worth a listen. I typically look at the brokers, because they do have some great market information, but wasn't impressed with what I found for MOBs. \n2. Good point about tenancy and the stickiness to the property. I've seen TI $s from the publicly traded REITs (you can find great TI data if you're willing to review the supplemental filings), and they do seem to be high.\n3. Thanks for the offer!", "replies": [], "depth": 2}], "depth": 1}, {"id": "gb0ntri", "text": "I work at CompStak which is free for brokers and appraisers. We have some, if you wanna PM me the criteria I can check for you :)", "replies": [], "depth": 1}, {"id": "gbae0gv", "text": "Is it on or off campus?", "replies": [{"id": "gbc5de5", "text": "Let's say, off-campus.", "replies": [{"id": "gbeobvn", "text": "Off campus MOBs are tough honestly, you have two scenarios - (1) a health system anchors it in which case you\u2019re good on rollover (generally) BUT you\u2019re 100% reliant upon other providers in that systems ecosystem to backfill any vacant space (2) you\u2019re anchored by an unaffiliated doctors group and the other providers in the building are kind of complimentary to them (ie a surgery center anchors it and there\u2019s a PT guy, an MRI guy, a prosthetic guy...). In my experience the health system anchored ones are a bit stickier tenant base; the unaffiliated ones aren\u2019t sticky at all. For whatever reason doctors all want to play CRE investor so when their roll comes up they either (1) find a merchant builder, get cut into the deal, sign a lease with a high rate, then sell the building on C of O and make a ton of money (2) if they do stay in the building they have you by the balls because well good luck backfilling a 20 year old purpose built surgery center / doctor office / other weird build out. You\u2019re giving them a rate roll down unless you can reasonably repurpose. OH and they are fully aware that when they go all of the other little guys are moving out too.\n\nPersonally I don\u2019t like off-campus MOBs, there\u2019s a reason that the cap rate spread is so great between on and off. The rollover scares me on off campus stuff, as does the basis creep associated with it. Personally I\u2019d stay away unless you\u2019re the merchant developer in bed with a doctor to build a new facility. Anyways good luck my $0.00002", "replies": [{"id": "gboigiu", "text": "Thank you for the comments. \n\nIt's interesting that most MOB REITs are going towards off-campus building. Do you think there is a legitimate trend there (i.e., people want convenience of not having to go to a hospital), or do you think it's more of a function of...on-campus buildings are clearly limited in supply, and the REITs need to put capital to work.\n\nThe large off-campus properties (&gt;100K SF), seem to create that eco-system you discussed. But I agree, the potential repurpose on a smaller off-campus MOB seems daunting.", "replies": [{"id": "gboqx4g", "text": "A lot of that is driven by the health systems needing to expand - to get more customers they need more locations rather than just the single downtown hospital. To be clear, an off campus Class A giant MOB operated by a health system is an entirely different animal than like a 60-120k SF Class B MOB operated by some ransom health providers - I wouldn\u2019t touch that class B stuff with a long pole. The big off campus A stuff is a totally different ballgame and honestly I wouldn\u2019t really consider that much different than investing in an actual hospital property. Your basis creep will still be insane over time BUT you\u2019re at much lower risk of tenant rollover and exit", "replies": [{"id": "gbr0agi", "text": "Thanks for the comments.", "replies": [], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}]