Looking at a Hospital
There is a off-market opportunity to purchase a distressed hospital asset that is in the works of being brought back to life. Current NOI is $3.5MM. 190,000 SF property. Location is A+++. Could buy at a 7-7.5 cap rate. I am a multi-family guy and for me this is a future apartment conversion all day long. Thing is I have no friggin clue about hospitals and how to operate. I would like an educated operator to come in but don't know of any. Any advise?
[{"id": "e3xe2c7", "text": "Maybe find a qualified operator or a JV with a hospital brand ", "replies": [], "depth": 1}, {"id": "e3xehj0", "text": "I wouldnt purchase a $50MM property if I had no experience with that property type unless it was an immediate or near future redevelopment play to a more familiar property type (multifamily in your case).\n\nIf you want to invest in a property and 100% trust another party to run it why not just invest in a REIT that focuses on medical use?", "replies": [], "depth": 1}, {"id": "e3xl2ud", "text": "Get a JV operating partner where you contribute equity..:if you want", "replies": [], "depth": 1}, {"id": "e3xn3q7", "text": "Truly a hospital? Or a rehab facility? There are plenty of transitional rehab operators out there, both regional and national, to partner with", "replies": [{"id": "e3ygh8n", "text": "Would love to find a reputable hospital/medical building operator", "replies": [{"id": "e3yqpb2", "text": "Try engaging a consultant that specializes in the specific product type you\u2019re after. If you want to bootstrap it yourself, you can start looking at Medicare cost reports for your region and go from there based on the facilities you\u2019ve identified that are well-operated to set up meetings", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "e3xouz9", "text": "Sounds familiar.  Where\u2019s the deal?", "replies": [], "depth": 1}, {"id": "e3y3mjv", "text": "If it's being brought back to life, what is that process looking like? Is the hospital leasing the facility? ", "replies": [{"id": "e3ygfts", "text": "Yes to both. 5 years left which is perfect for us. Then convert to apartments.", "replies": [], "depth": 2}], "depth": 1}, {"id": "e3y68k8", "text": "Do some hard digging into why the property is distressed. I'm a Chicago Broker and i've seen a few people go from Multi-Family into industrial or Retail. Many times people get in over their head and sell a few years later. Just food for thought.", "replies": [{"id": "e3ygdrv", "text": "I don\u2019t disagree with you a bit. I have a lot of industrial experience. Some office. Looking to broaden our portfolio and what we look at.", "replies": [], "depth": 2}], "depth": 1}, {"id": "e3yme4l", "text": "I've looked at 4 or 5 hospital conversions, but man are they hard. We only pulled the trigger on one and did it as an affordable deal. Take a hard look at it with an architect and contractor now to identify cost busting issues. You'll spend a fortune on coring and abatement during construction and there are lots of areas that don't convert well due to building depth so you end up with limited rentable sqft.\n\nOn the plus side I'm guessing you'll get a garage or parking with it? ", "replies": [], "depth": 1}, {"id": "e3ynue8", "text": "Hard to imagine that apartment conversion on 190k SF would be more substantially more lucrative than the present NOI. But then again, our markets may differ and I\u2019m no MF expert. ", "replies": [], "depth": 1}, {"id": "e41ez80", "text": "Running those numbers at a 7 cap means the property is worth $500k or roughly $2.6/sf.  What am I missing here?  Sounds super cheap.", "replies": [{"id": "e41feaa", "text": "you're missing basic math skills. how is your calculated value less than noi?", "replies": [{"id": "e41gupf", "text": "No you are right.  I'm an idiot, don't know what that was all about.  $50MM sorry about that lol", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}]