Capital Flowing into Health Care Sector

As demographics continue to shift in favor of health care real estate owners, more capital is coming into the sector, according to Clint Hinds, senior vice president with commercial real estate advisory firm Bentall Kennedy.

In a video interview with REIT.com at the Akerman U.S. Real Estate Summit this month in Miami, Hinds offered his insights into some of the dominant trends in the health care sector of the industry. He noted that with baby boomers turning 65, the dynamics within the sector are changing. Hinds speculated that the current period of growth in the sector would run for another 10 to 20 years.

"They're starting to demand more services more than any generation previously," Hinds said. "They're going to live longer."

Consequently, more capital is flowing into the sector, according to Hinds, even though institutional investors still view health care real estate as a niche play. For firms in the sector, that provides opportunities to build up their holdings.

"We look at it as an opportunity to aggregate a portfolio," he said.

Will that stimulate more deal flow in the sector? Hinds said he thinks so. However, he also pointed out that the vast uncertainty regarding the regulatory environment in the health care industry has had a marked effect on investment and deal-making. Real estate owners have been reluctant to get too active with transactions as a result, according to Hinds.

"I think the uncertainty with regulation and reform has definitely led the hospital systems and monetizations to be slower over the last three to four years," he said. "I think we're going to see more opportunities for monetizations coming from the hospital systems, as well as their overall desire to build more outpatient facilities in the 'hub-and-spoke' systems. I think that's going to create more activity for deal flow in the near term."