Hospitals now face a dynamic medical real estate market that can provide an attractive alternative to hospital-owned and financed outpatient facilities and medical office buildings. The ownership options available to hospitals considering the development of new medical projects have expanded greatly over the past few years and are likely to continue to evolve in the foreseeable future. This changing environment, driven by new sources of institutional capital, has led to a more competitive market for hospitals seeking real estate capital partners, and hospitals are starting to take advantage of it.

Cain Brothers has just issued the latest in its Strategies in Capital Finance white papers, titled “Medical Real Estate – Trends in Third Party Development – From Niche to Mainstream.”

Hospitals and health care systems have embraced third party ownership and management of real estate, because it can preserve capital resources for acute care needs, eliminate the potential conflicts that arise in the landlord/tenant relationship between hospitals and referring physicians, and minimize the potential legal and regulatory challenges associated with leasing space to referring physicians.

Jim Moloney, Managing Director at Cain Brothers, said, “We believe that health care management teams and board members need to be aware of the changes occurring in the market for non-acute care medical real estate projects and position them selves to benefit from it.”

These same hospitals and systems are now beginning to use third parties to develop and own new medical real estate projects. Mike Davis, Senior Vice President at Cain Brothers, said, “This trend has received far less public attention than monetization, but it has the potential to have a more profound impact on capital structure decisions for hospitals and health systems.”

The Cain Brothers white paper describes medical real estate project development, the developers, typical transaction terms, and a recommended process for hospitals and health care systems to select the best real estate development partner.

Please visit the Strategies page on our website to download this report or email strategies46@cainbrothers.com to request a hard copy.

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Cain Brothers is an investment banking firm that focuses exclusively on the health care industry. Its clients include providers, payors, medical device and equipment companies, information technology companies, and providers of outsourcing solutions to the health care industry. The firm has one of the largest teams of experienced bankers and traders on Wall Street dedicated to the health care industry. Operating out of offices in New York, Chicago, Houston, Indianapolis, and San Francisco, Cain Brothers creates custom-tailored, market-based solutions for the many strategic, financial, and operating challenges facing its clients. Cain Brothers’ venture capital affiliates, Health Enterprise Partners and CB Health Ventures, invest capital in fast-growing health care service and information technology companies.

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Contact Jim Vaughan
212-981-6929
jvaughan@cainbrothers.com