Strategic Investments: Driving Success in Healthcare Real Estate

Why Invest in Healthcare Real Estate?

Healthcare real estate has proved to be one of the strongest and most resilient sectors in the real estate landscape. Investors keen on long-term gains are attracted to excellent fundamentals associated with healthcare real estate:

Tenant Strength
Tenants of medical office buildings and ambulatory surgery centers (ASCs) are less likely to move than other commercial tenants; this “stickiness” promotes long-term leases and predictable, steady income streams. As a result, healthcare real estate is an attractive option for investors seeking consistent returns. Additionally, healthcare real estate contributes to building a dependable portfolio.

Stability Amid Market Fluctuations
Historically, medical office buildings have been less susceptible to changes in the general economy than traditional commercial real estate due to secular drivers supporting the healthcare sector and the nature of healthcare expenditures during economic downturns. The resilience of the medical office sector was particularly evident in 2020 amid the COVID-19 pandemic, which had a significant adverse impact on the overall commercial real estate market. Similarly, medical office properties demonstrated their recession-resistant properties during the Great Recession of 2007-2008. With this track record over time, medical office buildings have emerged from a small niche market within the broader field of commercial real estate to a recognized and well-defined sector that is attracting capital from investors worldwide.

Robust Fundamentals
The fundamentals underlying medical office real estate remain robust, with occupancy rates averaging better than 92% nationwide, creditworthy tenants, and accelerating rent growth. Another favorable factor is employment. According to the U.S. Bureau of Labor Statistics, there is a projected 16% growth in employment within healthcare occupations from 2020 to 2030. This surpasses the average growth rate for all occupations.

Demographic Trends Driving Demand
The demand for healthcare facilities is experiencing a significant upswing, fueled by compelling demographic trends. Two primary factors contribute to this surge: an aging U.S. population and the dynamic evolution of healthcare needs.

Individuals aged 80 and above are predicted to be one of the fastest expanding age groups until the year 2029. By 2025, 60 million Americans will be 65 and older; by 2040, this group will have grown to 81 million people. As this generation ages, there is an expected proportional increase in the demand for healthcare services. In fact, people 55 and over account for half of all healthcare spending. These dynamics will lead to a growing need for medical facilities and specialized care.

Shifting Settings for Care Delivery Add to Appeal of MOBs
Furthermore, the evolution of healthcare needs plays a pivotal role. The healthcare landscape is continuously adapting to technological advancements, changes in treatment modalities, and an increased focus on preventive care. These shifts necessitate modern, well-equipped facilities that can cater to the evolving requirements of the healthcare industry.

Increasingly, driven by demand from payors for delivery of care in lower-cost settings and from healthcare consumers for greater accessibility and convenience, and by technologies that enable a growing number of procedures (including joint replacements) to be performed in outpatient settings, more and more healthcare services are shifting away from large hospital campuses in favor of medical office buildings and ambulatory surgery centers. This trend, which is leading to the construction of more MOBs closer to where patients live, is adding to the appeal of these properties for healthcare real estate investors.

Diversification of Investment Portfolios
Investing in healthcare real estate provides an opportunity for portfolio diversification. The healthcare sector's unique features provide investors an opportunity to mitigate risks and boost overall portfolio stability,

Potential for Appreciation
The healthcare real estate sector also presents the potential for property appreciation, particularly medical offices and ambulatory surgical centers (ASCs). As the demand for healthcare services continues to grow, properties in strategic locations may show an increase in value over time.

Why Choose Montecito Medical?

As pioneers in our field, Montecito has grown to become one of the largest privately held acquirers of medical real estate in the country. We’ve been named the key influencer in the field by GlobeSt.com for five consecutive years.

Montecito's Achievements Rest on the Foundation of Three Robust Pillars:

1. Real Estate & Financial Expertise - With a dedicated focus on medical real estate acquisitions, we bring unparalleled expertise to the table. Backed by $1 billion in ready-to-invest capital, Montecito is well positioned to optimize returns for our investors.
2. Superior, Proprietary, AI-Powered Technology - We leverage cutting-edge technology, including big data, analytics and AI, Montecito can accurately assess the value of 54,000 medical office properties. Through this proprietary data engine, Scout Insight, we can evaluate the performance and potential of medical office properties based on more than 1.2 trillion data points involving not only real estate but an array of local demographic information and provider data, including physician billing and referral patterns. With this information, Scout Insight generates a score for the local market and individual medical practice occupying a healthcare property, enabling Montecito to identify real estate acquisition opportunities that meet our criteria and offer excellent investment potential. This technological edge not only streamlines our investment decisions, but also identifies new opportunities in the ever-evolving healthcare real estate market.
3. Trust Stemming from Personal Relationships - We don't just close deals; we build lasting partnerships. Montecito's success is rooted in the trust we establish with our sellers. By structuring transactions to meet our clients' unique needs, we enable them to share in our success.

Find out why Montecito was named a key influencer in healthcare real estate.
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