Unlocking Alternatives: Investing Beyond the Major CRE Asset Type

HEALTHCARE: PERFORMANCE

Assets continue to perform strongly, transaction volumes await confident capital

• In the wake of the pandemic, there was a steady increase in the sales volume of healthcare assets in the U.S. As funds reallocated their portfolio distributions away from traditional asset classes such as office and retail, healthcare has been a beneficiary of that growth. • During this period, large portfolio acquisitions and recapitalizations led to heightened transaction volumes and peak pricing. • While transactions have fallen as investors remain wary of the overall economic environment, performance indicators for the asset type remain strong and resilient. • Occupancy for quality assets in top markets has steadily grown through 2022 – 2023, as leasing remains robust. Occupancies generally stay comfortably in the 90% - 95% range. • Interest in office-to-healthcare conversions has grown, these adaptive reuse projects will likely require experienced developers / operators to execute properly to patient and investor needs. DIVE DEEPER: • Vital Signs: Healthcare Capital Markets H1 2023 • Vital Signs: Managing Healthcare Construction Projects • Vital Signs: Top Design Considerations

US Healthcare Pricing & Volume Trends

$200 $250 $300 $350 $400 $450

$B $2B $4B $6B $8B 20Q1 20Q2 20Q3 20Q4 21Q1 21Q2 21Q3 21Q4 22Q1 22Q2 22Q3 22Q4 23Q1 23Q2 23Q3 On-Campus Sales Volume ($) Off-Campus Sales Volume ($) On-Campus Avg Price ($/sf) Off-Campus Avg Price ($/sf)

Completions, Absorption, Occupancy

US Healthcare Cap Rates

Completed SF (LHS) Occupancy Rate (RHS)

Absorption SF (LHS)

0.00 200.00 400.00 600.00 800.00

3.50% 4.50% 5.50% 6.50% 7.50%

90.00% 90.50% 91.00% 91.50% 92.00% 92.50% 93.00%

0 1 2 3 4 5 6

Millions SF

% Occupancy

17Q1

17Q3

18Q1

18Q3

19Q1

19Q3

20Q1

20Q3

21Q1

21Q3

22Q1

22Q3

23Q1

23Q3

Spread - Office (RHS) MOB Cap Rate (LHS)

Spread - MOB (RHS)

Source: RevistaMed (Completions, Absorption, Occupancy based on Top 50 Markets, 7,500+ sf MOBs), Cushman & Wakefield Research

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