Page 8B—
COLORADO REAL ESTATE JOURNAL
—
March 2-March 15, 2016
A
s health care
providers and
their consumers
adapt to operations within
the Affordable Care Act
parameters, many health
care systems are considering
alternative ways to leverage real
estate to gain a competitive
advantage and maximize the
return on their real estate and
facility assets.
A comprehensive review of
health care real estate assets
can provide valuable data to
help owners operating in a
highly competitive market
make better, more informed
decisions that will help them
best serve the health care
needs of their constituents,
now and in the future. A
portfolio review can range
from a simple cost-benefit
analysis that considers the
long-term impact of an own-
versus-lease scenario or can
help an organization decide
what its best options are
for maintaining existing
operations, minimizing the
impact of operational costs on
its bottom line or positioning
for future growth.
For example, a physician
group may decide it wants
to increase its potential for
financial gains by owning its
own property. Considerations
may include how long the
group plans to operate in a
certain location, does it have
an exit strategy, and the value
of the underlying land parcel
along with a highest and best
use analysis. A cost-benefit
analysis often is a good first
step for many organizations
as they consider expansion
or reduction in existing
space, purchase of an existing
property or development of a
new facility.
For existing properties, there
are several other real estate
asset analysis tools available
that can help inform decisions.
Energy audits provide highly
valuable information that
allows an owner to understand
how the building performs
relative to its peers, establish
a baseline for measuring
improvements, determine
whether further, more detailed
evaluation is needed, and
how best to proceed with
improvements if viable.
A recent real estate facility
assessment effort for one of
our national partners revealed
that the energy performance
of a newly purchased building
was highly inefficient due
to the age and condition of
the building envelope and
heating, ventilating and air-
conditioning systems. In fact,
the building was operating at a
cost per square foot more than
twice the industry average for
a similar facility. We provided
an implementation plan
and budget to upgrade the
building envelope and HVAC
systems, including the life-cycle
cost analysis, which gave the
owner the information needed
to make the right real estate
decisions for his organization.
Operational performance, in
combination with an analysis
of lease rates, existing and
projected market conditions
and construction cost
knowledge becomes a powerful
tool for programming efforts.
It is easy to see how
the results of this kind of
analysis can lead to questions
about the viability of any
given organization to build
new and, if so, allow the
organization to consider the
best options for development
and delivery. As facility needs
have changed during recent
years, improvements in site
orientation, facility design,
major building equipment
and construction materials can
have a significant impact on
generating revenue and net
operating income.
Beyond the facility
ownership, design and
performance considerations,
a trusted developer who is
well versed in health care real
estate and construction can
provide important information
about the opportunities that
may come from building new
in underserved geographic
areas that meet any given
system’s targeted demographic
– ranging from site selection
and analysis to assistance in
due diligence and acquisition.
As examples, a knowledge and
understanding of the demand
and feasibility of MOBs in
underserved locations, wellness
centers in high-density areas
and ambulatory-type facilities
in rural communities can be
invaluable to organizations on
a path for growth.
A developer that has the
best interest of health care
organizations will offer a range
of services to best fit any given
scenario. Turnkey solutions
are a common option, but
a developer that has a long-
term interest in developing
quality medical office space
also has the ability to align
with various organizations,
such as physician groups, as a
part-owner and builder, which
provides the flexibility to
address future facility needs or
changes in the organization’s
structure.
For instance, partnering with
a developer allows a physician
group to benefit from the sale
of an asset if the partnership
decides to dispose of the
property, and ultimately have
control of its own real estate
destiny. A developer that is a
part-owner can bring equity
to these projects, eliminating
one additional hurdle that
can derail even the most
straightforward approach to
a real, identified need in the
market. The ability to source
debt from multiple lenders
also helps ensure the owner
group will get the best possible
terms.
A health care developer with
proven health care facility
construction expertise and
a strong financial backing
also minimizes risk. An
understanding of the needs
of health care systems and the
communities they serve helps
these systems build high-quality
facilities that not only elevate
the perception of the owner,
but also enhances the entire
community surrounding the
project.
Taber Sweet
Development executive,
Mortenson, Denver
