Acquisition Criteria

EHP is oriented towards both on-campus medical office properties and satellite outpatient treatment centers situated within the patient community. EHP believes that it can assist healthcare providers by bringing liquidity and professional management to their real estate portfolio. It can relieve hospital and health systems of the burden of on-going capital requirements to maintain their real estate, reduce the tensions that often accompany the physician/tenant/hospital relationship, and allow providers to enhance their balance sheets in order to direct resources to patient care rather than facilities. By maintaining and enhancing first-class medical office properties, EHP delivers significant benefits to all parties.


EHP focuses on acquiring core, core+plus and value-add medical properties, typically ranging from $10 million - $25 million per property, that lie below the radar of most REITs and many institutional investors. Its strategy is to carefully assemble a portfolio of high-potential assets, adding value by the superior operation of such facilities through its integrated platform.

Product Type:
Both portfolio and single-asset acquisitions of on- and off-campus medical office, outpatient facilities, ambulatory surgery, free-standing EDs, imaging and wellness centers
Property Age:
Generally properties built or substantially renovated after 1999, however, older properties will be considered
Transaction Size:
$10 million and above
Hospital System:
The ideal investment asset will be anchored by a healthcare provider which has demonstrated sustained financial viability that has allowed them to invest in both leading primary-care and specialist medical staff and updated technology and programming. The optimal candidate will be situated in a geographic area with a strong payer mix, positive demographic growth and outpatient demand
Tenancy:
Both single-tenant and multi-tenant properties typically with less than a dozen tenants and preferably anchored or master leased by a hospital system or specialty group
Location:
Nationwide, including secondary and tertiary markets
The future of healthcare delivery is a dynamic patient-centered setting, encompassing primary care and specialists that optimize collaboration and referral streams between providers establishing a safe haven for investors interested in returns that provide certainty, stability and growth. That setting is the medical office and outpatient services facility.
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  • Demand for healthcare services is exploding...
    with a projected population of 72.1 million people aged 65 by 2030 (more than twice their number in 2000 and averaging 3 times as many physician visits per year as compared to people under age 45). Furthermore, life expectancies continue to increase, further extending the need for chronic care. As a result, the strength of the healthcare sector belies the larger economy: During the worst of the recession from December 2007 to June 2009, healthcare added 428,000 jobs while total nonfarm employment was down by more than 7.5 million. Looking back at the two prior recessions in 1990 and 2001, one finds a similar story with growth rates of 8.5% and 11.0% respectively, proof of the inelasticity in the demand for healthcare. At 18% of GDP, healthcare represents 8 of the 20 fastest growing occupations and, through 2020, is expected to grow by 33%, nearly 2-1/2 times the pace of any other industry.
  • Healthcare delivery is shifting to an outpatient setting...
    with outpatient services poised to leap 30% by 2020. As a result, one of the central delivery points for care moving forward will be the medical office building because it can house many of the services available on hospital campuses in a more comfortable and inexpensive environment, and it pushes services closer to where people live, allowing systems to capture new patients. Despite the legal challenges to aspects of healthcare reform, 49 states have already begun implementing the Affordable Care Act, which includes a mandate to shift care to more efficient ambulatory facilities. Healthcare spending of $2.5 trillion is projected to almost double to $4.6 trillion by 2019 which, compounded by the surge in the senior population, is placing an inordinate burden on Medicare/Medicaid. This is causing the government as primary payer to use its leverage to demand that hospitals push services to more cost-effective outpatient settings.
  • Hospital systems are under pressure to monetize their real estate...
    to fund capital investments in technology and the acquisition of physician practices. Thus, the $1 trillion market of healthcare real estate is poised for a shift from fragmented hospital-system ownership to private and institutional ownership and/or partnerships with healthcare systems as hospitals tap the capital tied up in their properties and relieve themselves of the burden of property management and leasing to focus on their core business of healthcare. Furthermore, the 2011 medical office transaction volume of $2.8 billion represents only 1% of the $250 billion medical office segment, leaving significant room for growth in investment activity.
  • Healthcare real estate is being recognized for its investment stability and superior performance...
    during economic downturns. The national medical office vacancy rate fell to 9% at the end of 2012, far outdistancing traditional office vacancy which remains at 17%. Although on-campus facilities still tend to be the favored product type, off campus MOBs, along with freestanding Emergency Departments and Ambulatory Surgery Centers, in communities with a strong payer mix command a premium. Once moved in, doctors are reluctant to uproot their practices, meaning unparalleled tenant retention rates which have a limiting factor on a tenant’s capital improvements. In addition, physicians now appear to be favoring hospital employment (almost 60% of practices are owned by hospitals) over independent practice which will enhance the credit of rent rolls and create new opportunities for joint venturing and master leasing with hospital groups.
  • There is a lack of capital...
    for small to mid-size healthcare properties, especially those that may have some vacancy, lack long-term leases or that may be off the hospital campus. Acquisition activity in healthcare real estate has been dominated by large public and private REITs targeting large-cap, core investments. As these groups continue to grow they must pursue larger deals to impact their balance sheets and consequently avoid some transactions due to radius restrictions imposed by other hospitals, leaving significant opportunities for investors positioned to acquire these properties.
EnTrust Healthcare Properties LLC (EHP) specializes in the acquisition and operation of medical office and healthcare related properties, nationwide. As an affiliate of The Alter Group, one of the nation’s leading privately held real estate owners with a portfolio of 17 million SF, EHP accesses an integrated platform of acquisitions, property management, leasing, development and capital markets expertise to provide a seamless array of services for individual assets and portfolios. Its principals bring 52 years of investment transaction experience, including nearly $3.0 billion in commercial real estate property acquisitions and dispositions over the last decade. EHP is targeting hospitals, specialty groups and healthcare systems for long-term real estate relationships as well as owners of medical property seeking to monetize their real estate.



1980 Springer Drive  |  Lombard, IL  |  60148  |  FAX: 312.803.1988

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CONTACTS
Ray Braun
630.693.1218
630.546.1287
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James Clark
630.693.1254
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