BOSTON-As a commercial real estate sector matures, conventional wisdom suggests it attracts increasing interest from larger investors, such as real estate investment trusts and institutions. These well-heeled buyers often have sizable investment allocation targets, and it's usually not practical for them to try to achieve those objectives with one-off deals. Thus, as a sector matures, the proportion of portfolio sales increases relative to single-asset sales.

Has that maturation been occurring in the healthcare real estate market, specifically among medical office buildings? Mindy Berman, a managing director with Jones Lang LaSalle and its Healthcare Solutions Group, suspected that it was. So she and her research team recently dug into 12 years of data to see if the theory was valid. Their conclusion? It sure looks that way.

For its analysis, JLL defined portfolio sales as transactions involving at least two properties selling for a total of $50 million or more. The data, drawn from Real Capital Analytics Inc. and JLL's research, revealed that portfolio sales totaled about $1.1 billion in 2007, accounting for slightly more than 21% of the total MOB sales volume of nearly $5 billion. But by 2012, portfolios accounted for a much greater share of MOB sales: more than 34 percent. That was slightly more than $2 billion in a record year in which MOB sales reached almost $6 billion.

“This is an interesting and incredible period in which medical office is becoming much more accepted and more in demand, which leads to a broader base of investors becoming interested, and we're watching this happen in real time,” Berman says.

The trend toward a greater proportion of portfolio sales probably isn't all that unexpected as the MOB sector moves through its product life cycle. But what might be surprising is who has been doing the selling.

In the early and mid-2000s, most investors reasonably anticipated that the largest owners of MOBs – hospitals and health systems – would also be the biggest sellers. Monetizations of non-core real estate assets, or sale-leasebacks as they are called in most other CRE sectors, seemed like a win-win that would surge in popularity – unlocking capital for healthcare providers while opening new opportunities for investors.

But it hasn't worked out that way. Although there have been a number of hospital-driven monetizations, sales by developer/owners have accounted for twice as much MOB portfolio sales volume. Since RCA began tracking MOB sales in 2001, developer/owners have accounted for 56% of total portfolio sales volume, with healthcare providers a distant second at 28%. The remaining 16% of MOB portfolio sales volume is attributed to sales by investors.

It makes sense that developer/owners have been the big sellers, Berman says, because many hospitals and health systems sell their MOBs only “episodically” – often when other sources of low-cost capital have dried up. At the same time, many developer/owners have undoubtedly decided to capitalize on the growing demand and rising prices for MOBs in recent years, she notes.

John Mugford is the Editor of Healthcare Real Estate Insights™, the nation's first and only publication totally dedicated to covering news and trends in healthcare real estate development, financing and investment. For more information, please visit www.HREInsights.com.