MIAMI—Kayne Anderson has a knack for identifying the best markets to enter for healthcare real estate. The firm also has its finger on the pulse of shifting dynamics, as you read in the first two parts of this series.
For our final installment of this exclusive interview, GlobeSt.com once again caught up with Al Rabil, CEO of Kayne Anderson Real Estate Advisors (KAREA), one of the most active private buyers of healthcare real estate, to find out what's in the firm's secret sauce. You can still read the first two articles in this series: A CRE Opportunity Too Big to Ignore and How to Break Down Healthcare Real Estate Barriers.
GlobeSt.com: How do you identify the best facility locations-to-be for both senior housing and medical office?
Rabil: We seek to identify distressed, mismanaged, or undercapitalized properties and unlock value. For medical office, factors include location, in particular a property's proximity to a major hospital or healthcare institution, demographics of the nearby population, existence of adjacent land parcels, transaction size, barriers to entry—including whether the state has a Certificate of Need requirement—and the structure of in-place leases. For senior housing, factors such as age and financial demographics of the surrounding population, influx of adult children to the area, proximity to hospital/medical center, referral sources, barriers to entry, and location are all considered.
GlobeSt.com: With a market of newly-insured citizens, the healthcare industry has experienced renewed profits. How is this affecting the sector?
Rabil: The sector is flourishing for many reasons, and the increase of insured citizens may be one. Obviously with more people insured, there are more medical appointments, tests and treatment, as well as preventative visits occurring—all of these contribute to the increase demand for outpatient facilities.
GlobeSt.com: How is demographic shift from the “greatest generation” to the “baby boomers” changing the various products?
Rabil: In both senior housing and medical office, we are constantly evolving to accommodate the needs of our residents, our tenants and their patients. We anticipate that as the greatest generation ages out and the boomer generation becomes more a part of our clientele in both sectors, needs and wants will change and we will adapt as necessary. However, many of our projects are anticipating such a shift in the end users.
GlobeSt.com: What is KAREA's competitive advantage in the healthcare related real estate market?
Rabil: Our relationships with best in class partners in both medical office and senior living, as well as our vertically integrated team including experts in acquisitions, asset management, construction and engineering, legal, accounting and marketing, enable us to source off-market deals, negotiate long term leases and maintain effective management of our properties.
The result of this combination is a near or fully-leased, well-managed property that is attractive to prospective residents and tenants and can demand increased prices in the future. This translates to higher returns for our investors and ultimately, an attractive product for disposition.
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