Providence St. Joseph Health has partnered with Newmark Knight Frank to optimize its real estate portfolio and unlock capital currently tied up in real estate investments. The brokerage firm has identified non-essential assets in Alaska, Washington, Oregon, Montana and California. The asset classes include medical office, industrial, office assets and vacant land. Providence St. Joseph put out an RFP to find a firm with both healthcare and multi-market experience, and hired Newmark late last year to execute the optimization strategy.
“Providence St Joseph Health's senior leadership deserves a lot of credit in making real estate a priority focus in determining whether if necessary to own, lease or sell. They analyzed their entire real estate portfolio and determined which assets fell into the category of non-core and non-strategic to the health system,” Garth Hogan, executive managing director of healthcare West at Newmark Knight Frank, tells GlobeSt.com. “Our NKF team weighed in with experience in handling similar assignments and assisted in creating the final list, completed in December 2018, which consists of nearly 60 assets.”
The current market dynamics motivated Providence St. Joseph Health to monetize portions of its portfolio now. We're seeing properties sell at record prices. So it's the best time to maximize the values and unlock capital,” says Hogan. In addition, the healthcare industry is in need of liquid capital. “In healthcare, capital is precious right now. Nearly every health system and hospital has plans for rolling out a new delivery model, technology and improved access to care,” adds Hogan. “To make this happen requires capital. Selling real estate can help prevent going further into debt in the bond market.”
To execute the strategy, Newmark has partnered with Ten-X and plans to market the properties through the online platform. “NKF puts a high value on cutting-edge technology,” adds Hogan. “Ten-X Commercial's streamlined, end-to-end transactional platform armed our team with the technology and flexibility to market a complete portfolio of assets as well as showcase each property. The dashboard gives us and the client visibility into all activity in the portfolio real time, including important data on prequalified buyers. In this way, we can do more with less. We are able to quickly mobilize and market our healthcare clients' multi-market and multi-state assets.”
With health providers in need of capital and real estate pricing at peak levels, this could become a widespread trend. “Health systems and hospitals are beginning to realize that real estate is necessary, but ownership and management is unnecessary and not part of their core business,” says Hogan. “As in any industry, the availability of capital that can be redeployed into core business strategies is ideal, rather than relying on bonds and the debt markets.”
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Kelsi Maree Borland
