Much of the healthcare industry may need to monetize its real estate assets, according to a Savills blog post by Nate Brzozowski, The culprit is accumulated excess debt.
Just as many in commercial real estate stocked up on cheap debt and high leverage before and during the pandemic, so did many in healthcare. The reasons were slightly different, though still had similarities.
In CRE, investors and developers wanted to put other people's money to work while pulling out as much cash as possible to fund other projects. In healthcare, the expansion was in the form of mergers and acquisitions to develop operational scale. The theory was that the bigger the provider, the more it could save in costs by distributing them across a larger base of business, making everything more profitable.
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