WHY MEDICAL
OUTPATIENT BUILDING
INVESTMENTS?
Unlike other real estate sectors, new MOB developments are primarily driven by the demand from physician groups or medical care systems. This inherent characteristic restricts the availability of new properties, even during periods of strong net absorption, thereby supporting the potential for higher occupancy and income in MOB investments.
Limited supply: STABILITY AND DEMAND
MOB Construction, Absorption, & Occupancy
Top 100 US Markets, 2020 - 2024
Absorption SF Year Over Year
Completed SF Trailing 12 Months
Occupancy Rate Trailing 12 Months
Medical outpatient buildings maintain an average tenant retention rate of 77% - 83%. This high level of stability is significant, as MOBs often become pillars in their communities, serving patients and healthcare professionals for decades
TENANT STABILITY: A PILLAR IN COMMUNITIES
Tenant Retention Rate
Top 100 US Markets, 2020 - 2023
Trailing 12 Months Average Retention Rate
Stable & Durable Income: a winning combination
Well-executed MOBs generate consistent income due to the positive combination of long lease terms and annual rental escalations. Extended lease agreements and annual rental escalations serve to promote longer term financial stability and foster consistent growth in income over time.
Average NOI Yield
Top 100 US Markets, 2020 - 2023
Average NOI Yield Trailing 12 Months
(Chart Sources: Revista Med)
Medical Outpatient Buildings are a non-cyclical, defensive property type offering attractive income and capital appreciation. Learn more about the distinct characteristics of this asset class below.
mob sector features
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Long lease terms with operating expense reimbursement provide protection from increasing operations costs during the lease and capital costs required to retenant the space.
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Contractual annual rent escalations contribute to growing net operating income.
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High costs to build out space require healthcare service providers to invest significantly in their space, leading to higher renewal probabilities.
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Lenders and investors continue to find the healthcare real estate sector attractive, while hospital systems and medical facility developers seek to capitalize on their real estate assets’ value.
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New development is moderated by tenant-led development, meaning little speculative development takes place.
why healthcare real estate?
Healthcare real estate benefits from structural demand drivers for healthcare services that are independent of the broader economy and that support investment in the sector.
A growing &
aging population
Aging US demographics paired with increasing healthcare costs are driving demand for low-cost alternatives to the traditional healthcare model.
As the average age increases so do healthcare expenses.
By 2027, healthcare spending is predicted to be 20% of U.S. GDP.
The shift to
outpatient care
Many healthcare practices are transitioning to outpatient settings in order to provide services at a lower cost and meet the increasing demand for convenient care.
82% of visits to healthcare facilities from 2000-2010 occurred in physician offices, not in a hospital setting.
Since then, outpatient visits have rapidly outpaced inpatient visits.
Total MOB Investment & Acquisition Value
Chestnut Healthcare Real Estate, supported by Chestnut Funds, has invested in or acquired 105 medical outpatient buildings totaling $2.12B in value and nearly 6M square feet over the last 11 years. Collectively, the Chestnut investment team has been involved in nearly 300 Medical Outpatient Building transactions and developments.
MOB Properties Owned
Total Acquisition Value
Powered by Chestnut Funds, Chestnut Healthcare Real Estate acquires and develops middle market class A medical outpatient buildings with the objective to generate income and aggregate a portfolio of well-positioned assets. With a targeted investment approach, we often acquire overlooked assets, leveraging targeted capital deployment to enhance properties.