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Expert Q&A: Kidder Mathews’ Dupuy Chats about Healthcare RE Valuations

Connect Healthcare is coming up October 2 and 3, 2019 at The Resort at Pelican Hill in Newport Coast. More information about the event and registration details can be found here.

With Connect Healthcare 2019 less than a week away, one of our panelists, Michael Dupuy, senior vice president with Kidder Mathews in Phoenix, gave a sneak peak of what the capital markets panel will be discussing during the event.

Read on to hear what Dupuy has to say about healthcare real estate valuations and how tenants are responding to rental rate increases.

CONNECT HEALTHCARE: For 2019, what would you say is a trend you’ve noticed in healthcare capital markets?
DUPUY: We get a call a week from someone looking to rebalance their portfolio by either 1) selling retail and buying medical office or 2) repurposing their underperforming retail to medical office.

CONNECT HEALTHCARE: Let’s talk about rental rates and the direction they’re heading. At what point are healthcare tenants poised to push back on rent? Is that day coming soon?
DUPUY: The credit profile of the “average” healthcare practice has been enhanced by way of mergers and acquisitions. The groups are, generally, getting larger and smarter. Unless the location and building quality are very high, you’ve started to see lots of pushback. Especially, if the tenant represents a significant portion of the property.

CONNECT HEALTHCARE: For several years, on-campus properties were valued higher than off-campus properties. Is that still the case or does it matter anymore?
DUPUY: Seemingly everyone is now receptive to “campus adjacent.” I’d say that it doesn’t matter as much as it did five years ago. We’ve seen really good metrics on off-campus deals.

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