KINGSLEY INSIGHT
>> September 2008
INSIDE THIS ISSUE
Healthcare Real Estate: No Longer a “Niche”
Not very long ago, healthcare real estate was the newest target for investors seeking high returns on a relatively unfamiliar product. Those days are now in the past, as major REITs and investment managers have moved into this sector in a big way. To many investors, healthcare real estate is now viewed as an essential piece of a core portfolio.
Consider the following facts that underscore the institutionalization of healthcare real estate:
- Through August, healthcare REITs are up 10% on a YTD basis, outperforming other real estate securities (source: Real Estate Portfolio)
- Stock analysts, such as Stifel and Nicolaus’ Jerry Doctrow, are now examining healthcare independently of other real estate equities (source: CNBC stock blog)
- For the second straight year, institutional plan sponsors rate healthcare assets as more attractive investment targets than traditional office, industrial, and retail assets (source: Institutional Real Estate, Inc. Plan Sponsor Survey)
- Satisfaction levels among tenants in medical office buildings, while still below levels at Class A office buildings, continue to trend upward as physicians become more accustomed to occupancy in buildings that have become professionally managed investments, as opposed to hospital recruiting tools (source: Kingsley Index)
These are just a few of the trends accompanying a major shift in the way that the industry is looking at health care real estate. Increasing specialization in asset and property management, leasing, underwriting and benchmarking tools for the sector means that investing in medical real estate is no longer an inviting proposition for the novice.
How powerful is your company’s brand? The merger and acquisition activity
involving various
branded apartment REITs over the past couple of years has continued to fuel the debate on how valuable a brand can be. It is vital to know the answers to the following questions in this business environment: Is your company’s brand helping to attract and retain customers? Are customers committed to your brand?
Kingsley Associates’ research with leading multifamily firms across the United States indicates that brand reputation does play a role in attracting and retaining residents. In fact, one in every six residents indicates that the brand reputation of the community operator was a factor in selecting their current apartment.
Additionally, residents who are originally attracted to a community because of its brand reputation are also more likely to be satisfied overall and more likely to renew their lease. The only other marketing factors that are as powerful of an indicator of satisfaction are price / value and community management service.
BOMA & Kingsley: New Partners on the EER Program
Kingsley Associates is pleased to report that BOMA International has selected Kingsley as its exclusive research partner for its flagship benchmarking publication, the Experience Exchange Report (EER). Through this collaboration, BOMA and Kingsley will introduce a number of new product enhancements in the coming year.
The EER, or “BOMA Book” as it’s known to many in the industry, will move online, allowing users to search a Web-based tool for detailed operating income and expense analysis that has historically been available only in book or CD-ROM formats.
“We couldn’t be more thrilled about the opportunities this collaboration will afford,” noted BOMA International Chair, Chief-Elected Officer Richard D. Purtell, who is also a portfolio manager at Grubb and Ellis Management Services.
To learn more about this collaboration, please visit: http://www.kingsleyassociates.com/pdf/KA_BOMA_EER_Press_Release.pdf
How loyal will your clients and investors be during these uncertain economic times?
How the market views your organization can be a central determinant of your success, particularly in a tightening economy. By gathering feedback from your key stakeholders now, your management team can chart a course for business success.
Contact us to learn more about our investor and client satisfaction programs.