In the third quarter of 2018, single-tenant net lease medical properties recorded a 22-basis-point year-over-year increase in cap rates, according to The Boulder Group’s latest Medical Sector Net Lease Report. The cap rate for single-tenant net lease medical properties priced below $10 million went from 6.25 percent in the third quarter of 2017 to 6.47 in the third quarter of 2018.
The source of the increase is the rise of for-sale properties fitting a certain profile. “Investors continue to demand new construction medical assets as a primary acquisition target, which leads sellers of lower quality assets to add supply to the market,” Jimmy Goodman, partner with The Boulder Group, told Commercial Property Executive.
“Lower quality assets are considered shorter term leased properties, [properties with] tenants with a lack of credit and properties located in secondary markets.” Non-investment grade tenants accounted for 75 percent of the net lease medical sector in the third quarter, per the report.
More info at Commercial Property Executive:
Acquisition Yields Rise for Single-Tenant Medical Assets