STOCK MARKET WATCH -- Tuesday, 14 January 2014

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20. Obamacare Packing Medical Offices Spurs Deal Surge

http://www.bloomberg.com/news/2014-01-14/obamacare-packing-medical-offices-spurs-deal-surge.html

Obamacare and an aging U.S. population are spurring purchases of medical office buildings, with investors sending prices to a record on bets that Americans’ demand for health services will increase.

Sales of properties leased by doctors and other health-care providers reached $6.67 billion in 2013, the second-highest total in 13 years of data-keeping by Real Capital Analytics Inc. Buyers including real estate investment trusts paid an average of $270 a square foot, up from $262 in 2012 and the most on record. The increase partly reflects deals for newer buildings with the latest technology, according to the research firm.

“It’s a really competitive space,” said Steve Sikes, manager of real assets at the Alaska Retirement Management Board, which is considering buying $150 million to $200 million of medical offices in what would be its first direct purchases of the properties. “Hopefully there’s enough of these out there for everyone.”

The buildings generate steady income from multiyear leases and offer higher investment returns than other types of commercial real estate. Buyers expect occupancies to climb along with the need for medical services as baby boomers age and more people get insurance under the Patient Protection and Affordable Care Act. More than 975,000 Americans signed up in December to buy plans under the law, which guarantees health coverage to all residents and penalizes those who aren’t insured.