MEDICAL REAL ESTATE: TRENDS IN THIRD PARTY DEVELOPMENT FROM NICHE TO MAINSTREAM

Cain Brothers, Inc., August 8, 2005

Hospitals and health care systems have embraced third party ownership and management of real estate, because it can preserve capital resources for acute care needs, eliminate the potential conflicts that arise in the landlord/tenant relationship between hospitals and referring physicians, and minimize the potential legal and regulatory challenges associated with leasing space to referring physicians. High profile transactions to convert existing medical office buildings and other non-core medical real estate to third party ownership and management have focused public attention on monetization over the past few years. Hospitals and systems are now beginning to use third parties to develop and own new medical real estate projects. This trend has received far less public attention than monetization, but it has the potential to have a more profound impact on capital structure decisions for hospitals and health systems. BY: CAIN BROTHERS & COMPANY, LLC New York, NY, Chicago, IL, Indianapolis, IN, Houston, TX, San Francisco, CA www.cainbrothers.com (PDF format - click here to download the latest version of acrobat reader)