REAL ESTATE NEWS

Appetite in CRE investment is slowly starting to improve. In fact, healthcare-focused REIT Sila Realty Trust, months after going public, is noticing an uptick in outpatient medical volumes, in particular.

This comes after deals, in general, have been down "pretty meaningfully" over the past 12-24 months, according to Chris Flouhouse, executive vice president and chief investment officer at the firm, who will be a speaker at GlobeSt.'s annual healthcare panel, taking place this year from December 2-3 in Scottsdale.

THE NEED FOR CAPITAL

"With the health systems, that's something that, we feel is picking up," he said.

"From a developer perspective, given some of the capital constraint banks have had since, really, the beginning of 2022, development has been muted, so we're seeing opportunities again to kind of fill that void."

Flouhouse added that there is a "need for capital in the marketplace."

"We're starting to see a need to reinvest capital in businesses, and/or debt repayment," he explained.

"We are seeing an increase in developers looking for capital, similar to the deals that we just announced to kind of play out because supply in the market has been fairly muted because of higher building costs, [and] the capital-constrained environment."

So far this year, according to Flouhouse, Sila, which invests in a range of healthcare assets except for skilled nursing and senior housing, has completed roughly $180 million worth of deals.

THE SUNBELT AND OPPORTUNITIES

While Sila keeps a national footprint, the bulk of the REIT's properties (65 percent) are located in the Sunbelt. Right now, Flouhouse sees CRE opportunities "across the board." But fundamentals are also important, rather than just specific regions.

"We're focused on really making sure that we're aligning ourselves with the right operators in the right health systems, with solid credit," Flouhouse emphasized.

Sila going forward will look to continue to play offense on the acquisition front, which is $165 million year-to-date approximately. Most recently, it entered into two mezzanine loans for the development of inpatient rehabilitation and behavioral facilities.

"We have the ability to play the whole capital structure including structuring preferred investments, and mezzanine debt. ," Flouhouse said.

"For us, the important thing is being able an option to purchase upon completion."

Also, as we head into 2025, Flouhouse expects the momentum for deals to continue in the healthcare space including for outpatient medical volumes.

"We would expect that the level of healthcare acquisition market activity would exceed where we have been over the past four quarters from a trailing perspective," he concluded.

Source: GlobeSt/ALM