We often discuss the premium associated with MOBs located on hospital campuses compared to those situated off-campus. The difference in cap rate can be significant. However, when examining MOB inventory by type of building owner, the distribution of on-campus MOBs varies greatly. Each owner category displays a distinct preference for on-campus versus off-campus locations. Hospitals clearly prefer to own properties located on their campuses. In fact, nearly half of all MOBs owned by a hospital or health system are situated on the hospital campus. REITs exhibit a similar bias. Among the MOBs owned by REITs, 46% are located on a hospital campus.
The distribution changes when we look at private investor portfolios, which tend to favor properties located one mile or more away from the hospital campus. In fact, on-campus properties comprise only 11% of their combined portfolios, indicating that owning or buying properties on campus may either not be a priority or possibly not preferred. Independent provider groups share similar preferences, often choosing to establish their practices away from the campus.
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