Physicians Realty Trust CEO: Medical Office is a ‘Real Winner’
Physicians Realty Trust (NYSE: DOC) had a newsworthy 2016, filled with record-breaking transactions and revenues that beat expectations. But this doesn’t mean the company wants to slow down in 2017.
That’s because it’s “an exciting time” for the medical office industry, John Thomas, the president and CEO of the Milwaukee-based health care real estate investment trust (REIT), said in a video interview with REIT.com. This would have been true regardless of the results of the latest Presidential election, Thomas suggested.
“We think medical office is a real winner because of demographics,” Thomas said. Echoing Ventas, Inc. (NYSE: VTR) Chairman and CEO Debra Cafaro, Thomas suggested that for the medical office building industry, it’s relatively unimportant who won the Presidential election.
“We’ve always thought it didn’t matter who’s in the White House, who’s running Congress,” he explained. “Again, 11,000 people are turning 65 every day—more people need to access health care, not less.”
Still, it’s possible that Trump’s win may slow medical office development.
“There’s not a lot of new development in the medical office space,” Thomas said. “The results of the election may slow some new development down.”
U.S. Speaker of the House of Representatives Paul Ryan has a plan—“A Better Way”—that will likely serve as the outline of “whatever comes out of the new White House,” Thomas predicted. Physicians Realty Trust also has “a good ear and a good voice” with respect to what any new decision makers are thinking in Board Chairman Tommy Thompson, who is also a former U.S. Department of Health and Human Services (HHS) secretary and Wisconsin governor.
In the months leading up to the November election, Physicians Realty Trust was especially busy with acquisitions.
“This year we did the largest transaction ever in the medical office space,” Thomas noted, referencing the REIT’s approximately $700 million purchase of buildings from Catholic Health Initiatives this year.
The REIT has had to overcome some obstacles related to this particular transaction.
“In integrating those buildings… we’re trying to deliver a new level of service,” Thomas said. This involves alleviating fears that Physicians Realty Trust will raise rents and that the doctors are going to want to move out, he explained. But the experience will be useful when the REIT looks to purchase more buildings from hospital systems in the future.
“We view that as a customer service we can take to the next hospital and try to convince them to sell us their buildings,” Thomas said.
Watch the full video interview on REIT.com.
Written by Mary Kate Nelson