Kleinberg Kaplan’s Real Estate Practice is one of the nation’s premier providers of legal services relating to Medical Office Buildings. We represent clients engaged in the development, acquisition, sale, leasing and financing of medical office buildings. Our attorneys represented the seller in the largest portfolio sale of medical office buildings in the U.S. in 2012. We also represented that client as an equity partner in one of the largest medical office building developments occurring in 2013.
The medical office building (MOB) market has been one of the bright spots in the generally depressed real estate economy in recent years. This is the result of several factors, including the effect of the Patient Protection and Affordable Care Act (PPACA) which will result in expanded access to healthcare and thus an increased demand by medical service providers for suitable medical office space, changes in the way healthcare is delivered with the shift to more sophisticated outpatient treatment that previously was treated within hospital facilities, changes in demographics resulting in increased demand for treatment from a growing and greying population, rapid advances in medical technology creating demand for new value-added medical services, and the current trend of direct employment of doctors by hospitals.
All of this dynamism in the healthcare industry has created a boom in MOB development and refurbishment, as well as the conversion of existing properties for MOB uses. The demand for MOBs is expected to continue to rise driven by the factors set forth above. As construction tends to lag demand in a growing market, MOBs currently enjoy healthy occupancy rates, which provide real estate investors with opportunities to invest in buildings providing good cash flow and returns that have the added benefit of being readily-financeable.
The MOB market, as it currently exists, is varied and diverse, with facilities ranging from buildings that house the traditional “doctors’ offices” to outpatient surgery centers, ambulatory care centers with MRI and CT services, geriatric care centers, on-demand diagnostic care centers, primary outpatient service centers, and home health-care delivery systems. MOB transactions often require complex involvement among many different interests, including those of the associated hospital, the municipality, the community, the physician and service provider tenants, the investors, the developer and the lender. A successful transaction requires sensitivity to these interests as well as skill in balancing them.
We represent investors and developers in the acquisition, development, ownership and leasing of MOBs, as well as in loan transactions on behalf of the borrower. We are aware of not only the legal issues that present themselves in each transaction, but also the business issues that clients are most concerned about. We work with our clients to create unique investor-friendly solutions that are practical and appropriate for the transaction in question.