EnTrust Realty Advisors, an affiliate of The Alter Group, recently established a new division called EnTrust Healthcare Properties, which focuses exclusively on buying and managing medical office buildings and other healthcare assets around the country. Ray Braun, the division’s managing principal, recently discussed how EnTrust Healthcare Properties will serve the needs of both hospital systems and institutional and private investors, during a time when medical properties are becoming the premier asset of commercial real estate.
Q. What prompted your firm to establish this division?
If you look at Alter over the years, it certainly has been very prominent on the development side. It’s got a very strong asset management and property management group. This kind of allows them to do acquisitions that they normally are not in the practice of doing on the medical side. They certainly have done a lot of medical developments over the years, and what we have found is that when you have a complete package where you can do acquisitions, leasing, management and development, we’re much more attractive to those who may be interested in selling their real estate.
Q. What will be the responsibilities of the division?
Basically we’re going to build a portfolio where we can access good, long-term investments for us and our partners and have more access to development and value-add transactions. With healthcare being more than 17 percent of the GDP out there, it’s really a sector that can’t be ignored. It makes a lot of sense for us to have more of a focus on this sector.
Q. Who will the division serve?
The division will serve our investors and also will help The Alter Group because they could potentially be an investor in some of the developments that we come across. We may have some outside investors as well.
Q. Why is there a need for this service?
I think we fill a niche. There certainly are a lot of entities out there that can buy medical real estate, but maybe 10 percent of the medical real estate in this country is traded. There’s still a fairly large supply, and with all the uncertainty out there in healthcare and the hospital systems trying to figure out ways to strengthen their balance sheets, we believe that you will see an increase in activity. We’re starting to see that already. In speaking with some of the brokers who focus on this sector, they are seeing a little bit more demand from groups that want to sell their real estate. So we think we fill a little bit of a void.
Q. What is prompting the growth in the healthcare real estate market?
It really just comes down to demographics – the aging baby-boomer population that is getting older. As I mentioned, the GDB is expected to go from 17 to 20 percent into healthcare as the demand increases just from the demographics alone.