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Medical Office Building (MOB) Valuation Trends 2024

Our primary focus is on compiling data related to valuations and M&A activity for healthcare operating businesses. However, we also track real estate acquisition activity for a handful of REITs who disclosed financial information like gross capitalization rates and unlevered net yields from their transactions publicly. This data, which is published in the Scope Research Healthcare Real Estate Valuation Database, can be helpful for ballparking real estate values and lease rates for medical office buildings, inpatient facilities, and specialty outpatient facilities like ASCs, dialysis centers, imaging, and radiation therapy facilities.

  • Gross Capitalization Rate: Annual lease rate divided by purchase price.

  • Unlevered Net Yield: Funds from operations (FFO) divided by purchase price.

Gross Capitalization Rate Trends in MOB Acquisitions

Looking at MOBs specifically, gross capitalization rates in our sample ticked up slightly in 2018 and 2019 before declining alongside plummeting interest rates in 2020 and 2021. The median gross capitalization rate for MOBs remained in the 8% to 8.8% range between 2020 and 2022, before increasing sharply to 10.6% in 2023. So far in 2024, gross capitalization rates have declined back to 9.4%, but the sample size is very small as of this writing.

Healthcare real estate capitalization rate trends
Medical Office Building Gross Capitalizations Rates

Unlevered Net Yield Trends in MOB Acquisitions

Unlevered net cash yields, which factor in cash operating expenses, actually remained steady from 2017 all the way through 2020 before declining in 2021. Net yields then increased sharply in 2023 to the highest level since at least 2017, with a median unlevered net yield of 6.6%, up from the 5.1% to 5.9% range between 2017 and 2022.

Healthcare real estate capitalization rate trends
Medical Office Building Unlevered Net Cash Yields

About Scope Research

The Scope Research Healthcare Real Estate Database currently has financial details for 390 healthcare real estate deals going back to 2016. This database can be purchased individually and is included in our affordable annual subscriptions along with access to all of our healthcare M&A databases and segments, updated continuously.

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