Jeff Axley of Ridgeline Capital Partners joins Chris to break down medical office buildings, one of the healthcare real estate niches more LPs are starting to pay attention to. Jeff walks through how his background across office, multifamily, development, restructuring, industrial, and master-planned communities ultimately led him to focus on medical office as a more durable, recession-resilient asset class.
Chris and Jeff start with the basics: what medical office buildings are, how they differ from hospitals, senior housing, skilled nursing, assisted living, and other parts of the healthcare real estate landscape, and why outpatient care has become such an important long-term trend. Jeff explains why medical office can behave like traditional office in some ways, but with important differences: longer leases, triple-net structures, higher tenant improvement costs, more specialized build-outs, and stickier tenants who are much harder to move once they have expensive medical infrastructure in place.
They also dig into the current market opportunity. While traditional office and multifamily have faced major headwinds, medical office occupancy and rents remain strong, with supply typically built to match tenant demand rather than speculative growth. Jeff explains why buying existing medical office at a meaningful discount to replacement cost can create a protected basis, how rising construction costs support the value of existing buildings, and what LPs should look for when evaluating MOB underwriting.
Key takeaways:
What medical office buildings are and how they fit into the broader healthcare real estate landscape
Why outpatient care, aging demographics, technology, and reimbursement pressure support long-term MOB demand
How medical office differs from traditional office through lease structure, tenant improvements, plumbing, foot traffic, and tenant stickiness
Why MOB supply is typically more controlled than multifamily or traditional office supply
How triple-net leases help owners pass through operating expenses, while still requiring competitive cost management
Why replacement cost matters and how buying existing buildings below new construction cost can create downside protection
What LPs should watch in MOB deals, including going-in cap rate, cost of financing, positive leverage, stabilized yield on cost, and exit cap assumptions
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The content of this podcast is for informational purposes only. All host and participant opinions are their own. Investment in any asset, real estate included, involves risk, so use your best judgment and consult with qualified advisors before investing. You should only risk capital you can afford to lose. Past performance is not indicative of future results. This podcast may contain paid advertisements or other promotional materials for real estate investment advisers, investment funds, and investment opportunities, which should not be interpreted as a recommendation, endorsement, or testimonial by PassivePockets, LLC or any of its affiliates. Viewers must conduct their own due diligence and consider their own financial situations before engaging with any advertised offerings, products, or services. PassivePockets, LLC disclaims all liability for direct, indirect, consequential, or other damages arising out of reliance on information and advertisements presented in this podcast.
