Research - NOVEMBER 18, 2021

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Cap rates for net-lease medical properties compress significantly

by Andrea Zander

In the third quarter, national asking cap rates in the single-tenant medical sector compressed to 5.95 percent, according to The Boulder Group in its 2021 Net Lease Medical Report. This represented a 55-basis-point decrease when compared with the prior year.

“An increased investor allocation for medical properties was a primary factor in cap rate compression,” said Randy Blankstein, president, The Boulder Group. “Additionally, strong investor demand put downward pressure on cap rates in the sector.”

The net-lease medical sector was previously priced at a significant discount to the overall net-lease sector since 2017. However, in the third quarter of 2021, net-lease medical properties were priced at a four-basis-point premium to the overall net-lease sector, following a year of significant compression. Lower price point net-lease medical assets provided an opportunity to investors when compared with the net-lease retail sector. In the third quarter of

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