by recentricrealty | Aug 25, 2020 | Capital Markets
Every day in the world of global economics, foreign currencies compete for global investment opportunities in an ever-complex web of government rules and tariffs which determine the winners and losers across the globe.
Why and how a sovereign nation chooses to do business with other countries depends on the strength and stability of each country’s respective currency.
Watch the replay of the Recentric Investor Series Webinar on this topic – September 24, 2020.
Today, the US dollar is considered the “reserve” currency in the world. The US dollar began its global reserve status in 1921, after Britain’s pound sterling lost its status in 1920 (Source: Double Line). Being the “reserve” status for a currency brings lower exchange rate risk and greater buying power.
The downside is that artificially low interest rates and out of control deficit spending can spur asset bubbles.
This is now the multi-trillion dollar question: What happens when the United States government can no longer continue to spend beyond its means?
The United States government has adopted a bailout mentality since the 2008 great recession with the start of QE1 (quantitative easing). Since 2008 the US dollar money supply (M2) has increased by roughly 157%. On an annual basis, this represents a true inflation rate of the US dollar of over 13% per year. By comparison, Venezuela has increased their money supply 225% in a short 18 months causing hyper-inflation and a destabilization of their government.
Prolonged US dollar weakness against the major trading partners’ currencies, accelerating budget deficits brought on by a government bailout mentality, and continued quantitative easing by the US federal reserve are all causing investors to question how much longer the US dollar will be the reserve currency of the world.
You may be asking yourself: “What can I do?” There are steps you can take now, that may provide a life preserver for you and your family in the future. As with all investments, please discuss with your financial adviser before making any decisions to invest.
Watch the replay for the Recentric Investor Series Webinar on this topic – September 24, 2020.
Buy Precious Metals
Initially in 1941 when the Bretton Woods Agreement was created, the US dollar was fixed to gold at $35 US dollars to an ounce. Adjusted for inflation that same ounce would be worth $498.08 in today’s dollars. Since gold was removed as the backing for the US dollar in 1971, the total number of US dollars has grown without any checks and balances.
Today, the value of an ounce of gold is over $2,000 US dollars. As a result, investors are concerned that any USD dollar denominated assets may depreciate as the dollar weakens. Not surprisingly, the headlines in the WSJ on 8-18-2020 reported that Warren Buffet, a long-time skeptic of gold and silver investments, invested over $500 million into gold mining company, Barrick Gold.
Buy Commercial Real Estate
As demand begins to surge for goods and services in the post-COVID-19 shutdown, this sustained surge in consumer spending may be the trigger which causes high inflation, according to Michael Levy, chief economist at Berenberg Capital Markets.
Should inflation start to accelerate, commercial real estate provides a strong hedge. As the price of goods and services increase, so does the ability to charge higher rents in keeping up with inflation. Provided these leases are structured correctly, there is a tremendous opportunity to keep up with inflation, and also accelerate the paydown of any fixed interest rate commercial debt on these assets.
Recentric is currently heavily weighted in health care real estate in part for this reason.
Buy Assets Backed By More Stable and Fiscally Responsible Countries
Any USD dollar denominated asset such as pensions, stocks, annuities, and bonds will be directly affected by a weaker dollar and higher inflation. In fact, the world’s strongest currency against the USD is the Kuwaiti Dinar. The exchange rate is currently 1 KWD = 3.28 USD. Consult with an investment advisor who specializes in international investments and foreign currencies.
As the United States’ global trading partners continue to scrutinize the fiscal policies of our country, the US dollar continues its decline in purchasing power and overall appeal as a safe haven in times of crisis. This debasing of the US dollar domino effect will continue to erode the confidence of international investors.
It is time to start to heed these warnings and prepare for the obvious warning signs.
Contact Us
Contact us today if you’d like to hear more about our overall strategies and opportunities in health care real estate investments.
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Recentric continues to look for development and acquisition opportunities to meet the growing demand for larger, out-patient medical facilities. This strategy allows us to take advantage of the growing need for these facilities and offer new and exciting opportunities to our current and future investors.
by recentricrealty | Aug 19, 2020 | Capital Markets
Thank you to all who joined us for our Recentric Investor Series Webinar on The Impact of COVID-19 on Pediatric Care.
Bill Repichowskyj, Partner at E4H Environments for Health Architecture and Jennifer Arbuckle, Author at E4H, a health care architect firm based in Dallas, TX shared valuable insights about how Pediatric Care Facilities will be impacted post-COVID-19.
About Our Guests
E4H
With over four decades of experience, E4H Environments for Health is committed exclusively to the design of innovative health facilities. As a nationally recognized architecture firm, E4H’s team of future-focused strategists and visionary healthcare architects create flexible, state-of-the-art facilities designed to enhance the well-being of patients, staff, and families.
Jennifer Arbuckle, AIA, NCARB, Leed AP, Partner
Jennifer has nearly 30 years of architectural experience in all types of health facilities. She has guided many projects from initial master planning and programming through design and construction. She has worked on projects across the northeast ranging from Children’s Hospitals such as Blythedale Children’s Hospital to Community Medical Centers.
Bill Repichowsky, AIA, NCARB, Partner
As a partner and design leader for healthcare projects, Bill has over 30 years of experience. He has worked both nationally and internationally on a large variety of healthcare project types and sizes, ranging from academic medical centers to outpatient clinics for health systems. His pediatric design work includes Northwell Health’s Cohen Children’s Medical Center of New York.
Topics Covered
- What are the unintended consequences impacting pediatric care as it relates to their physical space compared to delivering care pre-COVID-19?
- Are we seeing discussions of consolidation of smaller lease spaces, and going with one larger space to streamline operations?
- As it related to tele-health, are practices needing more lease space to accommodate individual doctors needing their own recording space?
by recentricrealty | Aug 10, 2020 | Capital Markets
Please join us and register for our next webinar on Thursday, August 13th at 4 PM.
I will be interviewing Bill Repichowskyj, Partner at E4H Environments for Health Architecture and Jennifer Arbuckle, Author at E4H, a health care architect firm based in Dallas, TX.
We will cover topics like:
- What are the unintended consequences impacting pediatric care as it relates to their physical space compared to delivering care pre-COVID-19?
- Are we seeing discussions of consolidation of smaller lease spaces, and going with one larger space to streamline operations?
- As it related to tele-health, are practices needing more lease space to accommodate individual doctors needing their own recording space?
Be sure to register. If you cannot make the scheduled time, you will receive a link to watch a recording at your convenience.
by recentricrealty | Jul 15, 2020 | Capital Markets
If you have taken your child to the doctor in the past few weeks, you have probably noticed a few changes to your pediatric care experience. Of course, everyone is wearing a mask, entering patient information onto their phone and staying 6 feet apart. These are obvious and necessary precautions to keep everyone safe.
But did you notice that the HVAC filters have been upgraded utilizing a HEPA filtration and Air Purification System? Or that UV light technology has been installed at each of the entrances to the building? Or perhaps you didn`t experience a waiting room at all. You simply received a text on your phone with instructions to head directly to a specific exam room.
Nationwide, there are about 60,000 general pediatricians and 30,000 pediatric subspecialties, according to the American Medical Association. The success of these practices is driven largely by demographics. The profitability of each pediatric practice is based on efficient operations and reimbursement rates.
The business of pediatric care is facing some headwinds with COVID-19 and more direct competition, but appears to be weathering the storm and continuing to grow.
Here are some of the trends affecting these practices:
Medical Innovations Within Pediatric Care
COVID-19 has dramatically accelerated medical innovations for treating children. The telemedicine industry is a prime example of a technology fast track which helps to reduce unnecessary hospital visits, keep children patients from spreading disease and allow the pediatric clinics to stay under capacity as a result.
Not all states currently allow telehealth treatments for children; however, the American Academy of Pediatrics is working hard at the Federal level with Medicaid/Children`s Health Insurance Programs (CHIP) to reduce the barriers and increase health insurance coverage. Children will at some time still need to physically go see their doctor, and technology is coming to the rescue.
To encourage innovation in this area, the Nation Capital Consortium for Pediatric Device Innovation has created a competition focused on COVI-19 related pediatric medical devices to improve the diagnosing and treatment of children during a pandemic. The winners receive a grant of up to $50,000 and will be announced July 20th, 2020.
Pediatric Planning and Design Considerations
Pediatricians diagnose and treat illnesses and injuries, provide immunizations and monitor patient`s growth to adulthood. Some subspecialties include pediatric cardiology, pediatric critical care, pediatric gastroenterology, pediatric hematology/oncology and neonatology.
The Planning and Design considerations for pediatric care include waiting areas, patient throughput, staff workflows and overall infection control. Distracting children with games that control touching are quickly being implemented in children`s waiting rooms. Virtual games allow kids to stay busy during their wait without spreading germs. COVID-19 driven innovations such as thermal temperature screening cameras, enhanced filtrations systems and ultraviolet light strategy are all being deployed to kill germs and provide a safer environment for children.
The Future of Pediatric Care
Pediatricians are facing more direct competition with nearby walk in clinics, which include chain pharmacies and mass merchandisers, such as Pocono Community Pharmacy. The retail clinics offer limited serviced such as immunizations and basic treatment, which is causing pediatricians to stay open on weekends and evenings.
However, the outlook for pediatric growth is strong. According to Dunn & Bradstreet, US consumer prices for medical services, an indicator of profitability for pediatric offices, rose 5.1% in November 2019 compared to the same month in 2018. And total US revenue for physicians offices, including pediatrics, rose 3.1% in the third quarter of 2019 compared to the previous year. The business of treating children is facing some headwinds with COVID-19 and more direct competition, but appears to be weathering the storm and continuing to grow.
Recentric continues to look for development and acquisition opportunities to meet the growing demand for larger, out-patient medical facilities. This strategy allows us to take advantage of the growing need for these facilities and offer new and exciting opportunities to our current and future investors.
by recentricrealty | Jun 25, 2020 | Capital Markets
Recentric hosted a webinar this month with a focus on the topic, Is Health Care Real Estate “Pandemic Proof”?
I interviewed Abby Bartolotta, a seasoned commercial real estate agent in Denver with a track record of results and a wealth of information.
In case you missed it, you can watch the replay here.
Here are a few points we discussed:
- An enormous amount of cash is being raised from institutional, private equity and individual investors indicating a bearish outlook for the remainder of 2020.
- Behavioral Health is accelerating as an acceptable form of care amidst the pandemic and social unrest spreading across the globe.
- Medical office buildings have been stress tested like never before exposing the business practice flaws of their medical group tenants.
Let us know if you have any other questions after watching this interview. We’d love to continue the dialogue.
Be sure to keep an eye out and sign up for our webinar next month. Even if you are not available for the specific scheduled time, you will receive a link for the replay to watch at your convenience, so make sure to register.
by recentricrealty | May 29, 2020 | Capital Markets
If you happened to acquire a new real estate asset in late 2019, (which Recentric did), you may be wishing you could turn back the clock and change that decision. The proforma and in particular, the sensitivity matrix that you prepared to justify your acquisition did not have a check box for “Pandemic”. As a result, seeing your newly adjusted projections for 2020 and 2021 will now likely be a “brace for impact” moment.
Unless of course, you invested in health care real estate. History proved during the 2008/2009 global financial crisis that health care real estate performed the best out of all product types in commercial real estate with total returns decreasing by only 5%, vs. the second worst product type, hotels decreasing by 41%. (NAREIT)
The business of running practices
When it was clear the government would start to shut down the economy, Recentric quickly implemented a rent deferral protocol in late March and early April to handle the influx of rent deferral requests from our tenants. A standardized response was necessary to objectively respond to those tenants who were legitimately looking for relief.
This brought to light those tenants who prepared for a downturn by having existing lines of credit, a strong connection with their patients, and solid lender relationships. All of Recentric’s tenants across our portfolio are current on rent through May 2020 with the exception of one practice, who ultimately did not receive any PPP funds. These shocks to any business expose the business’ inherent flaws, and it appears that the large majority of health care practices are run well.
Debt deferment flexibility
The ability for a lender to provide relief to a property owner largely depends on their type of loan structure and source of funds. Of the total $8 trillion commercial real estate market, commercial banks represent 49% of the debt market. (CBRE, 2018). These are typically portfolio lenders who can internally defer the interest portion of the loan for 3-6 months. Regional Colorado banks have proven to be very responsive and accommodating to this crisis.
Life insurance companies which represent roughly 10% of the debt market, lend their massive cash reserves to commercial real estate to boost their bond returns. When it comes to debt deferment and the government shutdown, these types of lenders show no flexibility on the interest portion, and only consider deferring the principal portion of the loans.
Pent up demand for health care
As an unfortunate result of the government shutdown, massive amounts of patient harm are occurring due to missed routine health care. According to a recent letter sent to the White House by 600 concerned physicians, doctors have seen increases in the number of patients missing routine checkups that could detect issues like heart problems or cancer, increased substance and alcohol abuse, and greater financial instability that could lead to “poverty and financial uncertainty,” which “is closely linked to poor health.”
This demand will eventually overwhelm the health care system with patients looking to make up those missed appointments and procedures. As a result, net revenue for health care systems and practices will return to normal over the next 6-12 months.
While we are still only a few months into the government induced coma on our economy as a result of the COVID-19 global pandemic, the preliminary evidence we are seeing in the health care marketplace is that health care real estate will once again, be just fine.
Recentric Realty Capital: Recentric continues to look for development and acquisition opportunities to meet the growing demand for larger, out-patient medical facilities. This strategy allows us to take advantage of the growing need for these facilities and offer new and exciting opportunities to our current and future investors.
