Catalyst Healthcare, Heitman Launch $300M JV

July 22, 2024

Facilitated by Newmark, the new venture will fund the development of health-care properties.

Catalyst Healthcare Real Estate and Heitman have formed a joint venture to develop $300 million in health-care properties nationwide, including medical outpatient buildings, orthopedic centers and inpatient rehabilitation facilities. Newmark facilitated the venture.

Newmark has arranged a strategic joint venture between Catalyst Healthcare Real Estate and Heitman to fund a $300 million development pipeline of health-care properties, including an Andrews Medicine center. *Image courtesy of Newmark*

The partners will first fund the development of seven properties, completed or in the works, totaling nearly 500,000 square feet in five states. The properties will count such organizations as Ochsner Health System, Andrews Medicine, University of Mississippi Medical Center and PAM Health as tenants.

Nonprofit Ochsner operates 40 medical facilities in Louisiana, while PAM operates 70 long-term acute care hospitals and medical rehabilitation hospitals, as well as wound clinics and outpatient physical therapy locations, in 22 states. Andrews Medicine is an orthopedic and sports medicine specialist. In 2022, Catalyst inked a deal to be the real estate developer for Andrews Medicine.

Heitman currently has about $50 billion in assets under management as a participant in the global real estate property and capital markets. Its real estate investments through private equity, debt and publicly traded real estate securities represent a diversified portfolio.

Catalyst is a national health-care real estate development and investment firm. Newmark’s Healthcare Capital Markets Group advised both Catalyst and Heitman, on the establishment of the joint venture, and represented Catalyst on the development pipeline capitalization. Newmark’s Ben Appel, John Nero, Jay Miele, Michael Greeley and Ron Ott worked on the deal.

A resilient asset class

MOB fundamentals remain strong and construction starts remain slow, which points to increasing occupancy and rental rate growth, according to JLL’s most recent report on the sector. That dynamic will drive increasing allocation of capital from other asset classes.

Moreover, strong fundamentals are expected to remain the norm in medical-oriented real estate assets, especially due to an aging population that requires more care. While the population of Americans over 65 composed only 18 percent of the population in 2021, they drove 36 percent of health-care spending, JLL noted.

More specifically, they are increasingly getting that care in outpatient settings—which are typically medical office buildings. Inpatient volumes are anticipated to decline, but outpatient volumes will grow, JLL forecasts.