Health care offices in Charleston, elsewhere, are a hot real estate play

Former Mount Pleasant resident Scott Peters is CEO and chairman of Healthcare Trust Inc.

Real estate executive Scott Peters stepped off the golf course and into the doctor’s office in a career transition that began about eight years ago.

What the former Mount Pleasant resident probably didn’t realize at the time was the impact that fast-moving changes in the medical world would have on his new line of work.

“The macro-economic trends of health care are so compelling,” Peters said during a business trip to Charleston last week.

After leaving the Lowcountry around 2006, Peters helped launch and remains the CEO of Scottsdale, Ariz.-based Healthcare Trust of America Inc., which has swelled into a $3.4 billion enterprise that’s among the biggest owners of medical office buildings — aka MOBs — in both the Charleston area and the country. The company went public in 2012 on the New York Stock Exchange. The shares hit an all-time high last month, topping $30, according to Yahoo Finance.

Peters, who was chief financial officer at a Charleston-based golf course investment company for about a decade before heading west, was back in his old stomping grounds Wednesday and Thursday, in part to check out Healthcare Trust’s local holdings.

The company snapped up two of those properties in the past six months, both in Mount Pleasant. The largest deal was the $24.75 million purchase of the 69,000-square-foot Tides Medical Arts Building on Wingo Way, near the base of the Ravenel Bridge.

It followed up that deal with a smaller acquisition a mile or so up the road. The company paid $9.38 million in December to buy East Cooper Medical Arts Center on Hospital Drive, across from Vibra Hospital of Charleston.

In all, Healthcare Trust has plunked nearly $55 million into the local market since 2010, and it has opened a leasing and management office in downtown Charleston. It’s also become a sizable player in the Upstate.

It used to be that an office building was just that, with little regard for the end user. In recent years, medical space has emerged as a specialized asset class all its own, and Healthcare Trust was among the first big investors to focus on the new niche.

MOBs are now one of the hottest sectors in the commercial real estate business. To wit: The top office deal in the Charleston region last year was the nearly $26 million sale of the 69,000-square-foot Roper Medical Plaza on James Island to an Ohio-based buyer, according to a report released last week by the commercial real estate firm Colliers International. The property sold for about $9 million more than what the seller paid in 2012.

Peters and Mark Engstrom, Healthcare Trust’s executive vice president in charge of acquisitions, pointed to several factors, from demographics to economics.

The sector began to blossom during the last recession as a defensive play. Health care weathered the prolonged downturn better than most industries, ensuring stable rent streams for landlords. That prompted income-seeking investors to take a harder look at companies that owned medical space for dividend payments.

The health care industry also boasts a captive audience in the rapidly growing senior population that will require more medical services in the years ahead.

It’s need-based,” Engstrom said.

At the same time, an increasing number of medical procedures that once required checking into a full-service hospital are moving to the offices as outpatient visits.

Moreover, the cost of setting up or maintaining a medical practice is escalating, meaning physicians will be more likely to join bigger groups that require more space, which they increasingly would rather rent than own.

Finally, Obamacare is expected to trigger a jump in patient visits as insurance coverage is expanded.

“The Affordable Care Act changed everything,” said Peters, who thinks the law will be tweaked but otherwise is here to stay.

He’s the first to acknowledge that it’s somewhat unusual for a national firm from the other side of the country to be investing tens of millions of dollars and scouring new opportunities in secondary markets like Charleston or Greenville. Peters said that’s partly a function of his having lived in the state.

But more importantly, he said, the fundamentals in the Charleston region are right. It has a growing population, a diversifying employment base and an expanding, competitive health care industry.

“It’s a robust economy,” Peters said.

Contact John McDermott at 937-5572.