Kim Lisa TaylorSecurities Attorney, Founder, Syndication Attorneys, PLLC · Corporate Securities Attorney, 2x Best-Selling Author, Nationwide Speaker | Private Placement

Why Medical Office Buildings Are Recession-Proof Investments

17 Jan 2025 · 1 min

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In a brief interview segment, the speakers outline two key financial criteria investors should use when evaluating medical office buildings. First, they advise checking a healthcare tenant’s facility expense ratio—total costs such as rent and utilities should not exceed roughly 10‑12% of the tenant’s revenue. Second, they recommend assessing the tenant’s EBITDA or cash‑flow generation to gauge profitability and the ability to sustain rent payments. These rules of thumb are presented as quick, practical filters for identifying recession‑resilient medical office property investments.

What kind of things should investors be looking for if they're evaluating buying medical office buildings?
One is when you're looking at a healthcare tenant, looking at their facilities expenses, and that's more than rent. So that's rent, utilities, et cetera, is not more than 10 to 12% of the revenues. The second rule of thumb to the EBITDA, it's profitability. How much cash flow does that healthcare tenant throw off?