There’s a new health care investment joint venture entering the playing field – and it could be hunting for ambulatory surgery center (ASC) opportunities in the not-so-distant future.
Healthcare Realty Trust Incorporated (NYSE:HR) recently announced that it has entered into a strategic JV relationship with private equity powerhouse KKR. The goal of the partnership will be to “jointly own and invest in quality medical outpatient buildings,” according to a press release from the two organizations.
“Healthcare Realty is pleased to announce the formation of a strategic relationship with KKR, a leading global investment firm,” the company’s president and CEO, Todd Meredith, said in the release. “We look forward to collaborating with KKR to strategically invest in the medical outpatient sector.”
As a real estate investment trust (REIT), Healthcare Realty owns and operates medical outpatient buildings primarily located around major hospital campuses. Its portfolio includes nearly 700 properties totaling over 40 million square feet, concentrated in 15 markets.
Meanwhile, KKR is a global investment firm that’s active across private markets in nearly every asset class. It’s health care portfolio companies include Covenant Physician Partners and BrightSpring Health Services, along with several other up-and-coming health care businesses in growth mode, such as BlueSprig and Geode Health.
“Healthcare Realty is a leading owner and operator of medical outpatient buildings in the U.S. with a strong focus on quality properties and serving tenants through best-in-class management,” Peter Sundheim, managing director at KKR, said in the release. “This high-quality portfolio is a great match for our long-term capital.”
As part of the agreement, Healthcare Realty will contribute 12 of its existing properties to seed the JV at a value of $382.5 million, representing a cap rate of about 6.6%. KKR will make an equity contribution to the JV equal to 80% of the value of the properties.
Additionally, Healthcare Realty will retain a 20% interest and will manage the JV, as well as continue to oversee day-to-day operations and leasing of the properties, according to the release.
Of note: KKR has also committed up to $600 million to the JV to pursue additional acquisitions and other strategic opportunities.
“We look forward to collaborating on new investments at an opportune moment when the current deleveraging cycle is impacting all types of real estate, including in favored sectors with excellent long-term fundamentals and demand driver,” Sundheim continued.
Initially, the 12 properties in the JV are medical outpatient buildings in seven markets located on or near hospital campuses.
