Healthcare Realty Trust has entered a strategic joint venture (JV) with KKR to jointly own and invest in quality medical outpatient buildings.

The collaboration, through the contribution of a seed portfolio to the JV, is expected to yield approximately $300 m in proceeds for Healthcare Realty.

As part of the agreement, Healthcare Realty will contribute 12 of its properties, valued at $382.5m, to seed the JV, which corresponds to a cap rate of 6.6%.

Encompassing 762,399ft² and boasting a 98% occupancy rate, the medical outpatient buildings are primarily located on or near leading hospital campuses across seven key markets.

KKR will hold an 80% stake in the JV while Healthcare Realty will maintain a 20% interest and manage the properties.

Furthermore, KKR has pledged up to $600m to fund further acquisitions, targeting high-quality, stabilised assets that align with its long-term investment strategy.

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Healthcare Realty president and CEO Todd Meredith said: “Healthcare Realty is pleased to announce the formation of a strategic relationship with KKR, a leading global investment firm.

“We look forward to collaborating with KKR to strategically invest in the medical outpatient sector. In the near term, our capital allocation priority is to repurchase stock on a leverage-neutral basis. Looking ahead, we may contribute additional Healthcare Realty properties to the JV or pursue acquisitions, depending on market conditions.”

The property contributions are scheduled to take place in May and June 2024, subject to standard closing conditions.

KKR managing director Peter Sundheim said: “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 favoured sectors with excellent long-term fundamentals and demand drivers.”

Healthcare Realty was advised by Eastdil Secured and BlackBirch Capital, with Latham & Watkins serving as legal adviser.

KKR received financial advice from Newmark’s Healthcare Capital Markets Group and legal guidance from Simpson Thacher & Barlett.

In March 2024, Bloomberg News reported that KKR was considering divesting its stake in Filipino private hospital operator Metro Pacific Health.