KKR, Cornerstone in $1B JV to Develop Healthcare Facilities

Cornerstone Companies CEO J. Taggart Birge and  KKR Co-Chairman Henry Kravis (Cornerstone, Getty, iStock)

KKR and Cornerstone Companies are joining forces to develop health care facilities in the United States.

Cornerstone already has experience in the market, as the company is a health care real estate investment, development and management firm. It is also seeding the joint venture with 25 properties that are being recapitalized, according to Real Estate Weekly.

The joint venture is aiming to acquire more than $1 billion in real estate over the next few years. Cornerstone and KKR have made funding commitments, with the latter pulling from real estate and credit funds.

The portfolio that has been recapitalized encompasses more than 713,000 square feet of ambulatory surgery centers and medical offices spanning 12 states. They have long-term leases already in place, the publication noted.

That portfolio appears to reflect the kind of assets KKR and Cornerstone will be chasing with its new joint venture. The two companies will look to acquire and develop medical office buildings with a single tenant, ambulatory surgery centers, and outpatient health care assets that are facility-based. Long-term leases are to be a primary focus.

Medical offices have been seen as a rare bright spot during the pandemic for real estate investors. According to a report in April, medical professionals had paid 95 percent of rent owed over the previous year despite a big drop for in-person visits.

In 2020, $11.2 billion worth of medical office buildings were sold, versus $12 billion in 2019.

KKR also has a $3 billion portfolio of triple-net lease investments in its sights after launching Strategic Lease Partners in August.

[REW] — Holden Walter-Warner

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