KKR forms JV to target $1B in healthcare real estate

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Global investment firm KKR has formed a joint venture with Cornerstone
Companies, a healthcare real estate investment, development and management
firm, to acquire and develop a portfolio of healthcare properties across the
United States.

KKR and Cornerstone have seeded the portfolio with the
recapitalization of 25 healthcare properties owned by Cornerstone. With funding
commitments provided by KKR’s real estate and credit funds and Cornerstone, the
Joint Venture is positioned to acquire more than $1 billion in real estate
assets over the next few years.

“We will contribute capabilities from across KKR’s real
estate, credit and healthcare industry teams to support sourcing and
underwriting of assets for the Joint Venture”

The portfolio recapitalized by KKR and Cornerstone includes
713,705 square feet of medical office buildings and ambulatory surgery centers
located across 12 states, with in place long-term leases to a high quality
group of healthcare systems, physician group practices and surgery center
operators. Cornerstone and KKR will work together to grow the portfolio through
acquisitions and net lease development opportunities, with a focus primarily on
long-term leased single-tenant medical office buildings, ambulatory surgery
centers and facility-based outpatient healthcare assets.

“KKR is one of the world’s largest investment firms with
incredible connectivity across industries, including deep experience investing
in the healthcare and real estate sectors,” said Tag Birge, President and CEO
of Cornerstone. “This strategic partnership significantly increases our reach
and capacity to deliver investment and development solutions for leading
physician groups and health systems. We are very excited to work with a partner
in KKR who shares our commitment to lasting client relationships and strong
focus on portfolio construction and underwriting.”

“We are pleased to collaborate with the highly-regarded team
of industry specialists at Cornerstone to invest in a scaled portfolio of
healthcare properties,” said Peter Sundheim, Director at KKR. “The
recapitalization of 25 well-situated seed assets creates a strong foundation
for our Joint Venture.”

“We will contribute capabilities from across KKR’s real
estate, credit and healthcare industry teams to support sourcing and
underwriting of assets for the Joint Venture,” said Michelle Hour, Director at
KKR. “As investors in the healthcare sector for more than two decades, our
relationships and understanding of the needs of tenants will help us to provide
attractive ownership for their mission-critical real estate.”

Additional financial terms of the Joint Venture and
recapitalization transaction were not disclosed.

Newmark’s Healthcare Capital Markets Group advised
Cornerstone and KKR on establishing the Joint Venture, represented Cornerstone
on the portfolio recapitalization transaction, and provided advice to KKR on
debt financing. CBRE’s Healthcare and Life Sciences Capital Markets Group
provided buyside advisory services to KKR on the portfolio recapitalization
transaction. Simpson Thacher & Bartlett LLP acted as legal counsel to KKR.

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