Health care real estate firm Cornerstone forms joint venture with KKR

Indianapolis-based Cornerstone Cos. Inc. announced Wednesday that it has teamed up with New York City-based global investment giant KKR & Co. Inc. on a joint venture that could acquire and develop more than $1 billion in real estate assets over the next few years.

Cornerstone—which has carved a big niche in health care real estate—said the joint venture would put together a portfolio of diversified health care properties across the United States, starting with 25 recapitalized Cornerstone properties in 12 states, including five properties in Indiana.

The companies declined to disclose the exact properties involved in the deal, but said they consist of 713,705 square feet of medical office buildings and ambulatory surgery centers with long-term leases “to a high-quality group of health care systems, physician group practices and surgery center operators.”

Cornerstone and KKR said they will grow the portfolio through acquisitions and development opportunities, with a focus primarily on long-term-leased, single-tenant medical office buildings, ambulatory surgery centers and facility-based outpatient health care assets.

“KKR is one of the world’s largest investment firms with incredible connectivity across industries, including deep experience investing in the health care and real estate sectors,” Tag Birge, president and CEO of Cornerstone, said in written remarks. “This strategic partnership significantly increases our reach and capacity to deliver investment and development solutions for leading physician groups and health systems.”

Founded 36 years ago, Cornerstone has developed more than $1 billion in health care facilities and manages more than 100 medical facilities encompassing 7.7 million square feet.

Besides Indianapolis, the company has offices in Louisville; Troy, Michigan; Charlotte, North Carolina; Columbus, Ohio; and Nashville, Tennessee.

“We are pleased to collaborate with the highly-regarded team of industry specialists at Cornerstone to invest in a scaled portfolio of health care properties,” said Peter Sundheim, director at KKR, in written comments. “The recapitalization of 25 well-situated seed assets creates a strong foundation for our joint venture.”

Real estate experts say health care real estate is generally regarded as a safer investment than traditional office real estate right because its necessity isn’t as threatened by the work-from-home movement. KKR has been investing in the health care sector for more than 20 years.

KKR, founded as Kohlberg Kravis Roberts & Co. in 1976, is publicly traded financial company that manages multiple alternative asset classes, including private equity, credit and real assets, with strategic partners that manage hedge funds. The company had $429 billion in assets under management as of June 30. It has operations in 21 cities on four continents.