Brookfield Enters $2.1B Outpatient Building Venture With Healthpeak
It's been a busy day for Brookfield Asset Management, with one of its biggest pieces of news today involving the establishment of a joint venture with Healthpeak Properties to manage a roughly $2.1 billion outpatient medical building portfolio that spans 5.6 million square feet.
Under the long-term partnership, Brookfield bought a 49 percent stake valued at about $1.03 billion or $380 per square foot. Healthpeak will continue to own 51 percent of the portfolio and will have the option for a finite period, after seven years, to reacquire Brookfield's equity. If the latter option happens, it will need to net Brookfield (excluding expenses from the transaction) a 6.5 percent annual return rate.
The move, in Healthpeak's perspective, will allow it to diversify and deploy capital across other sectors, according to the REIT.
"Healthpeak is a recognized leader in healthcare real estate, and we're excited to establish a long-term strategic capital partnership centered on a portfolio of premier outpatient medical properties," said Alexander Elawadi, managing partner of real estate at Brookfield, in a statement.
"As real estate companies increasingly seek innovative capital solutions, Brookfield is well positioned to structure investments that advance our partners' strategic objectives while providing our investors with access to differentiated, high-quality real estate opportunities."
Meanwhile, outpatient space has become limited for healthcare tenants, according to a recent report from Colliers. While providers are expanding outpatient services typically in fast-growing suburban areas, construction starts for medical office buildings fell 45% year-over-year, as pressures linger from higher borrowing costs, elevated construction expenses and complex regulatory requirements.
The joint venture portfolio is positioned in 11 states including New York, Indiana, Pennsylvania, Arkansas, Illinois, Minnesota, New Jersey and Kentucky. The properties are 95 percent leased, with the remaining weighted average term coming out to six years.
Newmark served as the financial advisor on the deal, with Brookfield getting legal services from Kirkland & Ellis LLP.
Interestingly enough, this deal might be overshadowed by the other piece of major Brookfield news that made headlines today, with the asset manager and Canada Pension Plan Investment Board announcing the $5.2 billion acquisition of LXP Industrial Trust. The warehouse and logistics REIT manages about 53 million square feet across 108 properties.
Source: GlobeSt/ALM