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Healthpeak & Brookfield Form Outpatient Medical Joint Venture
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Key Takeaways
DOC formed a joint venture with Brookfield involving 86 outpatient medical properties worth $2.1 billion.
BAM acquired a 49% stake, while DOC retained 51% control and continues managing the portfolio.
The venture provides long-term capital, with 95% of the 5.6 million-square-foot properties leased.
Healthpeak Properties, Inc. (DOC - Free Report) and Brookfield Asset Management Ltd. (BAM - Free Report) have formed a long-term strategic capital partnership through a joint venture involving a portfolio of outpatient medical buildings across the United States. DOC contributed 86 properties totaling about 5.6 million square feet, with the portfolio valued at roughly $2.1 billion.
The properties are spread across 11 states, including Kentucky, Indiana, Pennsylvania, Arkansas, Illinois, Minnesota, New Jersey and New York. The portfolio is 95% leased and has a weighted average remaining lease term of six years, giving the joint venture a stable base of rental income.
Brookfield and its affiliates acquired a 49% non-controlling stake in the venture, while Healthpeak retained a 51% controlling interest. Healthpeak will remain the managing member and continue to handle asset management, leasing and property management. The company received about $1.025 billion in gross proceeds from the sale of 49% stake, which reflects a trailing cash capitalization rate of about 5.9% and a valuation of roughly $380 per square foot.
Healthpeak will also have the right, for a limited period starting after year seven, to buy back Brookfield’s interest at a price designed to provide BAM with a 6.5% net annual rate of return, excluding initial transaction costs.
The deal gives Healthpeak access to long-term capital while allowing it to keep control of the properties and benefit from future value growth. The joint venture is expected to remain consolidated in Healthpeak’s financial statements, with Brookfield’s stake recorded as a non-controlling equity interest.
Conclusion
Healthpeak is raising substantial cash without giving up control of a well-leased portfolio. The structure could fund debt reduction, share repurchases or investments in faster-growing areas while giving Brookfield access to durable healthcare real estate.
In the past three months, shares of this Zacks Rank #3 (Hold) company have gained 36.5% compared with the industry's 6.2% growth.
View the Zacks #1 Rank List
Image: Bigstock
Healthpeak & Brookfield Form Outpatient Medical Joint Venture
Key Takeaways
Healthpeak Properties, Inc. (DOC - Free Report) and Brookfield Asset Management Ltd. (BAM - Free Report) have formed a long-term strategic capital partnership through a joint venture involving a portfolio of outpatient medical buildings across the United States. DOC contributed 86 properties totaling about 5.6 million square feet, with the portfolio valued at roughly $2.1 billion.
The properties are spread across 11 states, including Kentucky, Indiana, Pennsylvania, Arkansas, Illinois, Minnesota, New Jersey and New York. The portfolio is 95% leased and has a weighted average remaining lease term of six years, giving the joint venture a stable base of rental income.
Brookfield and its affiliates acquired a 49% non-controlling stake in the venture, while Healthpeak retained a 51% controlling interest. Healthpeak will remain the managing member and continue to handle asset management, leasing and property management. The company received about $1.025 billion in gross proceeds from the sale of 49% stake, which reflects a trailing cash capitalization rate of about 5.9% and a valuation of roughly $380 per square foot.
Healthpeak will also have the right, for a limited period starting after year seven, to buy back Brookfield’s interest at a price designed to provide BAM with a 6.5% net annual rate of return, excluding initial transaction costs.
The deal gives Healthpeak access to long-term capital while allowing it to keep control of the properties and benefit from future value growth. The joint venture is expected to remain consolidated in Healthpeak’s financial statements, with Brookfield’s stake recorded as a non-controlling equity interest.
Conclusion
Healthpeak is raising substantial cash without giving up control of a well-leased portfolio. The structure could fund debt reduction, share repurchases or investments in faster-growing areas while giving Brookfield access to durable healthcare real estate.
In the past three months, shares of this Zacks Rank #3 (Hold) company have gained 36.5% compared with the industry's 6.2% growth.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks from the broader REIT sector are Postal Realty Trust (PSTL - Free Report) and Welltower (WELL - Free Report) , each sporting a Zacks Rank of 1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for PSTL’s 2026 FFO per share is pegged at $1.41, which indicates year-over-year growth of 6.82%.
The Zacks Consensus Estimate for WELL’s full-year FFO per share is pinned at $16.32, which suggests an increase of 19.47% from the year-ago period.
Note: Anything related to earnings presented in this write-up represents FFO, a widely used metric to gauge the performance of REITs.