TIAA, Healthcare Realty Form Joint Venture

The partnership aims to invest some $200 million annually, with a first deal closed in Minneapolis.
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Healthcare Realty Trust Inc. and TIAA have entered in a joint venture agreement to invest in medical office assets. The former owns a 50 percent interest in the partnership and will act as managing partner, handling the day-to-day operations and leasing of the properties. In addition, Healthcare Realty will fund its pro-rata share of future investments.

The venture anticipates acquiring some $200 million in properties per year without using property-level debt in most instances. The partnership’s first purchase is a 92,139-square-foot medical office building in Minneapolis. The asset, located within Allina Healthcare’s Mercy campus, traded for $16.6 million at a 5.1 percent cap rate. The new owners will seek to lease up the 80 percent-occupied property.     

The medical office sector closed a muted third quarter, its second impacted by the pandemic, a recent Hammond Hanlon Camp LLC report found. Transactions volumes reached the lowest point since the first quarter of 2014, with health systems responsible for a quarter of overall transactions.