KKR to invest $150m in healthcare REIT

The New York-based private equity giant is committing equity to Sentio Healthcare Properties over the next two to three years to help the REIT expand its portfolio.

New York-based private equity giant Kohlberg Kravis Roberts (KKR) has agreed to invest in an Orlando -based REIT focused on healthcare-related real estate. 

According to a statement, KKR has committed to provide $150 million of convertible preferred equity to Sentio Healthcare Properties over the next two to three years. Under the terms of the deal, KKR will invest with Sentio's current shareholders in the REIT, including the existing portfolio, on behalf of an undisclosed affiliate. Proceeds will be used to fund new acquisitions, enabling Sentio to continue to expand its portfolio of healthcare real estate assets while maintaining control over the execution of its investment strategy.

John Mark Ramsey, president and chief executive officer of Sentio, said in a statement that he believes “KKR's financial commitment and real estate and capital markets capabilities will help us drive meaningful shareholder value in the coming years.”

This is not KKR’s first entry in the assisted-living market. Last September, the firm entered into a joint investment deal in which it teamed up with four others to gain a stake in McLean, Virginia-based Sunrise Senior Living’s existing management contracts covering 282 senior-living communities. That deal, which included Beecken Petty O’Keefe & Company, Coastwood Senior Housing Partners and Health Care REIT, also gave KKR leasehold interests in 15 communities and 12 developments.

Separately, KKR recently agreed to buy a Kansas City shopping center. A report from Bloomberg states that the investment firm has entered into an agreement to buy Legends Outlets Kansas City for $131.5 million, gaining a retail property in a popular tourism district in Kansas City for less than replacement cost. KKR won the asset at a foreclosure auction in January. 

Legends Outlets has 1.1 million square feet of retail space and a 14-screen movie theater. Opened in 2006, it’s part of the Village West development that includes the Kansas Speedway. The outlet is located in a district that attracts more than 12 million visitors per year.

KKR started a dedicated real estate division in March 2011 with the hire of Ralph Rosenberg as its global head of real estate, although the firm previously invested in companies with significant real estate components via its other divisions. As of June 30, the firm managed $61.5 billion of assets.