Healthcare Realty Trust and the Teachers Insurance and Annuity Association have formed a joint venture partnership to invest in medical office properties. The partnership plans to acquire $200 million annually in medical office product, and does not plan to place debt on the assets. Healthcare Realty owns a 50% interest in the joint venture, and it will fund share of future investments proportionally.

The joint venture has already completed its first purchase, a 92,139-square-foot building on Allina Healthcare's Mercy campus in Minneapolis. The property traded hands for $16.6 million at a 5.1% cap rate. The property is currently 80% occupied, and the joint venture plans to drive value by leasing the remainder of the property. In accordance with its overarching strategy, the joint venture did not place debt on the property.

During the pandemic, investors have shown increasing interest in medical office product, viewing the asset class as a safe haven. According to a recent report from Hammond Hanlon Camp, medical office pricing has remained stable through the recession, and the stability has helped to attract both private and institutional investors to the asset class.