NEW YORK — NorthStar Realty Finance Corp. (NYSE: NRF) has entered into a definitive agreement to acquire a $1.05 billion healthcare real estate portfolio from investment partnerships owned and managed by Formation Capital LLC, Formation’s affiliated entities or Safanad Limited.
The portfolio is comprised of 43 primarily private-pay seniors housing facilities and 37 skilled nursing facilities. Including this transaction, NorthStar, a New York-based real estate investment trust (REIT), has an approximately $1.6 billion healthcare real estate portfolio consisting of more than 160 properties.
“We are very pleased to add a diversified, quality portfolio of healthcare properties that we expect will produce attractive current and overall returns,” says David Hamamoto, chairman and CEO of NorthStar Realty Finance Corp.
NorthStar is acquiring the portfolio in a joint venture with Formation Capital, a leading private investment firm focused on senior care real estate and services and post-acute healthcare.
NorthStar and its affiliates will contribute approximately 92 percent of the $430 million of equity to purchase the portfolio, and the joint venture will assume in-place financing for the remainder of the balance. The purchase price for the portfolio represents a cap rate of 9.4 percent.
“This transaction represents an initial step toward our goal of expanding NorthStar's healthcare portfolio into a preeminent healthcare real estate business,” says Jay Flaherty, who oversees NorthStar’s healthcare real estate platform. Flaherty joined NorthStar’s healthcare real estate team two months ago.
“We are enthusiastic that this will be the first of many compelling transactions that we can complete with our partners at Formation Capital,” adds Flaherty.
The portfolio is located across 14 states with the heaviest concentration (35 percent) in Florida. A majority (36) of the 43 private pay facilities will be owned through a RIDEA structure and the remaining facilities — including all of the skilled nursing facilities — will be owned under triple-net leases across five separate master leases.
As of Dec. 31, 2013, NorthStar Realty Finance had $10.6 billion in assets under management. The company’s stock price closed Friday at $16.20 per share, up from $9.65 per share this time last year.
— John Nelson