NEW YORK — The boards of directors of NorthStar Realty Finance Corp. (NYSE: NRF) and Griffin-American Healthcare REIT II Inc. have unanimously approved a definitive merger agreement under which NorthStar Realty will acquire all of the outstanding shares of Griffin-American in a stock and cash transaction valued at $4 billion, including approximately $600 million of debt.
“We set out to build a premium portfolio of diversified healthcare real estate in order to provide investors with an opportunity to realize a compelling return on their investment,” says Jeff Hanson, chairman and CEO of Griffin-American. “With this transaction, we have executed on our strategy, validating our investment thesis and delivering a strong result for stockholders.”
Griffin-American’s portfolio is comprised of predominantly medical office buildings (43 percent) and seniors housing facilities (30 percent) in the United States and the United Kingdom, and is being acquired at an approximate 6.4 percent capitalization rate.
Subject to the terms and conditions of the merger agreement, Griffin-American stockholders will receive $11.50 per Griffin-American share, comprised of $7.75 per share in cash and $3.75 per share in NorthStar Realty common stock.
The stock portion will be subject to a collar so that Griffin-American shareholders will receive 0.1859 NorthStar Realty shares if NorthStar Realty's stock price is above $20.17 per share at closing and 0.2344 NorthStar Realty shares if NorthStar Realty's stock price is below $16 at closing. If NorthStar Realty's stock price at closing is between $16 and $20.17 per share, Griffin-American shareholders will receive a number of NorthStar Realty shares between 0.1859 and 0.2344, equal to $3.75 in value.
The acquisition will increase NorthStar Realty’s percentage of owned real estate in its portfolio to approximately 75 percent of the pro forma company.
NorthStar Realty and Griffin-American shareholders must now approve the transaction. The transaction is expected to close during the fourth quarter of 2014.
Irvine, Calif.-based Griffin-American Healthcare REIT II Inc. is a public non-traded REIT that invests in a diversified portfolio of real estate properties, focusing primarily on medical office buildings and healthcare-related facilities.
New York-based NorthStar Realty is a diversified commercial real estate investment company that is managed by an affiliate of NorthStar Asset Management Group Inc. (NYSE: NSAM), a global asset management firm.
NorthStar Realty’s stock price closed at $16.14 per share on Monday, Aug. 4, up from $9.89 per share a year ago.
— Scott Reid