NorthStar Realty Finance Corp. and Griffin-American Healthcare REIT II, Inc. announced that the boards of directors of both companies have unanimously approved a 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, establishing NorthStar Realty as a leading investor in the healthcare real estate sector.
NorthStar Realty is acquiring the portfolio, which is comprised of predominantly medical office buildings (43 percent) and senior housing facilities (30 percent) in the United States and the United Kingdom, at an approximate 6.4 percent cap rate based on our estimate of 2015 NOI and the transaction is expected to be neutral to NorthStar Realty’s cash available for distribution.
The acquisition increases the scale and diversification of NorthStar Realty’s assets and increases owned real estate to approximately 75 percent of the pro forma company.
The transaction creates a best in class healthcare portfolio diversified by geography, asset class, tenant/operator and operating model, with a weighted average lease term of 9.1 years.
NorthStar Realty’s chairman and CEO, David Hamamoto, commented, “This acquisition represents a highly desirable portfolio of healthcare real estate assets, which creates the framework for substantial multiple expansion and provides NorthStar Realty an exciting opportunity to un-lock asset and platform value through future transactions.”
Jay Flaherty, who oversees NorthStar Realty’s healthcare real estate business, said, “With the addition of the high-quality Griffin-American assets, NorthStar Realty’s healthcare real estate portfolio is positioned to be a leading healthcare real estate platform with a strong mix of diversified assets, attractive contractual lease bumps and formidable EBITDAR coverage.