The merger between NorthStar Realty Finance Corp (NorthStar Realty) and Griffin-American Healthcare REIT II (Griffin-American), previously announced in August, 2014 has been completed this week.
NorthStar Realty has acquired all of Griffin-American’s outstanding shares in a transaction valued at approximately $4 billion. The proceeds will go to Griffin-American stockholders in the form of two-thirds cash and one-third common stock of NorthStar Realty (NYSE: NRF).
The Griffin-American Healthcare REIT II portfolio boasts 289 buildings diversified across 32 states and the United Kingdom, and consists of medical office buildings, senior housing, skilled nursing facilities and hospitals.
“From the acquisition of our first asset in 2010, we were completely focused on the eventual exit and ultimate outcome for our stockholders,” commented Jeff Hanson, former chairman, chief executive officer, and largest stockholder of Griffin-American Healthcare REIT II. “We executed our strategy in a disciplined manner, building a premium international portfolio of diversified healthcare assets and delivering an attractive total return to our investors. We are very pleased with the results.”
According to the REIT’s former president and chief operating officer, Danny Prosky, “The REIT experienced tremendous growth, particularly during 2012 and 2013 when it raised in excess of $600 million and $1.7 billion in equity capital, respectively.” He continued, “This industry-leading capital formation fueled the acquisition of more than $2.3 billion of institutional-grade acquisitions internationally over the same period, positioning the REIT with the size and scale necessary to execute such an accretive exit for stockholders so quickly.”
The acquisition’s completion puts NorthStar’s owned real estate at approximately 80% of total assets. Among the assets is a $5.8 billion healthcare portfolio diversified by geography, asset class, tenant/operator and operating model, and has a weighted average lease term of 8.5 years.
NorthStar Realty’s Chairman and Chief Executive Officer, David Hamamoto, stated, “We are very pleased to have completed the acquisition of this highly desirable healthcare real estate portfolio. We are well positioned to realize substantial multiple expansion and are enthusiastic about our prospects of capitalizing on value creation opportunities.”
Jay Flaherty, who oversees NorthStar Realty’s healthcare real estate business, added, “The completion of this acquisition creates a best-in-class healthcare real estate portfolio with a high quality mix of diversified assets and stable, long-term cash flows. Since we announced our agreement to acquire this portfolio, we have continued to see meaningful cap rate compression in the healthcare real estate sector, particularly for quality assets such as these.”