NorthStar Healthcare Income REIT to Be Acquired by Welltower Affiliate in $900M Transaction

Welltower Inc. (NYSE: WELL) and NorthStar Healthcare Income Inc. – an internally managed, public, non-listed real estate investment trust that owns a diversified portfolio of senior housing properties located throughout the United States – announced that NorthStar Healthcare has entered into a definitive merger agreement to be acquired by an affiliate of Welltower. The all-cash transaction has an approximate enterprise value of $900 million.
Under the terms of the merger agreement, NorthStar Healthcare’s stockholders will receive $3.03 per share in cash. This per share consideration exceeds the net asset value per share of $2.96 determined by NorthStar Healthcare’s board of directors as of June 30, 2024.
The merger agreement was unanimously approved by NorthStar’s board.
“Over the past few years, we have been executing on a disciplined strategy to improve the performance of our portfolio and opportunistically pursue dispositions, to create value and position NorthStar Healthcare for a liquidity event. We are pleased to have reached this agreement with Welltower, which is the culmination of these efforts and a great outcome for our stockholders, delivering a compelling, certain, cash value for their shares,” said Kendall Young, chief executive officer and president of NorthStar Healthcare Income.
While NorthStar – which was formed in October 2010 and commenced operation in February 2013 – can solicit other acquisition proposals until March 10, 2025, and potentially continue discussions with parties who made proposals before that date until March 20, 2025, it must cease soliciting other offers after that date. Also, the board can, under certain circumstances, change its recommendation regarding the merger.
The deal is expected to close in the second quarter of 2025, pending shareholder approval and other customary closing conditions.
“We are delighted to have reached an agreement to acquire NorthStar’s portfolio of 40 seniors housing communities, which portfolio, subject to satisfaction of closing conditions and closing under the merger agreement, Welltower anticipates will be allocated to an entity affiliated with its recently announced funds management business,” said Nikhil Chaudhri, co-president and chief investment officer of Welltower.
Under the terms of the merger, NorthStar Healthcare’s board of directors and advisers may actively initiate, solicit, and consider alternative acquisition proposals during a 40-day period starting from the date of the agreement. NorthStar Healthcare could terminate the agreement to accept a superior proposal subject to the agreement’s terms.
If it terminates the agreement under these circumstances, NorthStar will owe a termination fee: $14.07 million if terminated before the 40-day period start date (or the extended date for certain excluded parties), and $22.5 million if terminated on or after that date.
“We expect that this portfolio will serve to further enhance our regional densification strategy through our existing geographic footprint and network of exceptional [senior] housing operators. It has been a pleasure to work with Kendall and the NorthStar team to attain this win-win outcome for shareholders of both companies,” added Chaudhri.