NEW YORK, March 17, 2014 /PRNewswire/ -- NorthStar Realty Finance Corp. (NYSE: NRF) ("NorthStar") today announced that it has entered into a definitive agreement to acquire a $1.05 billion healthcare real estate portfolio (the "Portfolio") from investment partnerships owned and managed by Formation Capital, LLC or its affiliated entities (collectively "Formation") and Safanad Limited. The Portfolio is comprised of 43 primarily private-pay senior housing facilities and 37 skilled nursing facilities. Inclusive of this portfolio, NorthStar has an approximately $1.6 billion healthcare real estate portfolio consisting of over 160 properties.
NorthStar is acquiring the Portfolio in a joint venture with Formation (the "Joint Venture"). Formation is 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% of the $430 million of equity to purchase the Portfolio and the Joint Venture will assume in-place financing for the remainder of the purchase price.
NorthStar's Chairman and Chief Executive Officer, David Hamamoto, commented, "We are very pleased to have a diversified, quality portfolio of healthcare properties added to our existing healthcare portfolio that we expect will produce attractive current and overall returns. Since joining our healthcare real estate team only two months ago, Jay Flaherty has sourced an investment pipeline through his relationships in the industry that is adding significant value to the NorthStar franchise."
Flaherty, who oversees NorthStar's healthcare real estate platform, added, "This transaction represents an initial step towards our goal of expanding NorthStar's healthcare portfolio into a preeminent healthcare real estate business. We are enthusiastic that this will be the first of many compelling transactions that we can complete with our partners at Formation Capital."Portfolio Highlights
- The purchase price for the Portfolio represents a cap rate of 9.4%, an initial unlevered yield of 7.8% and an initial levered current yield of approximately 12%.
- The Portfolio is located across 14 states with the heaviest concentration (35%) in Florida.
- 36 of the 43 senior housing facilities will be owned through a RIDEA structure and the remaining facilities, including all 37 skilled nursing facilities, will be owned under triple-net leases across five separate master leases.
- The portion of the Portfolio under triple-net leases is expected to have a year-one aggregate lease coverage ratio of approximately 1.3x and all of the leases have fixed rent escalators between 2-3% annually.
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