NEW YORK (TheStreet) -- Shares of Northstar Realty Finance (NRF) are up 4.68% to $16.90 after the finance company agreed to buy Griffin-American Healthcare REIT II, for about $3.4 billion, expanding its holdings of medical-office buildings and senior housing, Bloomberg reports.
Stockholders of Griffin-American, a real estate investment trust that isn't traded on exchanges, will receive $11.50 a share, comprising $7.75 in cash and the rest in NorthStar common stock, the companies said today in a statement. NorthStar also will assume about $600 million of debt.
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TheStreet Ratings team rates NORTHSTAR REALTY FINANCE CP as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate NORTHSTAR REALTY FINANCE CP (NRF) a HOLD. The primary factors that have impacted our rating are mixed some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income and a generally disappointing performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth greatly exceeded the industry average of 9.5%. Since the same quarter one year prior, revenues rose by 47.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Net operating cash flow has increased to $53.70 million or 25.82% when compared to the same quarter last year. In addition, NORTHSTAR REALTY FINANCE CP has also vastly surpassed the industry average cash flow growth rate of -58.18%.
- NORTHSTAR REALTY FINANCE CP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, NORTHSTAR REALTY FINANCE CP continued to lose money by earning -$1.10 versus -$4.52 in the prior year. This year, the market expects an improvement in earnings ($2.05 versus -$1.10).
- The share price of NORTHSTAR REALTY FINANCE CP has not done very well: it is down 17.86% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income has significantly decreased by 348.9% when compared to the same quarter one year ago, falling from $47.96 million to -$119.37 million.
- You can view the full analysis from the report here: NRF Ratings Report