NorthStar Joint Venture Completes $875M Acquisition of Independent Living Portfolio

by Jeff Shaw

NEW YORK — A joint venture partnership between NorthStar Healthcare Income Inc. and NorthStar Realty Finance Corp. (NYSE: NRF) has acquired an $875 million portfolio of independent living facilities, following an SEC filing reported in April. NorthStar Healthcare and NorthStar Realty are both real estate investment trusts (REITs) externally managed by NorthStar Asset Management Group Inc. (NYSE: NSAM), a New York-based asset management firm focused on managing real estate and other investment platforms.

The portfolio is comprised of 32 independent living communities spanning 3,983 units and is 100 percent private pay. The communities are located in 12 states, with the largest concentration of facilities within California, Texas and Washington. As of March 31, the portfolio’s overall resident occupancy was approximately 93 percent.

The joint venture has retained Holiday Retirement Communities, one of the largest operators of independent living communities in North America, to operate the portfolio. Holiday Retirement is the operating name of the portfolio’s seller, Harvest Facility Holdings LP.

Berkadia arranged $648.2 million of the financing through its Fannie Mae program.

NorthStar Healthcare acquired a 40 percent interest in the portfolio, and NorthStar Realty acquired the remaining 60 percent interest.

“The experience of our healthcare team and its extensive relationships within the healthcare industry have and will continue to play a significant role in our ability to source and execute on institutional-quality healthcare portfolios,” says Ronald Jeanneault, CEO and president of NorthStar Healthcare, a non-traded REIT focused on seniors housing properties. “This acquisition allows NorthStar Healthcare to deploy significant capital into a high-quality private pay portfolio of independent living communities in line with our investment objectives.”

In connection with the acquisition, the joint venture obtained 10-year, fixed-rate financing through Fannie Mae’s Multifamily DUS program, with an aggregate principal amount of approximately $648 million and a fixed interest rate of 4.17 percent.

As of today, NorthStar Healthcare’s portfolio consists of 21 investments with an aggregate total cost of $1.5 billion, including 17 equity investments with an aggregate total cost of $1.3 billion and four debt investments with an aggregate principal amount of $145.9 million.

As of March 31, publicly traded NorthStar Realty Finance has $19.3 billion in assets in its global portfolio, with the bulk ($16.1 billion) comprising real estate assets such as retail and hotel properties. The company’s stock price closed Tuesday, May 26 at $18.24 per share, down from $32.40 per share at this time last year. (The company split its stock in June 2014 in connection with its spin-off of its asset management business.)

— John Nelson

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