NorthStar Healthcare Acquires $639.3M Seniors Housing Portfolio

by Jeff Shaw

NEW YORK — NorthStar Healthcare Income Inc. has acquired a $639.3 million portfolio of continuing care retirement communities (CCRCs) from subsidiaries of Fountains Senior Living Holdings LLC.

The portfolio will continue to be operated by Watermark Retirement Communities Inc., a national operator of seniors housing facilities and affiliate of The Freshwater Group, Inc. In connection with the acquisition, NorthStar Healthcare obtained fixed-rate financing through Freddie Mac’s multifamily-seniors housing loan program, with an aggregate principal amount of $410 million, a fixed interest rate of 3.9 percent and a term of seven years.

CBRE Capital Markets, which represented Fountains in the sale, also arranged the $410 million loan for the acquisition.

The portfolio consists of 15 CCRCs and 23 contracted life estate units, including 3,637 units located in 11 states, with the largest concentrations in New York, California, Florida and Michigan. The six entrance-fee properties were acquired directly by NorthStar Healthcare and leased to affiliates of Freshwater pursuant to a master net lease.

The nine rental properties were purchased by a joint venture between NorthStar Healthcare and an affiliate of Freshwater, which own 97 percent and 3 percent of the joint venture, respectively, and will be operated by an affiliate of Freshwater pursuant to long-term management agreements. Occupancy of the portfolio was 85 percent as of March 31.

“Watermark is a valued relationship, with this investment representing the fourth transaction that we have completed together,” says Ron Jeanneault, president and CEO of NorthStar Healthcare. “NorthStar Healthcare’s ability to leverage established relationships with premier sponsors provides access to significant investment opportunities to further expand and diversify our seniors housing portfolio.”

NorthStar Healthcare’s portfolio consists of 37 investments with a total cost of $2.1 billion. The portfolio includes 33 equity investments with an aggregate total cost of $1.9 billion along with four debt investments with an aggregate principal amount of $145.9 million as of June 12.

NorthStar Healthcare is a public, non-traded real estate investment trust (REIT) sponsored by NorthStar Asset Management Group Inc. NorthStar Healthcare was formed to acquire, originate and asset manage a diversified portfolio of equity, debt and securities investments in healthcare real estate.

NorthStar Realty Finance Corp’s stock price closed at $17.09 per share on June 11, up from $16.46 one year ago.

— Haisten Willis

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