NorthStar Healthcare Income to Acquire 15 CCRCs for $640M

by Jeff Shaw

GREENWOOD VILLAGE, CONN. – NorthStar Healthcare Income has agreed to acquire 15 continuing care retirement communities (CCRCs) throughout 11 states for $640 million. The assets, which include nine rental CCRCs and six entrance-fee CCRCs for a total of 3,637 units, were purchased from subsidiaries of Fountains Senior Living Holdings.

The deal is expected to close in early June. NorthStar then intends to sign a master net lease with affiliates of the Freshwater Group for the entrance-fee properties. The rental properties will be purchased by a joint venture between one of NorthStar’s subsidiaries and affiliates of Freshwater.

The rental properties will be held under a RIDEA (REIT Investment Diversification and Empowerment Act) structure, also known as a (TRS) Taxable REIT Subsidiary structure. NorthStar will manage and control the joint venture’s business and affairs, but will obtain Freshwater’s consent on certain major decisions.

The acquisition will be financed with seven-year debt at a fixed rate of 3.9 percent. National seniors living operator Watermark Retirement Communities will continue to manage the day-to-day operations of the portfolio. Watermark is an affiliate of Freshwater.

Greenwood, Conn.-based NorthStar is a public, non-traded REIT that originates, acquires, and manages asset equity and debt investments in healthcare real estate. NorthStar Realty Securities LLC is the wholly owned broker-dealer subsidiary of NorthStar Asset Management Group and the dealer-manager for NorthStar Healthcare’s public offering. 

The Freshwater Group is the acquisition, finance, design and development arm of Watermark Retirement Communities. It is based in Tucson, Ariz.

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