The recently departed former CEO of senior housing and healthcare REIT HCP (NYSE: HCP) is making a new foray into health care real estate through a burgeoning partnership with NorthStar Realty Finance.
Jay Flaherty, HCP’s former CEO who left the position abruptly in October, will work with NorthStar in a “long-term partnership to build a preeminent healthcare real estate business.”
Under the agreement between the partners, Flaherty will oversee and seek to substantially grow NorthStar’s on-balance sheet healthcare real estate portfolio, according to the company. In addition, he will work toward raising institutional capital for funds to be managed by NorthStar Asset Management Group Inc. and will serve as CEO of NorthStar’s non-traded healthcare REIT, NorthStar Healthcare Income, Inc, an entity that has taken a very active role in senior housing finance of late.
NorthStar Healthcare earlier this month launched a strategic senior housing joint venture with senior housing owner and developer The Freshwater Group, for an initial investment of $86.6 million plus closing costs.
In December, the REIT acquired four senior housing properties for $30 million, adding to its portfolio.
“We are very pleased and fortunate to have someone of Jay’s caliber join the NorthStar team,” said NorthStar’s Chairman and CEO David Hamamoto. “Jay’s distinguished career, institutional credibility and proven ability to dramatically scale a healthcare real estate business while generating superior returns for shareholders are incredibly compelling for NorthStar and NorthStar Asset Management.”
The new partnership will position NorthStar for growth, Hamamoto continued.
“Given Jay’s remarkable track record, I am confident that we can build a best in class healthcare real estate platform that will create the framework for extraordinary growth in NorthStar Asset Management and further diversify NorthStar’s asset base with high quality investments,” he said.
Under terms of the agreement, the partnership will be entitled to incentive fees ranging from 20-25% above certain hurdles in connection with new and existing health care real estate investments on NorthStar’s balance sheet, the company disclosed upon the announcement. The fees may also apply to new investments in future health care real estate funds raised by the partnership. It will also be entitled to additional fees associated with management of NorthStar’s non-traded healthcare REIT and other NorthStar-sposored REITs.
Written by Elizabeth Ecker