NorthStar Ramps Up Investments, With More Than $170 Million in Deals

NorthStar Healthcare Income, Inc. announced that it recently invested more than $170 million in two health care real estate transactions in September, including one assisted living portfolio acquisition and one mezzanine loan backed by a portfolio of skilled nursing and assisted living facilities.

NorthStar acquired a 570-unit portfolio of senior housing assets for $125 million, plus closing costs. The properties are located in Long Island, N.Y., and consist of four assisted living facilities totaling 404,000 square feet with an overall occupancy of 89% as of July 31.

The properties — located in a market with high barriers to entry, given that New York is a Certificate of Need state and that zoning restrictions limit overbuilding — are 100% leased to Arcadia Management, Inc., which has managed the properties since 2005. Each lease contains annual rent escalations.

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The portfolio is currently unlevered and NorthStar intends to secure financing for the investment.

Additionally, NorthStar closed an investment in a $45 million mezzanine loan secured by a pledge of an ownership interest in a portfolio of 16 health care properties (14 skilled nursing facilities and two assisted living facilities) located in nine states. Affiliates of Sava Senior Care, the nation’s sixth largest operator of skilled nursing facilities, will continue to manage the facilities.

Including this transaction, NorthStar has closed two mezzanine loans totaling $120 million with the borrower and operator, following an initial $75 million loan that closed in June.

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“These investments represent strategic additions to the NorthStar Healthcare portfolio and highlight our commitment to generating value through relationships with strong senior housing owners and operators,” said Daniel R. Gilbert, executive chairman. “We believe these assets advance our business plan while efficiently deploying significant capital and further diversifying NorthStar Healthcare’s portfolio.”

NorthStar Healthcare’s portfolio consists of 19 investments with an aggregate total cost of $491.2 million, including 15 equity investments with an aggregate total cost of $345.3 million and four debt investments with an aggregate principal amount of $145.9 million, as of October 7, 2014.

Written by Emily Study

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