NorthStar Realty, Griffin-American Healthcare REIT II Close $4 Billion Merger

On Wednesday, Griffin-American Healthcare REIT II completed its previously announced merger with New York-based real estate investment trust (REIT) NorthStar Realty Finance Corp. (NYSE: NRF), a transaction valued at $4 billion.

The announcement was made by Griffin Capital Corporation and American Healthcare Investors, both co-sponsors of Griffin-American Healthcare REIT II, which first announced in August that NorthStar Realty would acquire all of its outstanding shares at a price of $11.50 per share.

From the REIT’s first acquisition in 2010, the company had been focused on the eventual exit and ultimate outcome for its stockholders, said Jeff Hanson, former chairman and CEO of the REIT.

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“We executed out strategy in a disciplined manner, building a premium international portfolio of diversified healthcare assets and delivering an attractive total return to our investors,” Hanson said in a written statement. “We are very pleased with the results.”

The Griffin-American Healthcare REIT II portfolio is comprised of 289 buildings across 32 states, the United Kingdom and four clinical asset classes, including medical office buildings, senior housing, skilled nursing facilities and hospitals. 

As of September 30, 2014, the REIT’s non-RIDEA portfolio was approximately 95% leased with a weighted average remaining lease term of 9.2 years and leverage of just 18.6%.

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During 2012 and 2013, the REIT raised in excess of $600 million and $1.7 billion in equity capital, respectively, said former President and Chief Operating Officer of the REIT Danny Prosky. 

“This industry-leading capital formation fueled the acquisition of more than $2.3 billion of institutional-grade acquisitions internationally over the same period, positioning the REIT with the size and scale necessary to execute such an accretive exit for stockholders so quickly,” Prosky said.

NorthStar has remained active in the senior housing space in the months following the initial acquisition of Griffin-American II. In September, the REIT acquired a 570-unit portfolio of senior housing assets for $125 million in Long Island, N.Y. 

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One of the company’s bigger plays in the sector happened in March, when it acquired a $1.05 billion senior housing and care portfolio from investment partnerships owned and managed by Formation Capital, LLC, and Safanad Limited. 

Merger proceeds to Griffin-American stockholders will be comprised of approximately two-thirds cash and one-third common stock of NorthStar Realty. Specifically, subject to the terms of the merger agreement, Griffin-American stockholders will receive $7.75 per share in cash and $3.75 per share in NorthStar common stock.

Written by Jason Oliva

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