NorthStar Healthcare Completes $1.8 Billion Capital Raise

Coming off a year chock full of blockbuster acquisitions, one of the nation’s largest alternative investment sponsors and asset management firms has reached its capital raising goal for its senior housing real estate investment trust (REIT).

NorthStar Healthcare Income, a non-traded publicly registered REIT that primarily invests in senior housing facilities and skilled nursing, completed a $700 million offering, bringing the total capital raise to $1.8 billion, as of December 17, 2015.

The REIT is sponsored by the New-York based asset management company NorthStar Asset Management Group Inc. (NYSE: NSAM), a spin-off from NorthStar Realty Finance Corp. (NYSE: NRF).

“When we launched NorthStar Healthcare, we sought to provide investors an opportunity to capitalize on both the investment opportunity in this sector and NSAM’s leading presence in the marketplace,” Ron Jeanneault, chief executive officer of NorthStar Healthcare, said in a statement.

Since its inception in 2013, NorthStar Healthcare has invested in a health care real estate portfolio worth an estimated $2.8 billion. The portfolio boasts 35 equity investments with a total cost of $2.6 billion and four debt investments with a combined principal amount of $193 million.

The completion of the capital raise target comes as non-traded public REITs are currently facing headwinds following a proposed fiduciary rule from the Department of Labor (DOL). The rule, in its current form, could potentially eliminate the sales of these alternative investments from retirement accounts.

NSAM is a leading sponsor of alternative investment programs that are frequently sold to individual investors through retirement accounts. The company currently manages five such programs, including four non-traded REITs and one non-traded business development company. The combined programs, either active or in registration, have a total target capital raise of over $7.5 billion.

NSAM’s chief investment and operating officer Daniel Gilbert wrote to the DOL earlier this year in opposition of the proposed rule, requesting a 45-day extension of the comment period. The letter underscored that the “broad regulatory package” should be fully analyzed and vetted, given the company’s vested interest and significant standing in the market.

NorthStar Healthcare and its affiliate companies have recently completed major acquisitions in the senior housing space. Earlier this year, the REIT purchased 12 continuing care retirement communities (CCRCs) for approximately $640 million. In a joint venture with Griffin American Healthcare REIT III, Inc., NorthStar Healthcare also acquired a 30% stake in Trilogy Health Services LLC in a whopping $1.125 billion deal.

NorthStar Realty also has been aggressively acquiring, purchasing 32 independent living communities in an $875 million deal. Last year, NorthStar Realty closed its $4 billion merger with Griffin-American Healthcare REIT II.

NorthStar did not immediately respond to inquiries from Senior Housing News seeking comment on the offering.

Written by Amy Baxter