Colony Capital (NYSE: CLNY) is reportedly in talks with Fortress Investment Group on a portfolio of assets that includes senior housing and is valued at more than $3 billion.
The two companies are reportedly discussing a sale that includes Colony’s “wellness infrastructure” portfolio, according to a new Bloomberg report. Colony’s potential deal with Fortress is also said to include assets listed under “other equity and debt.” The terms of the potential transaction are reportedly not final, and there is no guarantee that the deal will occur in the end.
Representatives for both Fortress or Colony were not immediately available to confirm the discussed transaction or provide any additional details to Senior Housing News.
The reported discussion comes months after Colony transferred ownership of 36 senior housing properties to a lender in step toward resolving a default.
As of Dec. 31, Colony’s wellness infrastructure portfolio included 53 senior housing operating properties, with 65 other senior housing properties under triple-net leases, according to company filings. The portfolio also includes 106 medical office buildings as well as 83 skilled nursing facilities and nine hospitals under triple-net leases. The real estate is valued at $3.3 billion overall, and the portfolio carries $2.7 billion in debt.
Average occupancy for the portfolio’s senior housing operating segment was 72.8% in the fourth quarter of 2020, a marked difference from the 82.5% occupancy rate Colony reported for the segment a year prior, according to recent filings. For the company’s triple-net senior housing properties, average occupancy was 76.1% in 4Q21.
Boca Raton, Florida-based Colony is a global digital infrastructure, real estate and investment management firm with $46 billion in assets under management. Since 2019, the company has made an effort to pivot to digital infrastructure holdings.
Fortress, based in New York City, had almost $50 billion worth of assets under management as of Sept. 30, 2020. A Fortress affiliate had previously acted as external manager for New Senior Investment Group (NYSE: SNR) until the REIT entered into an agreement to internalize the company’s management functions. Fortress invested in independent living giant and primary New Senior operating partner Holiday Retirement in 2007.
While the reported discussion with Fortress is still just that, Marc Ganzi, Colony Capital’s president and CEO, recently indicated the company was open to such a sale.
“We don’t intend to stay in the wellness infrastructure business forever,” Ganzi said during the company’s fourth-quarter earnings call in February.
He also said that the company was evaluating “strategic alternatives” for the portfolio and had received “a lot of inquiries” regarding its health care business.