DigitalBridge (NYSE: DBRG) is selling its wellness infrastructure business, consisting of more than 300 senior housing, skilled nursing and other health care assets, in a deal valued at $3.2 billion.
The buyers are a joint venture between two real estate investment firms: Highgate Capital Investments and Aurora Health Network. The transaction is expected to close in early 2022, subject to third-party approvals and closing conditions.
Highgate Capital Investments is a global real estate investment and management company, specializing in hospitality, resort and lifestyle properties. The company’s global headquarters are in New York City, with offices in Dallas, London, Miami, Seattle and Waikiki.
The portfolio included 118 senior housing properties and 83 skilled nursing facilities as of May 2021. The sale was ahead of schedule by over a year, and in line with net carrying values, the REIT said in a release announcing the deal.
Furthermore, the transaction increases DigitalBridge’s corporate liquidity to over $1.5 billion on a pro-forma basis, while simultaneously reducing consolidated investment-level debt by $2.6 billion, and subsidiary-level debt by an additional $294 million. The debt was collateralized by the wellness portfolio.
Also based in New York City, Aurora Health network is a health care-focused real estate investment firm. Its acquisition strategy is primarily skilled nursing, rehabilitation, sub-acute and transitional care facilities.
Neither Highgate nor Aurora responded to requests for comment from Senior Housing News.
The sale is the final step in the Boca Raton-based REIT’s two-year digital transformation strategy, streamlines its organizational hierarchy, and includes $316 million of net value consisting of $226 million in cash and a five-year, $90 million seller note.
The announcement continues an eventful couple years for DigitalBridge, which first announced its intention to sell the portfolio in March 2021. Formerly known as Colony Capital, the company rebranded as DigitalBridge in June.
CEO Marc Ganzi said during a May earnings call that the REIT was in no rush to sell the portfolio in light of recent performance. The company’s senior living operating partners include Senior Lifestyle Corp. and Frontier Management, while Millers, Wellington Healthcare, Citadel Care Centers and Consulate are among its primary skilled nursing operators.
DigitalBridge spent the past year shedding senior housing properties in an effort to strengthen its bottom line. The REIT had $203 million in health care-related debt as of June 30, 2020. In August 2020, DigitalBridge previously turned over 36 senior housing properties to a lender, accounting for $157.9 million of that total.
Most of this debt was in default prior to Covid-19, but the pandemic exacerbated the problem. The REIT incurred $7.7 million in incremental costs across its senior housing portfolio, in the second quarter of 2021.
Last month, DigitalBridge bought a controlling stake in Vertical Bridge Holdings, the largest private owner of wireless communications infrastructure in the country with over 308,000 wholly-owned or master-leased sites, including over 8,000 towers.
In 2016, shareholders approved a merger between Colony, NorthStar Asset Management Group, and NorthStar Realty Finance Corp., creating a combined REIT with $58 billion under management.
Colony Founder Tom Barrack returned as CEO in late 2018 during a turbulent period where it reported a net loss of $70 million in the third quarter of 2018. In 2019, Colony agreed to a $325 million deal to acquire Digital Bridge Holdings, with the agreement that its chairman – Ganzi – would succeed Barrack by 2021.
Barrack, a sometimes-confidant of former President Donald Trump, resigned from the DigitalBridge board of directors in July after he was arrested on charges of failing to register as a foreign agent for the United Arab Emirates.
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