NorthStar Realty Finance Corp. (NRF) is in talks to buy Griffin-American Healthcare REIT II, an owner of about $3 billion of medical properties in the U.S. and U.K., two people with knowledge of the matter said.
The discussions are exclusive and are scheduled to expire on Friday, one of the people said. NorthStar Realty, based in New York, has been building a health-care property business and earlier this year bought $1.05 billion of senior housing and skilled-nursing facilities.
Griffin-American Healthcare REIT II, founded in 2009, is a nonlisted real estate investment trust, meaning its shares don’t trade on a stock exchange. The Irvine, California-based company concluded its fundraising last year, collecting $2.8 billion in equity. It had about $3 billion in assets at the end of the first quarter, with 286 properties in 31 states and the U.K.
The potential buyout is the latest for real estate companies seeking to take advantage of the growing demand for medical services and senior housing as the U.S. population ages. In June, Ventas Inc. (VTR), the second-biggest U.S. health-care REIT by market value, agreed to buy American Realty Capital Healthcare Trust Inc. for $2.6 billion in cash and shares.
This month NorthStar Realty spun off its asset-management business as a separate publicly traded company, NorthStar Asset Management Group Inc. (NSAM)
Messages left for Griffin-American Chairman and Chief Executive Officer Jeffrey Hanson, NorthStar CEO David Hamamoto and Joe Calabrese, a spokesman for NorthStar, weren’t immediately returned.
The negotiations were reported earlier today by the Financial Times, which said a cash-and-stock deal would value Griffin-American at about $4 billion.
Nontraded REITs have a finite life span and eventually have to give money back to investors. Typically the companies are sold or they list their shares on a stock exchange to provide liquidity to shareholders.
Publicly traded health-care REITs, which soared to records early last year, have been the worst-performing part of the property-trust market in the past 12 months. Shares have rebounded this year as interest rates fell, reducing borrowing costs and increasing the companies’ ability to make money on acquisitions.
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