NEW YORK CITY—NorthStar Realty Finance Corp. and Griffin-American Healthcare REIT II have finalized their $4-billion merger, a deal which GlobeSt.com first reported in August. For locally based NRF, the acquisition brings the company's owned real estate to approximately 80% of total assets, with $5.8 billion of that in the healthcare sector.

“The completion of this acquisition creates a best-in-class healthcare real estate portfolio with a high quality mix of diversified assets and stable, long-term cash flows,” says James Flaherty, who oversees NRF's healthcare business. “Since we announced our agreement to acquire this portfolio, we have continued to see meaningful cap rate compression in the healthcare real estate sector, particularly for quality assets such as these.”

For Irvine, CA-based Griffin-American, the cash-and-stock sale to NRF culminates an exit strategy that the company's leadership had in mind from its first acquisition in 2010, says Jeff Hanson. “We executed our strategy in a disciplined manner, building a premium international portfolio of diversified healthcare assets and delivering an attractive total return to our investors,” says Hanson, former chairman and CEO of Griffin-American Healthcare REIT II, and its largest stockholder. “We are very pleased with the results.”

The Griffin-American portfolio now owned by NRF is comprised of 289 buildings diversified across 32 states, the UK and all four clinical asset classes: medical office buildings, senior housing, skilled nursing facilities and hospitals. The REIT's non-RIDEA portfolio was approximately 95% leased as of Sept. 30, with a weighted average remaining lease term of 9.2 years and 18.6% leverage.

In a related deal three months after NRF and Griffin-American announced their merger, NorthStar Asset Management purchased 47% of American Healthcare Investors, also headquartered in Irvine. As a result of this partnership, AHI will continue management of the Griffin-Americanportfolio and will also manage most of the NorthStar healthcare real estate portfolio that is not composed of the Griffin-American assets.