NEW YORK CITY—NorthStar Healthcare Income and its two joint venture partners, Formation Capital LLC and Safanad Management Ltd., has closed on the acquisition of operator Extendicare International. The $1.1-billion deal includes a portfolio of 158 seniors housing and care facilities.
According to an SEC filing, NorthStar Healthcare indirectly owns 36.67% of the JV, FC Domino Acquisition LLC. Affiliates of Dubai-based Safanad own 46.66% and Formation affiliates own the remaining 16.67%. In the works since this past fall, the deal for Extendicare's 152 skilled nursing facilities and six assisted living facilities includes the assumption of about $682 million in debt.
“Our strategic partnerships continue to drive transaction volume and accretive investment opportunities for NorthStar Healthcare and our growing healthcare portfolio,” says Ron Jeanneault, CEO and president of the non-traded REIT, which is sponsored by NorthStar Asset Management. “We remain focused on continuing to build a diverse portfolio of needs-driven seniors housing on behalf of our shareholders.”
When Safanad announced its partnership with Formation and NorthStar this past November, CEO Kamal Bahamdan said it was “aligned with our strategy to continue to both identify and execute on specialized investment opportunities within the healthcare sector.” Earlier this month, Bahamdan observed, “Increasingly, we find that sophisticated investors are looking to partner with fully aligned sponsors to access compelling investment opportunities on a direct co-investment basis.” Safanad and Formation have now partnered on seven real estate investments.
The Extendicare portfolio encompasses more than 15,000 beds located across 12 states. The largest concentrations are in Indiana, Kentucky, Ohio, Michigan and Wisconsin. Prior to the acquisition, the portfolio was net leased to five third-party operators, with an occupancy rate of approximately 83% at the end of March.
To finance the Extendicare acquisition, the JV took on a combination of 75% fixed- and 25% floating-rate debt totaling approximately $886 million, with a weighted average current interest rate of 4.8%. In addition, NorthStar Healthcare also originated a $75-million mezzanine loan to partially finance the transaction, with a 67-month term and a fixed interest rate of 10% per year.
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