August 5, 2014 / 2:05 PM / in 3 years

NorthStar Realty to buy Griffin-American for about $3.35 billion

(Reuters) - NorthStar Realty Finance Corp NRF.N said it would buy Griffin-American Healthcare REIT II Inc for $3.35 billion as it looks to take advantage of rising demand for senior care facilities in a consolidating healthcare real estate sector.

The real estate finance company’s shares rose as much as 8 percent in afternoon trading.

The healthcare real estate sector has witnessed a number of deals this year as companies jostle for a share of the growing senior care market.

Ventas Inc (VTR.N), one of the largest U.S. healthcare real estate investment trusts (REITs), said in June that it would buy American Realty Capital Healthcare Trust Inc HCT.O for about $2.6 billion.

Ventas also bought 29 independent senior housing communities in Canada from Holiday Retirement Corp for $900 million.

Brookdale Senior Living Inc (BKD.N) said in February that it would buy Emeritus Corp ESC.N for about $1.4 billion, creating the largest owner-operator of senior housing in the United States.

NorthStar’s acquisition of Griffin-American is the company’s second deal in the sector in 2014.

In March, the company bought 43 private-pay senior housing facilities and 37 skilled nursing facilities for about $1.1 billion from Formation Capital and Safanad Limited.

Through its acquisition of Griffin-American, a non-traded REIT, NorthStar will add 295 healthcare-related properties in the United States and Britain to its portfolio.

The deal puts NorthStar’s healthcare venture in a good position to continue growing through acquisitions, joint ventures and other strategic transactions, Chief Executive David Hamamoto said on a conference call.

    Some analysts say that NorthStar’s expanded healthcare portfolio could increase the likelihood of the company divesting its healthcare business as a standalone REIT.

    But the company said on a conference call that it was focused on building the business and was not looking to spin it off right away.

    NorthStar will pay Griffin-American shareholders $7.75 per share in cash and $3.75 per share in NorthStar common stock for each Griffin-American share they own, NorthStar said.

    As part of the deal, NorthStar will also assume $600 million in debt from Griffin-American. The deal is likely to close in the fourth quarter of 2014, NorthStar said.

    UBS Investment Bank and CS Capital Advisors are financial advisers to NorthStar. BofA Merrill Lynch, Robert A. Stanger & Co Inc and KeyBanc Capital Markets Inc are advising Griffin-American.

    NorthStar shares were up 6.7 percent at $17.22 in afternoon trading on the New York Stock Exchange on Tuesday.

    Editing by Simon Jennings

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