By Robbie Whelan
NorthStar Realty Finance Corp. is in exclusive talks to purchase
Griffin-American Healthcare REIT II, a large owner of senior
housing, skilled nursing facilities, hospitals and other
properties, according to two people familiar with the
negotiations.
The cash-and-stock deal, which would value the real-estate
investment trust at $3.5 billion to $3.7 billion, isn't final and
could still fall apart. The exclusivity period ends this weekend
and, if a deal isn't cut by then, Griffin can start talking to
other bidders, these people said.
Griffin is being represented by Bank of America Merrill Lynch's
health-care banking group, these people said. News of the talks was
reported earlier Tuesday by the Financial Times.
Griffin-American is a nontraded REIT, meaning that it is
publicly-owned, but its shares are sold by individual
broker-dealers and not traded on any public stock exchange.
Nontraded REITs are more difficult to value than traded REITs
because of their lack of liquidity. Griffin-American's shares,
which began selling at $10 a share in 2009, were last revalued at
$10.22 a share in 2012.
In May, Griffin-American's independent board of directors
entered into exclusive negotiations to sell the company to American
Realty Capital Healthcare Trust Inc., a company controlled by
investor Nicholas Schorsch, for about $12.50 a share, which would
value Griffin-American at around $3.7 billion. Those talks fell
apart in early June, when ARC Healthcare was sold for $2.6 billion
in cash and stock to health-care REIT Ventas Inc.
NorthStar's offer for Griffin-American isn't as high as ARC
Healthcare's earlier offer, according to one person familiar with
the deal process.
Griffin-American Healthcare was originally named Grubb &
Ellis Healthcare REIT II Inc. and was sponsored by the commercial
real-estate-services firm of the same name.
But, in early 2012, with Grubb & Ellis Co. about to file for
bankruptcy protection, the firm transferred its nontraded REIT
advisory and dealership business to a team led by American
Healthcare Investors and Griffin Capital Corp., changing the fund's
name in the process. The company has raised $2.84 billion from
investors.
Write to Robbie Whelan at robbie.whelan@wsj.com
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