By Dow Jones Business News,
July 08, 2014, 02:27:00 PM EDT
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
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 firstname.lastname@example.org
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