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DigitalBridge Group Agrees To Sell Wellness Portfolio For $3.2 Billion

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DigitalBridge Group Inc., the real estate investment trust led by Chief Executive Officer Marc Ganzi, agreed to sell its so-called wellness infrastructure portfolio of more than 300 facilities in a transaction valued at $3.2 billion.

The REIT is set to obtain $316 million in proceeds from the sale of the division, which includes senior housing and skilled-nursing facilities, hospitals and medical office buildings, to Highgate Capital Investments and Aurora Health Network, according to the newly released statement. Highgate and Aurora are set to assume about $2.9 billion in associated debt. Bloomberg News first reported the agreement earlier.

“We’re incredibly bullish about our ability to get the right price for that asset and, ultimately, find the right home for it,” Ganzi said on a second-quarter earnings call last month.

The REIT is working to rotate away from real estate sectors that were favored by its founder Tom Barrack and exclusively pursue digital infrastructure assets such as data centers, fiber networks and cell towers.

“There’s a path to finish the mission between now and the end of the year to get to 100% digital,” Ganzi said at a conference last month.

Boca Raton, Florida-based DigitalBridge, formerly known as Colony Capital, in June agreed to sell assets to Fortress Investment Group LLC. In March, it announced the completion of its sale of a hotel portfolio to Highgate and an affiliate of Cerberus Capital Management LP. Those transactions followed other divestitures including the sale of a stake in real estate investment firm RXR Realty as well as its warehouse portfolio.

DigitalBridge’s shares have gained 146% in the past 12 months, outperforming the Bloomberg U.S. Real Estate Large & Mid Cap Price Return Index, which rallied around 33% over the same period.

Highgate, led by Mahmood and Mehdi Kimji, has historically focused on hotels, its website shows. Its partner on the transaction, Aurora, led by Joel Landau and Leo Friedman, has been an owner-operator of skilled nursing facilities.

 

Source: Wealth Management

Fortress Eyes Acquisition Of Colony Capital’s $3B Senior Housing, MOB Portfolio

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Fortress Investment Group is in talks with Colony Capital to acquire a portfolio of medical office buildings and senior housing properties valued at $3.3B from Colony, Bloomberg reports, citing anonymous sources familiar with the matter.

The deal would represent a move away from “noncore” assets by Colony, which is currently emphasizing its digital infrastructure holdings, including data centers, cell towers and fiber networks.

Colony inked a deal in September to sell about 200 hotels to Highgate, a hotel management specialist, which valued the indebted properties at $2.8B. In 2019, Blackstone Group bought Boca Raton, Florida-based Colony’s warehouse portfolio in a $5.9B deal.

Colony now refers to its healthcare portfolio as “wellness infrastructure,” according to a recent filing with the Securities and Exchange Commission. That includes senior housing, skilled nursing facilities, medical office buildings and hospitals.

The company earns income from some of those assets under net leases to single tenants or operators and from MOBs that are both single-tenant and multi-tenant. Some of the company’s senior housing properties are managed by operators under a REIT Investment Diversification and Empowerment Act, or RIDEA, structure, which allows tax benefits compared to receiving rent under a net lease arrangement.

For SoftBank-backed Fortress, the deal would represent a further expansion into healthcare assets. The investor previously owned a controlling stake in Brookdale Senior Living, which it took public in 2005. It sold its remaining interest in that company in 2014.

ATI Physical Therapy, a major chain of outpatient physical therapy clinics in the U.S., will go public in a deal with Fortress Value Acquisition Corp. II, a blank check company formed by Fortress.

New York-based Fortress, along with Altamont Capital Partners, recently struck a deal to buy the bankrupt Alamo Drafthouse Cinema, a chain of upmarket movie theaters that was hit hard by the coronavirus pandemic.

 

Source: Bisnow

Health Care Real Estate Could Be A Coronavirus Safe Haven

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It’s hard to imagine many stocks will do well through the coronavirus pandemic. But health care stocks and real estate investment trusts tend to be defensive sectors that investors flock to because they pay huge dividend yields.

So what happens when you combine the two?

Health care REITs might be a good bet in this scary market environment. Many are positioned well to help manage the COVID-19 coronavirus crisis, particularly companies that own and operate hospitals, medical offices and life sciences and biotech facilities.

“Health care REITs are generally the most defensive, economically resilient property type in the REIT industry,” said CFRA Research analyst Kenneth Leon in a report last week. “The group offers steady cash flow, low risk of rental rate volatility, and stable occupancy levels.”

Leon said that three in particular that he’s recommending are Alexandria Real Estate Equities (ARE), Healthcare Trust of America (HTA) and Medical Properties Trust (MPW).

Healthy Dividend Yields Are A Big Plus In Uncertain Times

The recent interest rate cut by the Federal Reserve may also help boost health care REITs — and all real estate firms — because of their solid dividend yields.

The three healthcare REITs that Leon recommends pay dividend yields ranging from 2.7% to 5%. With the Fed widely expected to slash interest rates again at its meeting next week, perhaps all the way back to 0%, the income that REITs generate will become even more tantalizing to investors flocking to safe havens.

“While COVID-19 has created near-term economic uncertainty, the REIT industry’s strong earnings, solid balance sheets, and high occupancy rates demonstrate that they are entering this situation well-positioned to handle a potential economic slowdown,” said Steven A. Wechsler, president and CEO of the Nareit trade group.

Senior Living Centers Look Risky

But not all health care real estate firms will thrive. Leon thinks investors should avoid companies that run senior living centers, because they won’t be able to safely show their properties to prospective new residents. He noted that many went into lockdown mode during the flu season of late 2017 and early 2018. And the COVID-19 outbreak is even scarier.

“Coronavirus may limit senior housing operators from showing their properties to prospective residents,” Leon wrote. “Precaution is a top priority for health care operators to better control an elevated death rate from severe flu conditions for the elderly.”

Leon remains wary of companies that operate senior housing centers, most notably Healthpeak Properties (PEAK), Ventas (VTR) and Welltower (WELL). Their rental revenue and profit growth will probably be squeezed by the admission of fewer residents.

“Operators cannot conduct visitor tours and sign up new residents.
Senior housing is in effect quarantined to new prospective residents and their families,” Leon wrote.

 

Source: CNN Business