Florida-based real estate investment trust DigitalBridge Group has agreed to sell its wellness infrastructure business, which includes more than 140 skilled nursing and senior housing facilities, in a $3.2 billion deal, the company announced Wednesday.
DigitalBridge will sell the assets to an investment group composed of two real estate investment firms, Highgate Capital Investments and Aurora Health Network. The wellness portfolio is composed of 316 properties, including 83 skilled nursing and 65 senior housing facilities, according to filings with the Securities and Exchange Commission.
Under the agreement, DigitalBridge will get a $316 million of net value comprising $226 million in cash and a $90 million five-year seller note. Highgate and Aurora will assume $2.6 billion in consolidated investment-level debt and $294 million of subsidiary-level debt.
DigitalBridge added the agreement allows the company to increase its corporate liquidity to over $1.5 billion on a pro forma basis, while also reducing its debt.
The sale is expected to be completed in early 2022.
“We are thrilled to announce an agreement to sell our Wellness Infrastructure business ahead of schedule and in-line with our carrying values,” Marc Ganzi, president and CEO of DigitalBridge, said in a statement. “Having completed our digital transformation in less than two years, this final step will allow us to emerge as the pure-play, fast-growing digital infrastructure REIT we envisioned from day one.”
DigitalBridge being able to monetize its wellness infrastructure ahead of schedule is “no surprise,” Andre Ulloa, partner and executive advisor with M&A Healthcare Advisors, told McKnight’s Long-Term Care News on Wednesday.
“The healthcare transactional market is extremely active, with demand for lower to mid-cap targets greatly outweighing the inventory of sellers,” Ulloa added. “Where we are seeing the largest spikes in acquisitions are with lower-middle market wellness transactions, particularly in hospice and behavioral health. In operations such as senior housing, skilled nursing facilities, medical offices and hospitals, there are numerous REITs that will purchase the real estate.”
Ulloa added that the challenge, specifically with SNFs, is finding an operations investor.
“In that regard, Aurora has come in to consummate the transaction and continue to grow as preeminent healthcare service operators. This deal adds to what we expect to be a record-breaking year in healthcare M&A,” Ulloa said.