DigitalBridge Group said it has reached an agreement to sell its Wellness Infrastructure business to an investment group composed of two real estate investment firms, Highgate Capital Investments and Aurora Health Network, in a transaction valued at $3.2 billion.
The Wellness Infrastructure business includes a portfolio of more than 300 facilities across senior housing, skilled nursing, medical office buildings and hospitals. Additionally, the Wellness Infrastructure business includes DigitalBridge’s equity interest in and management of its sponsored non-traded REIT (real estate investment trust), NorthStar Healthcare Income.
The consideration includes $316 million of net value to DigitalBridge, composed of $226 million in cash and a $90 million five-year seller note, and the assumption of $2.6 billion in consolidated investment-level debt and $294 million of subsidiary-level debt.
A global digital infrastructure REIT, DigitalBridge said the Wellness Sale, upon completion, advances several of its stated strategic goals.
For one, the Wellness sale represents the final step in the company’s digital transformation, which has seen six non-digital, legacy segments sold in the past two years, in line with net carrying values and ahead of schedule by over a year, according to DigitalBridge.
The sale reflects a second goal, DigitalBridge said, that of simplification. “The sale of the final legacy segment reduces organizational complexity, generates overhead savings and allows for a sole focus on digital,” a statement from the company reads.
Additionally, the Wellness sale increases DigitalBridge’s corporate liquidity to more than $1.5 billion on a pro forma basis, the statement reads, while at the same time reducing consolidated investment-level debt by $2.6 billion and subsidiary-level debt by an additional $294 million.
“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,” said Marc Ganzi, president and CEO of DigitalBridge.
Mahmood Khimji, co-founder and managing principal of Highgate, said that, in partnership with Aurora, his company looks forward to continuing to operate and effectively steward the Wellness healthcare facilities, serving patients and communities in the United States and the United Kingdom.
Joel Landau, co-founder and managing director of Aurora, said that his company looks forward to what he called a productive and value-enhancing partnership with Highgate in accordance with Aurora’s principles, which he said combine a focus on clinical excellence and quality of care alongside Aurora’s knowledge of the market.
In connection with the Wellness sale, Highgate and Aurora will assume $2.6 billion in consolidated investment-level debt collateralized by the Wellness Infrastructure portfolio, as well as $294 million in subsidiary-level debt, including the DigitalBridges’s trust preferred securities (TruPS) and 5.375 percent exchangeable senior notes, which are obligations of NRF Holdco, the holding company for the Wellness Infrastructure business. The Wellness sale net value of $316 million is in line with the net equity carrying value of the underlying assets as of June 30, when accounting for the transfer of the $294 million in subsidiary-level debt included in the Wellness sale.
Digital Bridge expects the Wellness sale to be completed in early 2022, the statement from the company reads, subject to closing conditions and third-party approvals.