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Brookfield Asset Management To Acquire MHC Portfolio for $2 Billion

NorthStar Realty Selling 135 Community Portfolio as part of Plan To Monetize Some Assets
May 12, 2016
NorthStar Realty Finance Corp. has agreed to sell its 135 manufactured housing communities to an affiliate of a real estate fund managed by Brookfield Asset Management Inc. for $2.04 billion or about $61,800/pad site.

A portion of the purchase price includes Brookfield assuming $1.27 billion of outstanding mortgage notes encumbering the portfolio.

The manufactured housing portfolio consists of 33,010 pads in 135 communities in 13 states. In addition, the portfolio includes manufactured homes and receivables related to the financing of homes sold to residents.

For portfolios owned during the full quarters ended March 31, 2015 and 2016, net operating income (NOI) was $29.5 million, monthly rent was $504.1 and economic occupancy was 85.9% for first quarter 2016, compared to NOI of $28.8 million, monthly rent of $485.7 and economic occupancy of 85.4% for the first quarter 2015.

Brookfield has put down a $50 million non-refundable deposit to seal the agreement.

NorthStar Realty estimates the sale will generate an internal rate of return of approximately 20%. The sale would result in a net gain of $620 million.

"During 2016, we have continued to focus on creating liquidity in our business by monetizing certain assets at highly attractive valuations,” said Jonathan A. Langer, CEO of NorthStar Realty. “Overall, we are extremely pleased with our asset monetizations to-date, which positions us with over $900 million of liquidity and an additional approximately $700 million anticipated from asset monetizations under contract (including the manufactured housing portfolio sale).”

During the first quarter 2016, NorthStar Realty sold its interest in a $900 million portfolio of senior housing assets, which resulted in net proceeds of $150 million.

NorthStar Realty also agreed to sell 10 multifamily properties for net proceeds of $86 million. The gross price expected is $307 million, including $210 million of in-place mortgage financing which is being assumed as part of the transactions.

The company also is in active discussions to sell a joint venture interest in its health care real estate portfolio. If successful, that sale is expected to generate approximately $500 million in liquidity.

Separately, NorthStar Realty has engaged an advisor to evaluate selling a portion of its medical office building portfolio.

Closing of the manufactured housing portfolio sale is expected to occur in the second half of 2016.

Separately, NorthStar Realty and Colony Capital Inc. are in joint venture negotiations to acquire NorthStar Asset Management Group Inc. For more on that story click here.

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