Fortress Investment Group LLC is in talks to acquire some of the non-core assets of the real estate investment trust (REIT) Colony Capital (NYSE: CLNY), including its skilled nursing portfolio, Bloomberg reported on March 8.
Fortress, which is based in New York and is owned by SoftBank Group, has about $50 billion of assets under management as at Sept. 30; it is in discussions to acquire Colony’s “wellness infrastructure portfolio,” according to Bloomberg. The real estate for that portion of Colony’s holdings was valued at approximately $3.3 billion as of December 31, 2020, with $2.7 billion of debt, according to Bloomberg.
According to Colony’s 10-K form filed with the Securities and Exchange Commission (SEC) on March 1, it had 83 skilled nursing properties with a capacity of 9,713 beds, as of December 31, 2020. The average occupancy is 70.5%, with an average remaining lease term of four years.
“We sold two portfolios of net lease skilled nursing facilities, totaling six properties with 909 beds, and a land parcel in 2020, resulting in repayment of $51.5 million of associated debt,” Colony said of its wellness infrastructure portfolio in that filing. “A portfolio of skilled nursing facilities, composed of 11 properties totaling 1,515 beds, is currently held for disposition, with a carrying value of $152.7 million and encumbered with $75.2 million of outstanding debt principal. The Company expects to apply proceeds from the sale to repay the debt.”
The 83 SNFs in Colony’s wellness infrastructure portfolio accounted for $93.37 million in net operating income (NOI) in 2020, compared with NOI of $102.53 million in 2019. In terms of footprint, the REIT has SNFs in 15 states; Florida and Indiana account for the most at 11 and 19 facilities, respectively.
Colony has warned that of a coming “significant decline” in revenue and net operating income from its wellness arm, Bloomberg noted, as COVID-19 led to occupancy drops at its senior housing, skilled nursing, and hospital properties in 2020. The REIT has been focusing on real assets represented by data centers, fiber networks, and cell towers, and divesting non-digital holdings as a result, Bloomberg noted.