Non-Traded REIT Investors Suffer Major Losses: Northstar Healthcare, Hospital Investors' & AFIN REIT

NorthStar Changes Sponsor, New Chairman and CFO as Investor Lawsuits Continue

DigitalBridge Group Inc. (NYSE: DBRG), former sponsor of the non-traded real property investment trust, NorthStar Healthcare Income Inc. sold its wellness infrastructure business to an investor group that included Highgate and Aurora Health Network. NorthStar Healthcare’s advisor CNI NSHC Advisors was included in the $3.2 billion sale.

DigitalBridge Group, formerly Colony Capital Inc., was rebranded to focus on the digital infrastructure sector in June 2021.

NRF Holdco is the holding company for the Wellness Infrastructure business. It owns a portfolio that includes senior housing facilities, medical office buildings, skilled nursing facilities, and specialty hospitals. The REIT’s new sponsor is NorthStar Healthcare. NRF Holdco employees were DigitalBridge employees who worked in the wellness infrastructure industry.

Northstar Healthcare Lawsuits and Claims By Investors

Investors who bought NorthStar Healthcare Income Inc Reit recently received tender notices from Comrit. They now realize that their shares are only worth a fraction of what they paid on the secondary market.

Justin Chang, Northstar’s Chairman, abruptly resigned this week. Richard Welch will be filling the vacancy. NorthStar REIT’s investment objective is centered on the need-based senior housing sector. This includes independent living facilities and assisted living. Memory care is also available. Skilled nursing facilities are also included.

Investors will notice that the latest valuation does not reflect a decrease of the estimated net asset worth (NAV) as of June 30, 2019, but also appears to have been based on calculations using third-party appraisals for at most 15 properties owned by Northstar. This follows the February 2019 Northstar decision to suspend distributions to investors, after previously reducing the distribution rate by over 50%.

Haselkorn & Thibaut attorneys are looking into financial advisors who had their clients invest in Northstar Healthcare Income Inc, a non-traded real estate investment trust (REIT). Investors can call Haselkorn & Thibaut at a toll-free number to discuss their cases at 1-800-856-3352.

Management Change For Northstar Healthcare

Separately Richard Welch resigned from his position as chairman and director of the board and T. Andrew Smith was elected non-executive chair.

Smith is the president and chief executive of Vigilant Health. He has more than 30 years of experience in healthcare, mergers & acquisitions, real property, capital markets transactions, corporate finance, and healthcare. Brookdale Senior Living, Inc. (NYSE) was his previous CEO. He also served as its president, executive Vice President, General Counsel, and Secretary. He is a member of the Assisted Living Federation of America’s board.

Neale Redington, chief financial officer and treasurer for the REIT, also resigned. Paul Varisano was the chief financial officer at NRF Holdco and was appointed CFO/treasurer of the REIT.

NorthStar Healthcare stated that neither resignation was the product of disagreements within the company.

Varisano was the senior vice president at DigitalBridge, where he was responsible for overseeing finance and accounting for the company’s wellness infrastructure business. Varisano was previously a controller for NorthStar Asset Management Group (DigitalBridge’s predecessor).

Varisano was previously the director of financial accounting at Icon Capital. He also served as an audit senior manager in Deloitte & Touche LLP’s real estate and investment management practices. He is a certified public accountant and has a bachelor’s degree from Northeastern University in business administration.

NorthStar Healthcare Income was created to acquire, invent and manage portfolio equity, debt, and securities investments in healthcare real property. In February 2013, the company was launched and raised $1.7 Billion, with $232.6 Million through its distribution plan. In January 2016, the REIT closed its follow-on offering.

Northstar Healthcare sold 14 assisted living/memory and continuing care retirement communities to Welltower Inc. (NYSE: WELL) in December 2021 for $580 million.

The REIT’s property portfolio, valued at $2.56 billion, included 554 properties as of the third quarter 2021. The REIT had assets of $1.82 billion and liabilities of $1.43 billion.

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