NorthStar Realty Finance Corp. (NYSE:NRF) Adds Griffin-American Healthcare REIT To Portfolio for $3.4B

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By Hanson So on August 6, 2014 BioPharma

Stocks of NorthStar Realty Finance Corp. (NYSE:NRF) increased by 4.68 percent and reached to $16.90 as soon as the company announced its deal to acquire the Griffin-American Healthcare REIT II. According to the Bloomsberg reports, the purchase price has been set at $3.4 billion. This acquisition deal made by Northstar Realty Finance Corp. (NYSE:NRF) will result in the expansions of its senior housing and medical offices’ holdings.

Not only is NorthStar paying $3.4 billion for the deal, but it will also assume Griffin-American’s debt of approximately $600 million. NorthStar will pay the shareholders of Griffin-American a total of $11.50 per share: $7.75 will be paid in cash whereas the rest of the amount will be adjusted by offering them the common stocks of NorthStar.

Analysts at TheStreet have given NorthStar Realty Finance Corp. (NYSE:NRF) a score of C with a rating of ‘Hold’. When asked about their recommendation, the analysts said that the company no doubt has some strength but it also has some weaknesses, and that brings the company to a neutral point. It is hard to predict anything since the company can move to any direction.

Talking about the strengths of the company, NorthStar has high revenue growth and operating cash flow, and its profits margins are also expanding significantly. Nonetheless, these strengths are outweighed by the weaknesses of the company. The weaknesses can be seen in the net income category; the net income is declining day by day.

Some Highlights:

The revenue growth rate of the company has increased significantly and surpassed the industry average of 9.5 percent. If the current year figures are compared with that of the same quarter a year back, a growth of 47.8 percent can be seen. However, this growth has not reached the bottom line yet as the earnings are still on a decline.
Cash flow for operations has increased by 25.82 percent when compared to the figures of last year, and reached to $53.70 million. The cash flow of NorthStar Realty Finance Corp. (NYSE:NRF) has also surpassed the growth rate of the industry.
The company has seen a huge decline in its EPS (earnings per share) if the recent quarter’s figures are compared with the same quarter of last year. It will not be wrong to say that the company has been showing somewhat volatile earnings lately. Last year, the company’s earnings were recorded to be at -$1.10; however, market analysts are expecting the trend to change this year and have predicted earnings of $2.05 for the company’s shares.
Coming to the stock prices of NorthStar Realty Finance Corp. (NYSE:NRF), the shares are down by 17.86 percent and have also underperformed in the Standard & Poor’s 500.
NorthStar Realty Finance Corp. (NYSE:NRF) has underperformed in both the Real Estate trust industry as well as the Standard & Poor’s 500, based on its net income figures. If the figures of the recent quarter are compared with that of the same quarter a year back, a decline of 348.9 percent can be seen. The income has gone down to -$119.37 from a previously held income of $47.96 million.