NorthStar Healthcare Moves Toward Merger with Welltower Affiliate

NorthStar Healthcare Income, Inc. is moving closer to a merger that would see its portfolio of senior housing properties absorbed by an affiliate of real estate investment trust Welltower Inc. If the deal moves forward, NorthStar shareholders will receive $3.03 per share in cash , with closing expected in the second quarter of 2025.

The transaction is subject to a shareholder vote, along with standard closing conditions and regulatory approvals. While there’s no guarantee the merger will go through, NorthStar is preparing for the transition by optimizing its portfolio and strengthening its balance sheet.

Positioning for the Future

NorthStar has faced the same headwinds as the broader senior housing industry—rising labor costs, inflation, and regulatory shifts. To navigate these challenges, the company has focused on divestitures and cost management while maintaining high occupancy rates across its properties.

In 2024, NorthStar completed several asset sales , including the $254 million disposal of its stake in Trilogy REIT Holding LLC. Other senior housing properties were also sold or classified as held-for-sale, generating liquidity ahead of the proposed merger. The company now holds $328.5 million in unrestricted cash , giving it financial flexibility regardless of whether the deal closes.

Market Trends Driving Consolidation

Senior housing occupancy has climbed steadily, reaching 87.2% in Q4 2024 , surpassing pre-pandemic levels. The population of adults aged 80 and older—NorthStar’s core demographic—is projected to grow 24% by 2028 , fueling long-term demand.

Despite these tailwinds, access to capital remains tight. Rising interest rates have pushed up financing costs, making it harder for smaller operators to expand. Larger players, like Welltower, have moved to consolidate the sector, acquiring portfolios that offer scale and operational efficiencies.

Financial and Operational Performance

NorthStar’s properties delivered strong results in 2024 , with same-store net operating income (NOI) up 16.9% year-over-year . Occupancy climbed to 90.1% , and management continued working to improve resident fee structures and operating margins.

At the same time, expenses remained a challenge. Higher wages, food costs, and utilities offset some revenue gains. To manage costs, NorthStar has deployed capital into targeted property improvements while streamlining operations.

Shareholder Considerations

For NorthStar investors, the proposed merger represents a clear path to liquidity , but it also raises key questions. Approving the deal locks in a fixed cash payout , while rejecting it leaves room for alternative outcomes—including the possibility of additional asset sales or long-term portfolio growth.

There are also risks to consider:

• Regulatory and Legal Approvals: The merger still requires clearance from regulators and a shareholder vote. Any delays or changes to the deal terms could affect the timeline.


• Market Conditions: Real estate values and financing costs fluctuate. If the deal falls through, NorthStar’s ability to generate returns will depend on market conditions at that time.


• Strategic Alternatives: Without the merger, NorthStar could continue pursuing asset sales and distributions to return capital to shareholders.

What’s Next

A special shareholder meeting will be scheduled to vote on the transaction. If the merger receives approval, NorthStar expects to finalize the deal in the coming months.

For shareholders, the decision comes down to timing and certainty. A cash buyout provides immediate liquidity , while remaining independent leaves room for potential future appreciation . Either way, NorthStar has positioned itself for a transition—whether through this merger or another strategic move.