NorthStar Healthcare to Proceed with Merger

The company voluntarily issued supplemental disclosures to ease litigation risk and avoid delaying the deal.

May 28, 2025

NorthStar responds to shareholder pressure

NorthStar Healthcare is moving ahead with its planned merger with an affiliate of Welltower Inc.—and taking steps to keep the deal on track.

In response to shareholder pushback over the company's original proxy disclosures, NorthStar issued a new set of supplemental materials. These additions aim to reduce legal friction and avoid disruptions ahead of the upcoming shareholder vote on June 4, 2025. Two lawsuits and four demand letters had challenged the completeness of the company’s earlier filings. NorthStar maintains that its disclosures already met legal requirements but made the updates anyway to reduce the risk of delays or litigation.

The proposed merger, first announced in January, will combine NorthStar with Compound Merger Sub LLC , under the umbrella of Compound Holdco LLC. Welltower OP LLC will act as guarantor. The merger agreement includes a go-shop period, allowing NorthStar to explore alternative bids—though none ultimately materialized.

Additional context on the deal process

NorthStar used the supplemental release to give shareholders a closer look at how the transaction came together. It outlined outreach to 21 prospective buyers ahead of the formal marketing process, including:

• Real estate investment trusts (REITs)


• Health care providers


• Strategic operators and financial sponsors

While there was initial interest, the company didn’t release detailed due diligence materials at that point. Later outreach in early 2025 brought more potential buyers to the table, but no firm offers arrived before the deadline.

Valuation, financial forecasts, and next steps

The filing also revisits Welltower’s initial offer, which landed in November 2024. The proposal valued NorthStar’s equity at $563 million and gross assets at $935 million, with no financing condition. It also made clear that Welltower would prefer exclusivity and wasn’t focused on retaining NorthStar’s management team post-closing.

Further down, the new disclosures break out NorthStar’s financial outlook and deal valuation work. A discounted cash flow analysis shows projected growth through 2029, with unlevered free cash flow rising from $41.4 million to $60.1 million over the period. Peer valuation benchmarks and detailed cap rate assumptions are also included, giving shareholders a clearer view of how the deal was assessed.

NorthStar emphasized that these updates do not reflect any admission of legal necessity. Rather, they’re a way to streamline the process, remove barriers, and ensure shareholders have the information they need before casting their votes.

The outcome of that vote will decide whether the merger moves forward. If approved, NorthStar will become part of Merger Sub and no members of its current leadership are expected to stay on.