NorthStar Healthcare (No)Income

NorthStar Healthcare Income needs to remove Income from its name.  The REIT filed an 8-K late on Thursday (February 7th) announcing that it is suspending its distribution effective immediately.  It's a move that can't be a shock to anyone who has looked at the REIT's financial statements.  Here is the entirety of the statement:

On February 1, 2019, the board of directors (the “Board”) of NorthStar Healthcare Income, Inc. (“NorthStar Healthcare”) determined to suspend the monthly distribution payments to stockholders, effective immediately.

 

In determining to suspend monthly distribution payments to stockholders, the Board performed a thorough analysis of NorthStar Healthcare’s business, financial condition, liquidity sources and capital needs. The Board believes it is prudent to preserve capital and protect NorthStar Healthcare’s financial position by suspending distributions at this time. NorthStar Healthcare expects that cash retained by the suspension of cash distributions will allow NorthStar Healthcare to reinvest in its assets through maintenance and strategic capital expenditures and reduce leverage in order to drive long-term value for stockholders.

The Board will continue to assess NorthStar Healthcare’s distribution policy in light of its operating performance and capital needs. However, there can be no assurance that distributions will be declared again in any future periods or at any particular rate.

When the post-Crash history of non-traded alternative investments is written, NorthStar Healthcare Income's saga will span chapters and include the arrival of deal-happy James Flaherty, the subsequent participation (helping to finance) in joint ventures with parent NorthStar Realty Finance, including NorthStar's highly leveraged acquisition Griffin American Healthcare REIT II, and the irresistible lure of operating skilled nursing facilities.  The original NorthStar executives and Flaherty are long gone but investors in NorthStar Healthcare are stuck with the detritus of their investment hubris.

Need A Google Finance Translator

I think I am pretty good at reading and understanding financial filings, it's what I do.  N-1 Liquidating Trust, the entity that holds the assets of the former NorthStar Real Estate Income Trust that were not part of the Colony Credit Real Estate merger and listing, made a filing today that shouts, "Ha! You want complicated, hold my beer!"  Bifurcation, junior participation, modification, multi-year extension... I read it all as obfuscation to cover capital elimination. 

Eyebrows Raised

I wrote about the merger of three Medley/Sierra entities last summer, but it was one of several posts Blogger pulled citing a complaint.  A sponsor (I suspect) complained about certain posts and included posts involving several sponsors in its complaint, and Blogger, per its policy, removed all the mentioned posts.  Anyway, that was then and this is now.  I read on the DI Wire this morning that NextPoint has submitted an alternative proposal to the Medley/Sierra proposal.  I have not read the proposal in full, but NextPoint's plan to scrap a $125 million internalization fee to Medley caught my attention.  I am curious as to how this drama plays out.  I do encourage you to take a look at Medley Capital Corp's (MCC) five-year stock chart.