Why should I invest in a portfolio of equity and debt investments?
“double taxation” treatment i.e., taxation at both the corporate and stockholder levels that generally results from investments in a corporation; and
• pays distributions to investors of at least 90 of its annual ordinary taxable income.
In this prospectus, we refer to an entity that qualifies and elects to be taxed as a REIT for U.S. federal income tax purposes as a REIT. We have elected to qualify as a REIT for U.S. federal income tax purposes commencing with the taxable year
ended December 31, 2013.
Q: What is an “UPREIT”?
A: We own substantially all of our assets and conduct our operations, directly or indirectly, through a limited partnership called NorthStar Healthcare Income Operating Partnership, LP, which we refer to as NorthStar Healthcare Income
Operating Partnership, or our operating partnership. We refer to partnership interests and special partnership interests in our operating partnership, respectively, as common units and special units. We are the sole general partner of our operating
partnership. Because we conduct substantially all of our operations through an operating partnership, we are organized as an umbrella partnership real estate investment trust, or “UPREIT.”
Q: Why should I invest in a portfolio of equity and debt investments?
A: Allocating some portion of your investment portfolio to equity and debt investments in real estate may provide you with portfolio diversification, reduction of overall risk, a hedge against inflation and attractive risk-adjusted returns. For these
reasons, institutional investors like pension funds and endowments have embraced commercial real estate, or CRE, as a significant asset class for purposes of asset allocations within their investment portfolios. According to survey data
published by Preqin in May 2014, private pension plans in the United States had an average target real estate allocation of 10.0, compared with 4.6 in 2012. In addition, 93 of institutional investors surveyed by Preqin in August 2014
planned to maintain or increase their allocation to real estate investments in the future. Individual investors can also benefit by adding a real estate component to their investment portfolios. You and your financial advisor should determine whether
investing in real estate would benefit your investment portfolio.
Q: Why should I invest specifically in a company that is primarily focused on equity and debt investments in healthcare real estate?
A: We believe the current market presents an attractive environment for us to invest in healthcare real estate, with a focus on the mid-acuity senior housing sector. We expect the supply of suitable investment opportunities to grow as: i senior
housing operators seek to monetize real estate assets to fund growth in their core businesses; ii investment managers seek liquidity for investors in limited life funds; and iii senior housing owners, operators and investors face challenges
attracting equity and debt capital to acquire, develop or reposition senior housing facilities given the expertise required to focus on this sector. Moreover, we believe this barrier to entry may result in less competition in the senior housing market
compared to other CRE, sectors since we have observed generalist real estate investors refocus on less operationally intensive assets in the multifamily, industrial, office and retail sectors. In addition, senior housing cash flows should benefit
from favorable supply and demand dynamics. Specifically, we believe that senior housing cash flows will benefit as occupancy levels improve. Although construction levels have recently begun to increase, we believe that favorable
demographic trends and overall limited supply growth will continue to place upward pressure on occupancy and rent levels. In addition, we believe that our growth-oriented capital, together with our management team’s experience and
extensive network of long-standing relationships in the senior housing and CRE finance industries, position us to take advantage of the opportunities described above.