Transaction Positions Health Care REIT among the Largest Owners of
Seniors Housing Worldwide
TOLEDO, Ohio--(BUSINESS WIRE)--Aug. 22, 2012--
Health Care REIT, Inc. (NYSE:HCN) announced today that it has entered
into a definitive agreement to acquire all of the outstanding common
stock of Sunrise Senior Living, Inc. (NYSE:SRZ) for $14.50 per share in
an all cash transaction. The acquisition positions Health Care REIT
among the largest owners of seniors housing in the world with over
58,000 units located in the U.S., Canada, and the United Kingdom.
As part of the transaction, Health Care REIT will acquire Sunrise’s 20
wholly owned seniors housing communities and Sunrise’s interest in joint
ventures that own 105 seniors housing communities. The 20 wholly owned
communities are located in the U.S. (17) and Canada (3), while the joint
venture communities are located in the U.S. (78) and the United Kingdom
(27). The purchase price reflects a real estate value of approximately
$1.9 billion, of which approximately $950 million will be paid in cash
and the balance through the assumption of debt at an average interest
rate of approximately 4.9%.
“This acquisition powerfully advances our strategic vision: own the
highest quality, private pay seniors housing communities in strong,
growing, affluent markets and align with experienced, dynamic management
teams,” said George L. Chapman, Health Care REIT's Chairman and Chief
Executive Officer. “Sunrise has been a leader in the transformation of
seniors housing. This transaction positions us to build on our
collaborative, relationship based investment philosophy and benefit from
the ongoing transformation of the sector. There are few opportunities to
acquire assets of this quality in a transaction of this scale.”
“Sunrise has been at the forefront for more than 30 years in creating
best-in-class, high-end senior living communities,” said Mark Ordan,
Sunrise’s Chief Executive Officer. “The entire Sunrise management team
is pleased to be entering into this transaction with Health Care REIT.”
Strategic Highlights
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Institutional Quality Properties in High Barrier to Entry Markets.
The communities have a median age of eight years, and 90% of the
communities are Sunrise’s “mansion” prototype. The portfolio is
concentrated in New York, Los Angeles, San Francisco, Washington,
D.C., Philadelphia, Boston, Chicago, and London. Approximately 50% of
the properties are located in top 5 MSAs and approximately 85% of the
properties are located in top 20 MSAs within their respective
countries.
-
Embedded Investment Pipeline In Excess of Two Billion Dollars. The
acquisition includes a real estate pipeline of more than $2 billion
that could be realized over time by purchasing additional interests
from existing Sunrise joint venture partners. At the time of
acquisition, Health Care REIT expects to own on average an
approximately 28% interest in the 105 joint venture communities. Of
the 105 joint venture communities, 37 have purchase options that are
exercisable in 2013, 13 have purchase options that are exercisable in
2014, and 21 are subject to open buy/sell rights that could result in
Health Care REIT acquiring a 100% ownership interest.
-
Acquisition Structured to Capture Strong NOI Growth. Health
Care REIT intends to structure ownership and operation of the wholly
owned communities and any joint venture communities, if and when
acquired, under RIDEA. Health Care REIT expects property-level net
operating income to increase 4% to 5% per year on average over the
long term, assuming economic conditions consistent with the current
market.
-
Future Value Creation. Health Care REIT expects to create
additional value for shareholders when joint venture interests are
acquired, existing debt is refinanced, and operational and structural
efficiencies are achieved.
-
Enhanced Diversification and Private Pay Component. The
transaction is expected to increase Health Care REIT’s private pay
percentage from 74% to 77%. Sunrise will become Health Care REIT’s
second largest operator at approximately 11% of the portfolio based on
investment balance.
Timing and Advisors
The closing of the transaction is subject to approval by the
shareholders of Sunrise. The transaction is expected to close in the
first half of 2013.
BofA Merrill Lynch acted as exclusive financial advisor to Health Care
REIT on the transaction. Arnold & Porter, LLP, Shumaker, Loop &
Kendrick, LLP, and Sidley Austin, LLP acted as Health Care REIT’s legal
advisors.
Conference Call Information
The company has scheduled a conference call on Wednesday, August 22,
2012 at 10:00 a.m. Eastern Time to discuss the acquisition. Telephone
access will be available by dialing 888-346-2469 or 706-758-4923
(international). For those unable to listen to the call live, a taped
rebroadcast will be available beginning two hours after completion of
the call through September 5, 2012. To access the rebroadcast, dial
855-859-2056 or 404-537-3406 (international). The conference ID number
is 23409698. To participate in the webcast, log on to www.hcreit.com
15 minutes before the call to download the necessary software. Replays
will be available for 90 days through those same websites. This press
release is posted on the company’s website at www.hcreit.com
under the heading News.
About Health Care REIT, Inc.
Health Care REIT, Inc., an S&P 500 company with headquarters in Toledo,
Ohio, is a real estate investment trust that invests across the full
spectrum of seniors housing and health care real estate. The company
also provides an extensive array of property management and development
services. As of June 30, 2012, the company’s broadly diversified
portfolio consisted of 1,010 properties in 46 states and Canada.
About Sunrise Senior Living, Inc.
Sunrise Senior Living, a McLean, Va.-based company, employs
approximately 31,600 people. As of June 30, 2012, Sunrise operated 307
communities located in the United States, Canada and the United Kingdom,
with a unit capacity of approximately 29,800 units. Sunrise offers a
full range of personalized senior living services, including independent
living, assisted living, care for individuals with Alzheimer’s and other
forms of memory loss, as well as nursing and rehabilitative services.
Sunrise’s senior living services are delivered by staff trained to
encourage the independence, preserve the dignity, enable freedom of
choice and protect the privacy of residents.
Additional Information and Where to Find It
In connection with this proposed transaction, a proxy statement will be
filed by Sunrise with the United States Securities and Exchange
Commission (“SEC”). Investors are urged to carefully read the proxy
statement and any other relevant documents filed with the SEC when they
become available because they will contain important information.
Investors will be able to obtain the proxy statement, and all other
relevant documents filed by Sunrise with the SEC free of charge at the
SEC’s website www.sec.gov.
Participants in the Solicitation
The respective directors, executive officers and other members of
management and employees of Health Care REIT and Sunrise may be deemed
to be participants in the solicitation of proxies from the shareholders
of Sunrise in favor of the transaction. Information about Health Care
REIT and its directors and executive officers, and their ownership of
Health Care REIT securities, is set forth in the proxy statement for
Health Care REIT's 2012 Annual Meeting of Shareholders, which was filed
with the SEC on March 29, 2012. Information about Sunrise and its
directors and executive officers, and their ownership of Sunrise
securities, is set forth in the proxy statement for the 2012 Annual
Meeting of Shareholders of Sunrise, which was filed with the SEC on
March 23, 2012. Additional information regarding the interests of the
Sunrise directors and executive officers may be obtained by reading the
proxy statement when it becomes available.
Forward-Looking Statements and Risk Factors
This document may contain “forward-looking” statements as defined in the
Private Securities Litigation Reform Act of 1995. When the company uses
words such as “may”, “will”, “intend”, “should”, “believe”, “expect”,
“anticipate”, “project”, “estimate” or similar expressions, it is making
forward-looking statements. Forward-looking statements are not
guarantees of future performance and involve risks and uncertainties.
The company’s expected results may not be achieved, and actual results
may differ materially from expectations. This may be a result of various
factors, including the satisfaction of closing conditions to the
transaction, including, the approval of the transaction by the
shareholders of Sunrise and the receipt of regulatory approvals and
lender or third-party consents; the completion of the sale of the
Sunrise management company to a third party; the respective parties’
performance of their obligations under the transaction agreements;
unanticipated difficulties and/or expenditures relating to the
transaction; the company’s ability to enter into new joint venture
agreements and management contracts; the company’s ability to acquire
interests in properties from joint venture partners; the company’s
ability to realize operating efficiencies; operator/tenant or joint
venture partner bankruptcies or insolvencies; the cooperation of joint
venture partners; exposure to potential losses from the actions of the
company’s venture partners; negative developments in the operating
results or financial condition of operators/tenants or managers; risks
related to non-compliance with government regulations and new
legislation or regulatory developments; the status of capital markets,
including availability and cost of capital; changes in financing terms;
risks related to international operations; the movement of U.S. and
foreign exchange rates; and other factors affecting the execution of the
transaction and subsequent performance, including REIT laws and
regulations. In addition, the ability of Health Care REIT to achieve the
expected property-level NOI growth also will be affected by the effects
of competition within the health care and seniors housing industries (in
particular the response to the proposed transaction in the marketplace).
Additional factors are discussed in the company’s Annual Report on Form
10-K and in its other reports filed from time to time with the
Securities and Exchange Commission. The company assumes no obligation to
update or revise any forward-looking statements or to update the reasons
why actual results could differ from those projected in any
forward-looking statements.
Source: Health Care REIT, Inc.
Health Care REIT, Inc.
Scott Estes, 419-247-2800
Jay Morgan,
419-247-2800
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