TOLEDO, OH—Health Care REIT Inc., based here, said Wednesday that it has closed its $3.4 billion acquisition of Sunrise Senior Living Inc., but will be acquiring additional joint venture partner interests in Sunrise properties, for a total of $900 million, by July.
The $4.3 billion investment is expected to include 120 wholly owned properties and five joint venture properties. The average age of these properties is only eight years. According to Health Care REIT officials, these properties generate average monthly rental rates that are nearly 100 percent higher than the national average because they are located in markets with high concentrations of age and income-qualified elderly, affluence, and significant barriers to entry. These sites are in London, southern California, Chicago, Philadelphia, Boston, Washington D.C., and Montreal.
George Champan, chairman and CEO at Health Care REIT, said the purchase provided a premier seniors housing portfolio during a time that these properties are providing attractive returns compared to the general investment market. “The Sunrise properties complement our high quality portfolio of predominately private pay properties concentrated in affluent high barrier to entry markets. We expect the Sunrise properties to deliver consistent and resilient growth in NOI and asset value.”
Health Care REIT has also sold the Sunrise management company for $130 million, a legal requirement, as REITs are not allowed to own management firms outright. However, the trust has an interest in the new management firm, an entity led by affiliates of Kohlberg Kravis Roberts & Co. LP and affiliates of Beecken Petty O’Keefe & Co. The affiliates have said they will employ the former Sunrise workers and continue to operate under the Sunrise brand.
BofA Merrill Lynch acted as exclusive financial advisor to Health Care REIT on the transaction. Arnold & Porter LLP, Goodmans LLP, Nabarro LLP, Shumaker Loop & Kendrick LLP, and Sidley Austin LLP acted as the trust’s legal advisors.