Health Care REIT, Inc. (NYSE:HCN) announced today the completion of the acquisition of the Sunrise Senior Living, Inc. property portfolio, the sale of the Sunrise management company, and the acceleration of all planned joint venture partner buy-outs. The company’s investment in Sunrise properties as of today is $3.4 billion, and that investment is expected to increase to $4.3 billion by July 2013 upon exercise of the company’s rights to acquire additional joint venture partner interests at fixed purchase prices.
“Rapid and efficient execution of a complex acquisition, accelerated joint venture buy-outs at accretive prices, and the favorable sale of the management company has positioned us with the premier seniors housing portfolio in the market place at a price that generates very attractive risk adjusted returns for our shareholders,” commented George L. Chapman, Chairman and CEO of Health Care REIT, Inc. “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. Our partnership in the Sunrise management company and our strong relationship with Kohlberg Kravis Roberts & Co. and Beecken Petty O’Keefe & Company will offer future strategic opportunities, producing immediate and long-term shareholder value.”
The $4.3 billion investment is expected to include 120 wholly owned properties and five joint venture properties. The 125 properties are among the highest quality seniors housing properties in the market place. Approximately 90% of the properties are Sunrise’s well regarded mansion prototype, while the average age of these properties is only eight years. The properties generate average monthly rental rates that are nearly 100% 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. The high quality of these properties is also evidenced by the fact that the median housing value in these markets is 100% higher than the national median. The properties are concentrated in London, Southern California, Chicago, Philadelphia, Boston, Washington D.C., and Montreal. Health Care REIT expects the $4.3 billion acquisition to generate a 6.5% unlevered initial yield, or 6.1% after capital expenditures.