HealthCare REIT to buy Sunrise Senior for $845 mln

The third-largest health care real estate investment trust by market value HealthCare REIT Inc has agreed to buy Sunrise Senior Living Inc for about $845 million to expand its assisted-living communities.

Health Care REIT will be paying $14.50 a share in cash, a 62% premium over Sunrise’s closing share price of $8.93 yesterday.

As per the data compiled by Bloomberg, Sunrise has about 58.3 million shares outstanding.  The transaction reflects the real estate value of about $1.9 billion, Toledo, Ohio-based Health Care REIT said.

 Health Care REIT said in a quarterly regulatory filing, “Demand for assisted-living and senior housing is expected to rise as the U.S. population ages. The number of residents aged 65 and more will increase 79% through 2030.” 

The acquisition of McLean, Virginia-based Sunrise will expand HealthCare REIT’s presence in major markets like New York, Los Angeles, Washington and Philadelphia.

U.S. healthcare REIT has also announced deals worth $3.44 billion in the last 12 months at an average premium of about 13%. 

The shares of Sunrise rose 60% to $14.26 at the close in New York and share of Health Care REIT dipped 2.7% to $58.14. 

The acquisition includes Sunrise’s 20 wholly owned senior housing communities in the U.S. and Canada and also the company’s interest in joint ventures that own 105 communities and 27 of them in the UK.   

George L Chapman, Health Care REIT’s Chairman and CEO said, “There are very few opportunities of this scale and quality.” He also said, “Senior housing is undervalued relative to other classes of real estate.”  

Post transaction, Health Care REIT will own more than 58,000 units of senior housing.

The deal increases the share of the landlord’s business that is not dependent on government reimbursements and lowers the average age of its properties to 12 years from 13. 

 The Sunrise deal is conditioned on the approval of its shareholders and is scheduled to be completed in first half of 2013.  KeyBanc Capital Markets and Goldman Sachs will serve as financial advisors on transaction and Watchtell Lipton Rosen & Katz was the legal adviser to Sunrise.

HealthCare REIT completed $1.1 billion of acquisitions in the second quarter, including the $509.5 million deal with Chartwell Seniors Housing for properties in Canada.