Sunrise Senior Living, Inc. (NYSE: SRZ) announced that it has entered into an agreement to sell 21 wholly owned assisted living communities, located in 11 states, to BLC Acquisitions Inc., an affiliate of Brookdale Senior Living Inc. (NYSE: BKD), for $204 million. The portfolio has a total of 1,389 units, comprised of 92 independent living units, 876 assisted living units and 421 Alzheimer’s units. The communities are located in 11 states — California, Colorado, Connecticut (2), Georgia, Indiana (4), Michigan, New Mexico, North Carolina, Ohio (6), Pennsylvania (2) and Virginia.
BLC placed $5 million into escrow towards the purchase price and expects to finance the transaction with approximately $134 million of mortgage debt (substantially through the assumption of existing debt), with the balance of the purchase price to be paid from cash on hand. The transaction is expected to close in November 2009.
“This is another important step in our restructuring process and provides us with needed funds to pay down our bank line and with additional working capital,” said Mark Ordan, Sunrise’s chief executive officer. “We are particularly pleased that our residents and team members in these communities will join a fine and committed operator like Brookdale.”
At the closing of the sale, Sunrise is expected to receive approximately $60 million in proceeds after payment or assumption by BLC Acquisitions of certain mortgage loans, the posting of required escrows, and payment of expenses by Sunrise, but prior to the use of any such funds to repay a portion of the outstanding amounts under Sunrise’s bank credit facility. Sunrise expects to record an impairment charge of approximately $7 million in the third quarter of 2009 to write down five of the 21 communities to fair value. Sunrise expects to record a gain on the sale of real estate of approximately $50 million upon closing of the transaction.
"We are extremely pleased to be adding these high-quality assets to our portfolio. Many of these communities are in markets where we have either built or are building a continuum network. We see significant upside potential in these assets and expect to leverage the full resources of Brookdale to quickly add operating and marketing support as well as introduce our array of ancillary services. In fact, over 80% of the units are in markets that we can immediately serve with therapy and 55% with home health. We expect that the transaction will be accretive beginning in 2010. We look forward to building on the success of these communities, providing high-quality care and services to these residents and welcoming the communities’ associates into the Brookdale family," said Bill Sheriff, CEO of the Brookdale.
For Sunrise’s 8-K filing, click here.