Sunrise Senior Living, Inc. (NYSE: SRZ) and Ventas (NYSE:VTR) announced today that the two companies have entered into an agreement where Ventas will acquire the real estate interests of nine limited liability companies in the U.S. and two limited partnerships in Canada from Sunrise for a total of 58 communities. The $186 million sale includes $145 million in mortgage debt netting approximately $41.5 million that Sunrise will use to pay down its credit facilities and other obligations.
As part of the agreement, Sunrise and Ventas will amend the existing master agreement and management agreements for the 58 communities and the other 21 senior living communities in the Ventas portfolio that are already wholly owned by Ventas. Sunrise’s minority interests that will be acquired by Ventas represent between 15 percent and 25 percent ownership interests in these communities. Sunrise recognized approximately $19.5 million during the first half of 2010 for its proportionate share of annualized net operating income after management fees (NOI) from the 58 communities. Occupancy the 58 communities exceeds 89 percent as of today.
"We are pleased that this agreement sets new performance, operating and reporting thresholds that, if met, will enable us to manage these assets for many years, and avoids the previously announced Ventas performance termination rights on a significant number of assets," said Mark Ordan, Sunrise’s chief executive officer. "In addition, selling our joint venture interests to Ventas brings Sunrise additional funds to improve our balance sheet and provide a foundation for careful growth. We have seen clear improvements in performance, and we are excited to do all we can to continue this trend."
“We are pleased to work collaboratively with Sunrise on a multi-faceted transaction that benefits both companies,” Ventas Chairman, President and Chief Executive Officer Debra A. Cafaro said. “Ventas will acquire the real estate interests in 58 senior living communities currently owned by Sunrise, and will receive improvements to the management contracts on all 79 assets managed by Sunrise. Sunrise, in exchange, will receive a significant capital infusion from the transaction and eliminate the currently exercisable termination rights Ventas has under the existing management contracts, thus enhancing Sunrise’s corporate stability and maintaining its preeminent global brand in senior living.”