HCN, Sunrise Profit in Q3 Following Merger Agreement; Ordan Plans Exit

Net income for Health Care REIT, Inc. (NYSE:HCN) rose 1.8% in the third quarter ended Sept. 30, 2012 to $37.3 million following the company’s $845 million acquisition of Sunrise Senior Living (NYSE:SRZ) announced in August.

However, net income applicable to shareholders fell to $0.16, down 24% compared to last year’s $0.21. 

HCN’s revenues jumped to $47.4 million, nearly 28% above last year’s $37.1 million.


Earlier in the third quarter, HCN announced its plan to acquire Sunrise and its portfolio of properties, valued at $4.3 billion. HCN says it remains on track to close the acquisition by early 2013 and is working with Sunrise to accelerate the buyout of its partners in 105 of Sunrise’s joint-venture properties. 

So far, Sunrise’s buyouts of its joint venture holdings have increased the initial $1.9 billion value of the portfolio to about $3.2 billion, according to earlier announcements

HCN also reported a $0.91 normalized FFO, up 2.2% from last year’s $0.89.


The Company is currently updating its normalized 2012 FFO guidance to reflect recently announced investment and capital activity. Normalized FFO was updated to a range of $3.49 to $3.53 per diluted share. As a result, net income attributable to common stockholders has also been revised to a range of $0.91 to $0.95 per diluted share.

Shortly after HCN released its third quarter results, Sunrise also announced its most recent quarterly performance, evidence of a dramatic turnaround from the national senior living provider’s near-bankruptcy in the first quarter of 2009.

Sunrise reported a third quarter net income of $21.1 million, as compared to a net loss of $8.7 million the company experienced for the same period in 2011. 

Net income applicable to shareholders rose 133% to $0.35, compared to last year’s $0.15.

Revenues fell 3.2% to $32.4 million, compared to last year’s $33.4 million, however.

Under the terms of Sunrise’s Aug. 21, 2012 merger agreement with HCN, the REIT would acquire Sunrise in an all-cash merger with stockholders receiving $14.50 in cash for each share of SRZ common stock. 

Sunrise announced that it will hold a meeting with stockholders on Jan. 7, 2013 to seek stockholder approval of the merger agreement with HCN and certain related matters. Those holding stock as of Nov. 21, 2012 will be entitled to vote at the special meeting. 

Mark Ordan, Sunrise’s CEO and chief turnaround artist, and Greg Neeb, chief administrative and investment officer, will transition from their roles following the close of the company’s sale to HCN, Sunrise announced on Thursday. Ordan agreed to serve as Sunrise’s CEO for up to a year following the completion of the merger. Both he and Sunrise’s founder and chairman, Paul Klaassen, are expected to serve on the Sunrise board after the closing. 

“I am excited to continue to serve as CEO as Sunrise transitions to new leadership,” said Ordan in a statement. “Greg Neeb and I formed a management team during the past years that we are most proud of. We are happy that we have restored Sunrise’s strength, delivered superior shareholder returns, and are placing the company in the very strong hands of the new investor group.”

Written by Jason Oliva

Companies featured in this article: