UPDATE 3-Health Care REIT to buy Sunrise for $845 mln

Wed Aug 22, 2012 2:50pm EDT

* Health Care offers $14.50 per share

* Offer at 62.4 percent premium to Sunrise stock's Tuesday close

* Deal for 20 wholly owned facilities and stakes in 105 JV properties

* Health Care to spend another $2 bln by 2014 to buy stake in Sunrise JVs

By Adithya Venkatesan and Esha Dey

Aug 22 (Reuters) - Health Care REIT Inc will buy Sunrise Senior Living Inc for about $845 million in an all-cash deal to bulk up its assisted living portfolio as affluent baby boomers prepare to retire.

Health care real estate investment trusts (REITs) have been targeting retirement villages over the last few years as an aging U.S. population spurs demand for such communities that provide access to nursing facilities.

The three largest publicly listed U.S. healthcare REITs -- Ventas Inc, HCP Inc and Health Care REIT Inc -- have been deploying cash to pick up senior living facilities and other healthcare-related properties, especially after a 2007 law that gives these companies more room to grow.

According to the law, REITs can earn rents on leased properties and also capture the operating income from those facilities by retaining independent management for a fee.

On a conference call with analysts, Health Care REIT said it would own the real estate, while the Sunrise management team continues to operate the communities.

Other recent deals in the sector include Ventas' $5.8 billion acquisition of Nationwide Health in February 2011, and a deal by Health Care REIT around the same time to buy 19 senior housing communities from Brandywine Senior Living for $600 million.

The Sunrise deal boosted shares of operators of retirement homes such as Capital Senior Living Corp, Brookdale Senior Living Inc and Assisted Living Concepts Inc .

WIDER DEAL

Besides gaining access to Sunrise's 20 wholly owned seniors housing communities, the deal gives Health Care REIT 28 percent ownership of 105 joint venture properties owned by Sunrise.

Health Care said it plans to spend about $2 billion more to pick up the remaining stake in those properties by 2014.

"Strategically, and in terms of the real estate Health Care is acquiring, it is a good deal," Sandler O'Neill & Partners LP analyst James Milan said.

The deal also gives the REIT access to three wholly owned properties in Canada and 27 joint venture properties in the United Kingdom, which the company noted offered comparable demographic and demand characteristics to the United States.

McLean, Virginia-based Sunrise's core U.S. locations include New York, Los Angeles, Washington D.C., Boston and Chicago.

Health Care's all-cash $14.50 per share offer represents a 62.4 percent premium to Sunrise stock's Tuesday close.

Shares of Sunrise, which had a market value of about $520.2 million as of Tuesday's close, was trading at $14.22 in the afternoon on the New York Stock Exchange.

Shares of Health Care, with a market value of $13.54 billion as of Tuesday, were down 2.8 percent at $58.04 on the same exchange.

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