* Health Care offers $14.50 per share
* Offer at 62.4 percent premium to Sunrise stock's Tuesday
* Deal for 20 wholly owned facilities and stakes in 105 JV
* Health Care to spend another $2 bln by 2014 to buy stake
in Sunrise JVs
By Adithya Venkatesan and Esha Dey
Aug 22 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
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
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