Accelerated joint venture partner buy-outs increase aggregate real
estate value to $4.3 billion
TOLEDO, Ohio--(BUSINESS WIRE)--Jan. 9, 2013--
Health Care REIT, Inc. (NYSE:HCN) announced today the completion of the
acquisition of the Sunrise Senior Living, Inc. property portfolio, the
sale of the Sunrise management company, and the acceleration of all
planned joint venture partner buy-outs. The company’s investment in
Sunrise properties as of today is $3.4 billion, and that investment is
expected to increase to $4.3 billion by July 2013 upon exercise of the
company’s rights to acquire additional joint venture partner interests
at fixed purchase prices.
“Rapid and efficient execution of a complex acquisition, accelerated
joint venture buy-outs at accretive prices, and the favorable sale of
the management company has positioned us with the premier seniors
housing portfolio in the market place at a price that generates very
attractive risk adjusted returns for our shareholders,” commented George
L. Chapman, Chairman and CEO of Health Care REIT, Inc. “The Sunrise
properties complement our high quality portfolio of predominately
private pay properties concentrated in affluent high barrier to entry
markets. We expect the Sunrise properties to deliver consistent and
resilient growth in NOI and asset value. Our partnership in the Sunrise
management company and our strong relationship with Kohlberg Kravis
Roberts & Co. and Beecken Petty O’Keefe & Company will offer future
strategic opportunities, producing immediate and long-term shareholder
value.”
The $4.3 billion investment is expected to include 120 wholly owned
properties and five joint venture properties. The 125 properties are
among the highest quality seniors housing properties in the market
place. Approximately 90% of the properties are Sunrise’s well regarded
mansion prototype, while the average age of these properties is only
eight years. The properties generate average monthly rental rates that
are nearly 100% higher than the national average because they are
located in markets with high concentrations of age and income-qualified
elderly, affluence, and significant barriers to entry. The high quality
of these properties is also evidenced by the fact that the median
housing value in these markets is 100% higher than the national median.
The properties are concentrated in London, Southern California, Chicago,
Philadelphia, Boston, Washington D.C., and Montreal. Health Care REIT
expects the $4.3 billion acquisition to generate a 6.5% unlevered
initial yield, or 6.1% after capital expenditures.
$4.3 Billion Sunrise Real Estate Acquisition:
Since the announcement of the proposed acquisition on August 22, 2012,
the company accelerated the buy-out of joint venture partner interests
in 100 of the 105 joint venture properties. Health Care REIT acquired
five of the joint venture properties located in the United Kingdom in
the third quarter of 2012 for $243.5 million. During the fourth quarter
of 2012, Sunrise used $580.8 million of loan proceeds from Health Care
REIT and its own funds to acquire joint venture partners’ interest in 37
of the 105 joint venture properties and to repay certain secured
indebtedness. The loans were converted to owned real estate by the
company as of today’s closing. Also during the fourth quarter of 2012,
Health Care REIT acquired majority interest in and repaid debt related
to five properties located in the United Kingdom for $238.7 million and
reached agreement with additional joint venture partners to acquire
their interest in 53 of the 105 joint venture properties. The company
expects to complete the buyout on these 53 properties on or before July
2013.
Sunrise Property Count Reconciliation:
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Partner
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Announced
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Buy-Outs
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Total
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Remaining
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8/22/12
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To Date
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As of Today
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2013E
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Total
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Wholly Owned
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20
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47
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67
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53
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120
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Joint Venture
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105
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(47)
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58
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(53)
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5
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Total
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125
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125
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125
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The aggregate $4.3 billion acquisition amount includes the anticipated
assumption of $494.0 million of debt with a blended rate of 5.1%. The
assumed debt is net of approximately $2.1 billion of secured debt with a
blended rate of 6.0% that was repaid prior to closing or is expected to
be repaid through mid-2013. The approximate $3.1 billion in cash
required to date to close the loans, the acquisitions and repay secured
debt was funded through the company’s 2012 capital raising activity and
availability under the company’s new unsecured credit facility.
Sunrise Investments Reconciliation:
($’s in millions)
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Total As of
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Remaining
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3Q2012
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4Q2012
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1/9/2013
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Today
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2013E
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Total
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Debt Assumed(1)
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$397.8
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$397.8
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$96.2
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$494.0
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Cash Required
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$243.5
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$819.5
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$1,987.4
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$3,050.4
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$729.8
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$3,780.2
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Acquisition Amount
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$243.5
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$819.5
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$2,385.2
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$3,448.2
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$826.0
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$4,274.2
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(1)
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Debt assumed is net of payoffs that occurred as of closing or are
expected to occur shortly after respective closing dates.
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Sunrise Senior Living Management Company Sale:
Immediately prior to the acquisition of the Sunrise property portfolio,
an entity led by affiliates of Kohlberg Kravis Roberts & Co. L.P. and
affiliates of Beecken Petty O’Keefe & Company acquired the Sunrise
management company for approximately $130 million, with Health Care REIT
investing approximately $26 million for a 20% ownership interest. The
Sunrise management company will employ the employees of Sunrise Senior
Living and operate under the “Sunrise” name and brand.
Advisors
BofA Merrill Lynch acted as exclusive financial advisor to Health Care
REIT on the transaction. Arnold & Porter, LLP, Goodmans, LLP, Nabarro,
LLP, Shumaker, Loop & Kendrick, LLP, and Sidley Austin LLP, acted as
Health Care REIT's legal advisors.
About Health Care REIT, Inc.
Health Care REIT, Inc., an S&P 500 company with headquarters in Toledo,
Ohio, is a real estate investment trust that invests across the full
spectrum of seniors housing and health care real estate. The company
also provides an extensive array of property management and development
services. As of September 30, 2012, the company’s broadly diversified
portfolio consisted of 1,030 properties in 46 states, the United
Kingdom, and Canada.
Forward-Looking Statements
This document may contain “forward-looking” statements as defined in the
Private Securities Litigation Reform Act of 1995. When the company uses
words such as “may,” “will,” “intend,” “should,” “believe,” “expect,”
“anticipate,” “project,” “estimate” or similar expressions, it is making
forward-looking statements. Forward-looking statements are not
guarantees of future performance and involve risks and uncertainties.
The company’s expected results may not be achieved, and actual results
may differ materially from expectations. This may be a result of various
factors, including, but not limited to, unanticipated difficulties
and/or expenditures relating to the Sunrise acquisition; the company’s
ability to enter into new joint venture agreements and management
contracts; the company’s ability to acquire interests in properties from
joint venture partners; unanticipated difficulties and/or expenditures
relating to the joint venture partner buy-outs; the cooperation of joint
venture partners; the status of capital markets, including availability
and cost of capital; changes in financing terms; competition within the
health care and senior housing industries; negative developments in the
operating results or financial condition of the operator/tenant,
including, but not limited to, its ability to pay rent; operator/tenant
bankruptcies and insolvencies; governmental regulations affecting
Medicare and Medicaid reimbursement rates and operational requirements;
liability or contract claims by or against the operator/tenant;
unanticipated difficulties and/or expenditures relating to the
integration of multi-property acquisitions; issues facing the health
care industry, including compliance with, and changes to, regulations
and payment policies, responding to government investigations and
punitive settlements and the operator/tenant’s difficulties in
cost-effectively obtaining and maintaining adequate liability and other
insurance; and changes in rules or practices governing the company’s
financial reporting. Additional factors are discussed in the company’s
Annual Report on Form 10-K and in its other reports filed from time to
time with the Securities and Exchange Commission. The company assumes no
obligation to update or revise any forward-looking statements or to
update the reasons why actual results could differ from those projected
in any forward-looking statements.
Source: Health Care REIT, Inc.
Health Care REIT, Inc.
Scott Estes, 419-247-2800
Jay Morgan,
419-247-2800