Health Care REIT Inc., the Toledo-based owner of senior housing and health-care properties, announced Wednesday that it had agreed to acquire Sunrise Senior Living Inc. in a cash deal valued at $845 million.
The real estate investment trust said it had set a purchase price for Sunrise of $14.50 a share, a 62 percent premium over Sunrise’s closing share price of $8.93 Tuesday.
Sunrise has about 58.3 million shares outstanding, implying a value of $845 million. The acquisition reflects a real estate value of about $1.9 billion, Health Care REIT said in a statement.
The deal must be approved by Sunrise shareholders and is scheduled to be completed in the first half of 2013.
Health Care REIT’s stock fell nearly 2.7 percent Wednesday to finish at $58.14 on the New York Stock Exchange. Sunrise shares jumped nearly 60 percent, gaining $5.33 to close at $14.26.
The Toledo real estate investment trust said it will acquire Sunrise’s 20 wholly-owned senior housing communities in the United States and Canada as well as the McLean, Va.-based company’s interest in joint ventures that own 105 communities, including 27 in the United Kingdom.
Demand for assisted-living and senior housing is expected to rise as the U.S. population ages. The number of residents aged 65 and over will increase 79 percent through 2030, Health Care REIT said in a quarterly regulatory filing, citing Census Bureau data.
“This acquisition powerfully advances our strategic vision: own the highest-quality, private-pay senior housing communities in strong, growing, affluent markets,” said George L. Chapman, Health Care REIT’s chairman and chief executive officer.
After the transaction, HealthCare REIT, which is the third-largest health care real estate investment trust by market value, will own more than 58,000 units of senior housing, according to the statement.
The deal increases the share of the real estate investment trust’s business that isn’t dependent on government reimbursements and lowers the average age of its properties to 12 years from 13 years, according to a presentation on the company’s Web site.
The decline in average age, along with a high revenue per occupied room, suggests Health Care REIT is getting “new properties with the right amenities in good, strong locations,” said John Sheehan, an analyst with Edward Jones in St. Louis.
U.S. health-care REITs have announced deals totaling $3.44 billion in the last 12 months at an average premium of about 13 percent, according to data compiled by Bloomberg.
Health Care REIT completed $1.1 billion of acquisitions in the second quarter, including a $509.5 million deal with Chartwell Seniors Housing for properties in Canada.
The Sunrise deal is far from Health Care REIT’s largest acquisition.
In its largest deal to date, the real estate investment trust spent $2.4 billion in March, 2011, to acquire the real estate assets of privately-held Genesis HealthCare, an operator of rehabilitation facilities, nursing homes, and assisted-living complexes in the Northeast and Mid-Atlantic states.
In August, 2010, Health Care REIT completed an $817 million partnership with Seattle-based Merrill Gardens LLC. The local firm took an 80 percent stake in Merrill Gardens, which operated 38 retirement communities, primarily in California and Washington state.