VTR 21.91
One to look at
Seniors losing their divvy income are turning into bad pays.
(I'm not looking too much into healthcare reits- should have after seeing SRZ plunge since this thread's origination)
finance.yahoo.com
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Ventas to Buy Sunrise REIT for C$1.14 Billion (Update6)
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By Doug Alexander
Jan. 15 (Bloomberg) -- Ventas Inc., a real-estate investment trust that owns health-care facilities, agreed to buy Sunrise Senior Living Real Estate Investment Trust for C$1.14 billion ($980 million) to enter the seniors housing market in Canada.
Ventas will pay C$15 a unit in cash for Toronto-based Sunrise, operator of 74 seniors residences in Canada and the U.S., the Louisville, Kentucky-based company said today in a statement. That's 36 percent higher than the Jan. 12 closing price.
The purchase will almost double Ventas's revenue, adding seniors homes in six U.S. states and two provinces in Canada, which has one of the oldest populations in the Americas. This is the second transaction in five months for Ventas with a Canadian company, after it agreed to buy 67 medical and seniors housing properties in the U.S. for $649 million from Canada's Reichmann family.
Ventas's offer provided the best ``value'' among companies interested in the Canadian firm, said Sunrise Chief Executive Officer Douglas MacLatchy in an interview. He declined to name the other companies. Sunrise units soared more than a third, after declining 13 percent in the past year before today.
``I think people are going to be happy to call it a day,'' BMO Capital Markets analyst Karine MacIndoe said in an interview. ``Investors were really, really not happy in the last year.''
Sunrise units rose C$3.85, or 35 percent, to C$14.90 at 3:59 p.m. on the Toronto Stock Exchange, its biggest rise since its initial public offering in December 2004.
Stock Rises
``For some time we weren't getting the value recognition in Canada that similar types of companies were getting in the U.S. market, and so we looked at various alternatives to try and create that value for our unitholders,'' MacLatchy said.
Ventas shares rose 34 cents to $42.61 in New York on Jan. 12. The markets were closed today because of a U.S. holiday.
``This transaction will broaden our footprint in North America with entry into the Canadian seniors housing market,'' Ventas Chief Executive Officer Debra Cafaro said today in a statement.
Ventas said total revenue from the 74 acquired communities should be about $387 million this year, with net operating income of about $132 million. The Sunrise acquisition should reduce the company's funds from operations this year by five to seven cents a share, Ventas said in a statement. The Sunrise operations include 11 facilities in Canada and 63 in the U.S.
``They're paying a higher multiple than where they're trading, that's the bottom line,'' MacIndoe said. ``I guess they see the merits of diversifying some of their risk and increasing the quality of their portfolio.''
About 13 percent of Canada's 32.8 million people are over 65 years old, compared with 12.4 percent in the U.S. and 5.5 percent in Mexico, according to data compiled by Bloomberg.
Voting
The takeover requires the support of two-thirds of Sunrise unitholders, in a vote planned for next month. The transaction is expected to close by the second quarter. The purchase includes convertible debentures and about C$1 billion in debt, for a total enterprise value of C$2.1 billion, Sunrise said. Sunrise agreed to pay Ventas a break fee of C$39.8 million if the transaction doesn't succeed.
Merrill Lynch & Co. advised Ventas on the transaction. Sunrise was advised by Toronto-Dominion Bank's TD Securities.
(Ventas will hold a conference call to discuss the transaction tomorrow at 9 a.m. eastern time. The conference will be broadcast on the Internet at ventasreit.com)
To contact the reporter on this story: Doug Alexander in Toronto at dalexander3@bloomberg.net |
