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MCLEAN, VA-Sunrise Senior Living Inc. and Parsippany, NJ-based Prudential Real Estate Investors are forming another joint venture to fund additional development in the European market. The new JV, which will have a total investment capacity of $1 billion, is a de facto extension of the two firms' first joint venture that launched in 2002.

"We still have a very large pipeline from that JV; there is still incredible demand for our product in the market," Lisa Mayr, Sunrise's vice president, Investor Relations and Capital Markets, tells GlobeSt.com.

The two firms are contributing some $200 million in equity to the venture; PREI is contributing $160 million on behalf of investors, including those in its Preco III fund; Sunrise is adding $40 million, with ownership of venture splitting 80% to 20%, respectively. The JV will leverage about $800 million in mortgage-backed financing from third party lenders.

The JV expects to develop an estimated 18-assisted living communities in metro areas throughout the United Kingdom over the next four years. Sunrise will operate these facilities under long-term agreements.

Once complete, these communities will add an additional 1,800 beds--at 100 beds per facility--to Sunrise's European portfolio. Currently it has 1,200 beds with 3,000 under development. Five of its facilities are fully stabilized with occupancy rates in the high 90%, Mayr says. "The others are in process of stabilization," she says.

All together Sunrise has 12 operating communities in the UK, with 18 additional currently under development or in the construction phase. The company also has a presence in Germany and is looking at other European markets.

"We are pleased with the success of our first 12 projects in the UK," says Thomas Newell, president of Sunrise, in a statement. "We see tremendous potential for growth in the UK and other European markets and believe PREI is an excellent partner for the next phase of this growth."

In January 2005, that JV received an infusion of new equity bringing total development funding to approximately $864.2 million--a $467.1 million or 118% increase over the venture's initial capital structure.

Instant Insights /

Sunrise Forms $1B European JV With PREI

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