Sunrise Negotiates $564M Sale/Manage Back Deal

MCLEAN, VA-Senior-living properties owner and developer Sunrise Assisted Living Inc. has just committed to a $564 million deal with investors operating under the guidance of Macquarie Capital Partners LLC. The arrangement calls for Sunrise’s sale/long-term manage back on 44 properties spread out over 13 states. Upon the transaction’s anticipated closing in the latter portion of the second quarter, Sunrise will be left with 10% interest in the properties, as well as the management responsibilities.

“Upon closing of this transaction and satisfaction of the operating contingencies, we will have met our 2003 income goal for the sale/long-term manage back program,” Sunrise chairman and CEO Paul Klaassen notes. “This transaction significantly accelerates our management services transformation by adding attractive long-term management contracts, reducing leverage, providing excess cash flow and increasing visibility for our 2003 earnings.”

The multi-million-dollar deal involves 28 consolidated communities and 16 joint-venture properties, accounting for a total resident capacity of nearly 3,500. In terms of the transaction’s financial ramifications, Sunrise will see $167 million in income and a debt reduction totaling $203 million. When all is said and done the company will still be left in possession of a remaining 66 consolidated and leased communities, of which 34 are eligible for Sunrise’s sale/long-term manage back program.

In March, Sunrise executed a similar deal involving 10 cottage-style assisted living properties in Minnesota. The company completed the sale/long-term manage back of the properties with a Wedum Foundation subsidiary in exchange for $19.2 million. And in December of last year, Sunrise made another sale/long-term manage back deal with Macquarie, in which Sunrise saw $170 million for 11 properties.