MCLEAN, Va., July 3, 2012 /PRNewswire/ -- Sunrise Senior
Living, Inc. (NYSE: SRZ) announced today that on June 29, 2012, it closed on an agreement with CHT
Partners, LP, a subsidiary of CNL Healthcare Trust, Inc. ("CHT"),
forming a new joint venture to which Sunrise contributed seven
consolidated communities containing 687 units and CHT contributed
approximately $57 million. The new
joint venture is owned approximately 55 percent by CHT and
approximately 45 percent by Sunrise Senior Living Investments,
Inc., a subsidiary of Sunrise Senior Living, Inc., with a
gross valuation of approximately $226
million.
In connection with the transaction, approximately $50 million of CHT's contribution was used to pay
down existing financing on certain of the communities transferred
to the new joint venture. Sunrise received approximately
$5 million in cash at the closing of
the transaction.
Sunrise CEO Mark Ordan commented:
"We are pleased once again to partner with CNL, and to complete
this transaction, which gives us approximately $5 million in cash, and further strengthens our
balance sheet and Sunrise overall."
See below for key transaction terms and statistics relating to
the new joint venture portfolio.
Transaction Benefits
- Two core stabilized Sunrise mansions with additional upside
from five communities transitioning from lease up to
stabilized: Average unit occupancy for the seven communities
was 84.3% for the three months ended March
31, 2012. Average unit occupancy was up 1170 basis
points for the first-quarter 2012 over the first-quarter 2011 and
net operating income for the first quarter of 2012 increased 41
percent over the first quarter of 2011.
- Exceptional financing execution: the Company
secured excellent financing with favorable debt and equity
terms. The new debt refinanced two pools of existing debt on
five of the communities. The first pool was under a
forbearance agreement that was scheduled to mature in January 2013, and the second pool was scheduled
to mature in October 2012. The Company was obligated to the
prior lender on an operating deficit guarantee with respect to the
second pool, but as a result of the refinancing, Sunrise has been
released from such obligation.
- Long-term management contract: the Company secured a
long-term management agreement with a 6 percent management fee and
the unlimited ability to cure any performance shortfalls in the NOI
threshold test that starts in 2014.
- Future asset control: the joint venture agreement
provides certain purchase options and buyout rights, which if
exercised in the future, will allow the Company to control the
assets outright.
Key Joint Venture Terms
Portfolio
Valuation:
|
Approximately $226M
|
Sunrise
Equity Value:
|
Approximately $46M (45%)
|
CHT Equity
Value:
|
Approximately $57M (55%)
|
CHT
Preference on Net Cash Flow:
|
11.0%
annual return on equity (year 1-7)
Pro-rata (year 8+)
|
SRZ Buyout
Option:
|
Sunrise
can buy out CHT interest during years 4 through 7 for a price
equating to a 13% IRR to CHT
|
Buy/Sell
Rights:
|
Either
party can initiate traditional buy/sell rights beginning in year
8
|
Key Financing Terms
Principal
Balances:
|
$55M and
$70M
|
Loan
Maturities:
|
$55M
(March 2019), $70M (June 2019)
|
Interest
Rate:
|
$55M
(4.66%), $70M (5.25%)
|
Guarantees:
|
Standard
non-recourse carve-outs only, made by Sunrise and CHT
|
Security:
|
First lien
mortgages and equity pledges on all 7 properties in
cross-collateralized pool
|
Prepayment
Option:
|
Subject to
yield maintenance
|
Key Management Terms
Management
Length:
|
30 year
term
|
Management
Fee:
|
6% of
Revenue
|
Performance Termination:
|
NOI-based
termination right begins 2014;
Sunrise has unlimited cure rights
|
Key Property Characteristics
Number of
Properties
|
7
|
Unit
Capacity
|
687
|
Average
Age
|
< 5
years
|
SRZ
purpose built mansions:
|
7 out of
7
|
Markets:
|
Washington
DC, Santa Monica, Baton Rouge, New Orleans, Phoenix, Louisville,
Chicago
|
Unit Mix
Breakout:
|
AL (54.4%)
/ ALZ (26.8%) / IL (18.8%)
|
Key Financial Statistics
Avg Unit
Occ% (Q1 2012)
|
84.30%
|
Total Avg
Daily Rate (Q1 2012)
|
$220.81
|
Total
Revenue ('000s)*
|
$46,831
|
6%
Management Fee ('000s)
|
$2,810
|
NOI w/ 6%
MF ('000s)*
|
$13,776
|
NOI
Margin
|
29.4%
|
*March 2012 YTD Annualized by
dividing by 91 and multiplying by 366.
About Sunrise Senior Living
Sunrise Senior Living, a McLean,
Va.-based company, employs approximately 31,600 people. As
of March 31, 2012, Sunrise operated
308 communities located in the United
States, Canada and the
United Kingdom, with a unit
capacity of approximately 30,300 units. Sunrise offers a full range
of personalized senior living services, including independent
living, assisted living, care for individuals with Alzheimer's and
other forms of memory loss, as well as nursing and rehabilitative
services. Sunrise's senior living services are delivered by staff
trained to encourage the independence, preserve the dignity, enable
freedom of choice and protect the privacy of residents. To learn
more about Sunrise, please visit
http://www.sunriseseniorliving.com.
About CNL Healthcare Trust
CNL Healthcare Trust, Inc. is an investment offering that
acquires properties in the senior housing and healthcare sectors,
although it may also acquire other income-producing properties. The
company intends to qualify as a non-traded real estate investment
trust. CNL Financial Group, LLC is the sponsor of CNL Healthcare
Trust. For more information, visit www.CNLHealthcareTrust.com.
Forward-Looking Statements
Certain matters discussed in this press release may be
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Although Sunrise believes
the expectations reflected in such forward-looking statements are
based on reasonable assumptions, there can be no assurance that
these expectations will be realized. Sunrise's actual results could
differ materially from those anticipated in these forward-looking
statements as a result of various factors including, but not
limited to; the risk that we may not be able to successfully
execute our plan to sell certain assets mortgaged pursuant to our
German restructure transaction or the net sale proceeds of the
mortgaged North American properties may not be sufficient to pay
the minimum amount guaranteed by Sunrise to the lenders that are
party to the German restructure transactions when such payment is
required in October 2012; the risk
that we may be unable to reduce expenses and generate positive
operating cash flows; the risk of future obligations to fund
guarantees to some of our ventures and lenders to the
ventures; the risk of further write-downs or impairments of our
assets; the risk that we are unable to obtain waivers, cure or
reach agreements with respect to existing or future defaults
under our loan, venture and construction agreements; the risk that
we will be unable to repay, extend or refinance our indebtedness as
it matures, or that we will not comply with loan covenants; the
risk that our ventures will be unable to repay, extend or refinance
their indebtedness as it matures, or that they will not comply with
loan covenants creating a foreclosure risk to our venture interest
and a termination risk to our management agreements; the risk that
we are unable to continue to recognize income from refinancings and
sales of communities by ventures; the risk of declining occupancies
in existing communities or slower than expected leasing of newer
communities; the risk that we are unable to extend leases on our
operating properties at expiration; the risk that some of our
management agreements, subject to early termination provisions
based on various performance measures, could be terminated due to
failure to achieve the performance measures; the risk that our
management agreements can be terminated in certain circumstances
due to our failure to comply with the terms of the management
agreements or to fulfill our obligations thereunder; the risk that
ownership of the communities we manage is heavily concentrated in a
limited number of business partners; the risk that our current and
future investments in ventures could be adversely affected by our
lack of sole decision-making authority, our reliance on venture
partners' financial condition, any disputes that may arise between
us and our venture partners and our exposure to potential losses
from the actions of our venture partners; the risk related to
operating international communities that could adversely affect
those operations and thus our profitability and operating results;
the risk from competition and our response to pricing and
promotional activities of our competitors; the risk that liability
claims against us in excess of insurance limits could adversely
affect our financial condition and results of operations including
publicity surrounding some claims that may damage our reputation,
which would not be covered by insurance; the risk of not complying
with government regulations; the risk of new legislation or
regulatory developments; the risk of changes in interest rates; the
risk of unanticipated expenses; the risks of further downturns in
general economic conditions including, but not limited to,
financial market performance, downturns in the housing market,
consumer credit availability, interest rates, inflation, energy
prices, unemployment and consumer sentiment about the economy in
general; the risks associated with the ownership and operation of
assisted living and independent living communities; other risk
factors contained in the Company's Form 10-K filed with the SEC on
March 1, 2012, as amended on
March 15, 2012, and as may be amended
or supplemented in our Form 10-Q filings. The Company assumes no
obligation to update or supplement forward-looking statements that
become untrue because of subsequent events. Unless the context
suggests otherwise, references herein to "Sunrise," the "Company,"
"we," "us" and "our" mean Sunrise Senior Living, Inc. and our
consolidated subsidiaries.
Investor Relations Contact
Tim Smith, 703-854-0348
Media Contact
Meghan Lublin, 703-854-0299
SOURCE Sunrise Senior Living, Inc.