TORONTO, December 19, 2018 /PRNewswire/ --
Sun Life Financial Inc. ("Sun Life
Financial") (TSX: SLF) (NYSE: SLF) today announced that it intends
to merge Bentall Kennedy, its leading North American real estate
and property management firm which Sun Life Financial acquired in
2015, with GreenOak Real Estate ("GreenOak"), a global real estate
investment firm with approximately $14
billion (US$11 billion) in
assets under management and nine offices globally. Sun Life
Financial will acquire a majority stake in the combined Bentall
Kennedy and GreenOak entity that will be named Bentall GreenOak and
be part of Sun Life Investment Management. Senior management of
Bentall GreenOak will include executives from both Bentall Kennedy
and GreenOak.
"This transaction is right on strategy, broadening our asset
management pillar by expanding the capabilities of our alternatives
manager, Sun Life Investment Management," said Dean Connor, President and CEO, Sun Life
Financial. "Combining the strengths of two leading and globally
respected real estate investment managers will bring Clients a
broader range of investment solutions that include core, core plus
and value add real estate[1], plus
senior and tactical real estate debt strategies across North America, Europe and Asia."
Sun Life Financial will contribute its interest in Bentall
Kennedy and pay GreenOak shareholders $195
million (US$146 million) in
cash in exchange for a 56% interest in the combined Bentall
GreenOak entity, with GreenOak shareholders holding the remaining
interest. As part of the transaction, Sun Life will have an option
to acquire the remaining interest in Bentall GreenOak approximately
seven years from the closing. Sun Life Financial will also be
acquiring the right to a portion of the GreenOak shareholders'
share of Bentall GreenOak net income in exchange for a fixed amount
to be paid in quarterly installments. This will result in Sun
Life Financial having the rights to approximately 90% of Bentall
GreenOak earnings prior to the Company exercising its option to
increase its ownership level.
"Combining Bentall Kennedy with GreenOak extends our
capabilities in real estate investment solutions, in a
complementary way and increases Sun Life Investment Management's
total assets under management to $75
billion," said Steve Peacher,
President, Sun Life Investment Management. "Bringing together these
two highly experienced teams provides a breadth of strategies and
market reach which will uniquely position Bentall GreenOak to serve
its Clients."
The common shareholders' equity of Sun Life Financial will be
reduced by approximately $730 million
when the transaction closes, from the establishment of a liability
reflecting the present value of the expected settlement price on
the purchase of the remaining interest of Bentall
GreenOak[2]. The ultimate
settlement price will reflect the success of the combined Bentall
GreenOak entity.
The transaction is expected to be accretive to underlying
earnings per share and return on equity in 2019 by $0.04 and 60 bps,
respectively[3]. The transaction
will be financed through surplus cash, resulting in a reduction of
one point in the Life Insurance Capital Adequacy Test (LICAT) ratio
of Sun Life Financial (no impact on the LICAT ratio of Sun Life
Assurance Company of Canada). The
transaction is expected to close in the first half of 2019, subject
to receipt of regulatory approvals and satisfaction of customary
closing conditions.
Berkshire Global Advisors served as financial advisor and Weil,
Gotshal & Manges LLP as legal advisor to Sun Life.
Slides related to this announcement are available at
http://www.sunlife.com
Note to Editors: All figures in Canadian dollars unless
otherwise noted.
Forward-looking information
In this news release, "the Company", "we", "our" and "us" refer
to Sun Life Financial Inc. and its subsidiaries and joint ventures.
Certain statements in this news release are forward-looking,
including but not limited to, statements relating to: (i) our
growth strategies and strategic objectives, (ii) the expected
timing of the closing of the transaction, (iii) the expected source
of funding, (iv) the expected increase in the assets under
management of Sun Life Investment Management, (v) the expected
impact of the transaction on our underlying earnings per share and
return on equity, shareholders' equity and LICAT ratio, and (vi)
other statements that are not historical or are predictive in
nature or that depend upon or refer to future events or conditions.
Forward-looking statements may also include words such as "aim",
"anticipate", "assumption", "believe", "could", "estimate",
"expect", "goal", "intend", "may", "objective", "outlook", "plan",
"project", "seek", "should", "initiatives", "strategy", "strive",
"target", "will" and similar expressions. All such forward-looking
statements are made pursuant to the "safe harbour" provisions of
applicable Canadian securities laws and of the United States
Private Securities Litigation Reform Act of 1995.
The forward-looking statements in this news release represent
our current expectations, estimates and projections regarding
future events and are not historical facts. These forward-looking
statements are not a guarantee of future performance and involve
risks and uncertainties and are based on key factors and
assumptions that are difficult to predict, including the assumption
that the transaction, including the terms of the transaction, will
be approved and completed on terms acceptable to the parties, or at
all, and the assumption that Bentall Kennedy and GreenOak will be
successfully integrated. The forward-looking statements do not
reflect the potential impact of any non-recurring or other special
items or of any dispositions, mergers, acquisitions, other business
combinations or other transactions that may be announced or that
may occur after December 19,
2018. If any non-recurring or other special item or any
transaction should occur, the financial impact could be complex and
the effect on our operations or results would depend on the facts
particular to such item and we cannot describe the expected impact
in a meaningful way or in the same way we could present known risks
affecting our business. The forward-looking statements
contained in this presentation describe our expectations, estimates
and projected future events as at December
19, 2018. Except as may be required by Canadian securities
laws, we do not undertake any obligation to update or revise any
forward-looking statements contained in this news release.
Forward-looking statements are presented for the purpose of
assisting investors and others in understanding our expected
financial position and results of operations as at the date of this
news release, as well as our objectives for the transaction,
strategic priorities and business outlook following the
transaction, and in obtaining a better understanding of our
anticipated operating environment following the transaction.
Readers are cautioned that such forward-looking statements may not
be appropriate for other purposes and undue reliance should not be
placed on these forward-looking statements.
The following are transactional risk factors that could have a
material adverse effect on our forward-looking statements: (1) the
ability of the parties to complete the transaction; (2) failure of
the parties to obtain necessary consents and approvals or to
otherwise satisfy the conditions to the completion of the
transaction in a timely manner, or at all; (3) our ability to
realize the financial and strategic benefits of the transaction;
(4) failure to effectively or efficiently reorganize the operations
of Bentall Kennedy and GreenOak after the transaction has closed;
and (5) the impact of the announcement of the transaction and the
dedication of Sun Life Financial's resources to completing the
transaction on Bentall Kennedy and GreenOak. These risks all could
have an impact on our business relationships (including with future
and prospective employees, Clients, distributors and partners) and
could have a material adverse effect on our current and future
operations, financial conditions and prospects. Other important
risk factors that could cause our actual results to differ
materially from those expressed in or implied by the
forward-looking statements in this news release are listed in the
annual information form of Sun Life Financial Inc. for the year
ended December 31, 2017 under the
heading "Risk Factors" and other regulatory filings filed or
furnished to Canadian and U.S. securities regulators available at
http://www.sedar.com and http://www.sec.gov.
About Sun Life Financial
Sun Life Financial is a leading international financial services
organization providing insurance, wealth and asset management
solutions to individual and corporate Clients. Sun Life Financial
has operations in a number of markets worldwide, including
Canada, the United States, the United Kingdom, Ireland, Hong
Kong, the Philippines,
Japan, Indonesia, India, China,
Australia, Singapore, Vietnam, Malaysia and Bermuda. As of September 30, 2018, Sun Life Financial had total
assets under management of $984
billion. For more information please
visit http://www.sunlife.com.
Sun Life Financial Inc. trades on the Toronto (TSX), New
York (NYSE) and Philippine (PSE) stock exchanges under the
ticker symbol SLF.
About Sun Life Investment
Management
Sun Life Investment Management comprises Sun Life Institutional
Investments (Canada) Inc. and
Bentall Kennedy (Canada) Limited
Partnership in Canada, and Prime
Advisors Inc., Ryan Labs Asset Management and Bentall Kennedy
(U.S.) Limited Partnership in the United
States.
These operations have combined third-party assets under
management of $61 billion as of
September 30, 2018. Sun Life
Investment Management is supported by the investment division of
Sun Life Assurance Company of Canada that manages $146 billion in
assets under management for the Sun Life Financial group of
companies as of September 30,
2018.
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[1] Value add and core plus strategies typically involve
properties that have in-place cash flows, but have the potential to
increase that cash flow over time by making improvements to, or
repositioning the property.
[2] The transaction includes a put option that entitles
the minority owners of Bentall GreenOak to sell their 44% interest
to Sun Life approximately 8.5 years from the close of the
transaction.
[3] Accretion amounts represent estimated full year
impacts. Actual accretion will be subject to a number of factors,
including the anticipated timing of the closing of the
transaction.
Media Relations Contact:
Connie Soave
Director
Corporate Communications
T. 416-407-5721
connie.soave@sunlife.com
Investor Relations Contact:
Greg Dilworth
Vice-President
Investor Relations
T. 416-979-6230
investor.relations@sunlife.com