Property News Healthcare

Sunrise Senior Living

£1.2bn Sunrise Senior Living acquisition reinforces investor interest in private-pay care solutions.

Healthcare REIT, the leading American real estate investment trust in healthcare properties, has announced that it is to acquire Sunrise Senior Living for $1.9bn (£1.2bn), including the assumption of $1bn in debt and a cash consideration of $950m.

Jose de Pablo, Director of Healthcare at Colliers International commented:

“Despite the financial troubles experienced by Sunrise in the past, which put into question the survival of the company, the deal shows a confirmation of its development strategy; one of the reasons underlining this transaction is the fact that Sunrise has an embedded $2bn development pipeline. In addition, it stresses the importance of the quality of the buildings and the locations chosen by Sunrise, and the possibility for other operators to manage those quality assets, since it is expected that a third company will take over the management company, while Healthcare REIT retains the properties.

“With this transaction, Healthcare REIT will control over 58,000 units, and it will be present not only in the US and Canada, but also in the UK, where Sunrise has an interest in joint ventures owning 27 properties.  It is uncertain if the REIT will keep the UK assets or decide to sell them on, but the transaction follows similar interest by US investors in the UK private-pay market.

“The Sunrise transaction has been announced 10 months after Heitman, the global real estate investment management firm, made public the joint venture worth £75m it had signed with Signature, another high quality provider which, like Sunrise, concentrates on the private-pay market, to develop and operate further facilities in the UK. Leading UK operator Barchester has also embarked on similar arrangements in the past, agreeing to lease properties developed through a joint venture between developer Castleoak and investor Bridges Ventures.

“At Colliers International, the specialist healthcare team has been experiencing an increasing interest from investors in distinct care offerings - mainly in products like those of Sunrise or Signature that primarily focus on the private-pay long term care market. The news of the Sunrise acquisition reinforces our views about investors’ preference for quality assets and locations and the reliance on the private-pay market in a time of economic uncertainty.

“It remains to be seen if this international step by Healthcare REIT, albeit fortuitous, will be followed by a continued interest in the UK and European markets from this and other powerful healthcare REITs from across the Atlantic. At Colliers International, we think it is just a matter of time.”

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