Ventas to Buy Sunrise Senior Housing REIT for $1.8 Billion

Healthcare REIT Ventas Inc. will enter the Canadian senior housing market by acquiring the Toronto-based Sunrise Senior Living REIT for approximately $1.8 billion in cash and debt. The price amounts to about C$15 per unit, a 35.7% premium over the units' Friday close. Sunrise units rose 35% to C$14.90 on the news yesterday. The buyout includes 74 private communities in desirable metropolitan areas in the U.S. and Canada that collectively house 7,000 residents. Canada has one of the oldest populations in the Americas (about 13% are over 65 versus 12.4% in the U.S. and 5.5% in Mexico). Ventas expects the communities to increase revenue from private pay assets to about two-thirds of total revenue. Total revenue from the communities is forecast at around $387 million in 2007, with net operating income of about $132 million. With the purchase, Ventas has also acquired exclusive right of first offer for other new assets in Canada and parts of the U.S. The transaction is expected to close in Q2.

• Sources: Bloomberg, MarketWatch, MoneyCentral
• Related commentary: Real Estate Investment Trusts: Rent or Buy?, New REIT ETFs Open Up Lucrative World of Commercial Mortgages, Eye on Health Care REIT, REIT ETFs - Comparative Analysis
• Potentially impacted stocks and ETFs: Ventas Inc. (VTR), Sunrise Senior Living Inc. (SRZ). Competitors: Health Care Property Investors Inc. (HCP), Healthcare Realty Trust Inc. (HR), Nationwide Health Properties Inc. (NHP), Manor Care Inc. (HCR). ETFs: Vanguard Small Cap Value ETF (VBR), Vanguard Small Cap ETF (VB)

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