Sunrise Senior Living Inc. and CNL Healthcare Trust Inc. formed a new joint venture to which Sunrise will contribute seven consolidated communities containing 687 units and CNL will contribute approximately $57 million. The new joint venture will be owned 55% by CNL and 45% by Sunrise Senior Living with a gross valuation of $226 million.
In connection with the transaction, it is expected that $50 million will be used to pay down existing financing on certain of the communities transferred to the new joint venture. Sunrise is expected to receive $5 million in cash at closing of the transaction.
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Sunrise will continue to operate the seven communities under long term management agreements with a 6% management fee. The seven communities are comprised of:
Sunrise of Gilbert Gilbert, AZ 144 units
Sunrise at Fountain Square Lombard, IL 142 units
Sunrise on Connecticut Avenue Washington, DC 100 units
Sunrise of Louisville Louisville, KY 80 units
Sunrise at Siegen Baton Rouge, LA 79 units
Sunrise of Metairie Metairie, LA 72 units
Sunrise of Santa Monica Santa Monica, CA 70 units
The communities had an average occupancy rate of 85.3% as of March 31, 2012.
Subject to certain restrictions, under the terms of the proposed joint venture, Sunrise will have the right to re-purchase, at Sunrise's option, 100% of our interest in the joint venture in years one and two and years four through seven.
CNL is pursuing mezzanine financing to finance its payment of the joint venture. If it cannot obtain mezzanine financing it may terminate the transfer agreement and pay Sunrise $4 million in transaction costs.
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