Sunrise Senior Living Getting Some Traction

December 8, 2008

December 8, 2008
On Friday, December 5, Sunrise Senior Living announced it received $8.3 million in proceeds from the refinancing of eight seniors housing communities where it owns a 15% interest and Ventas owns the remaining 85% interest. In our December issue we referenced that Ventas could buy back the Sunrise minority interests to provide Sunrise with some much-needed liquidity. This recently announced financing is an alternative to that strategy, but one that will yield a much smaller amount of cash.

The market, however, loved it and sent the shares up 74% on Friday and up another 60% today to well over $1.00 per share. In early afternoon trading, the price was $1.59 per share with a volume of more than 2.5 million shares so far today, and that represents a price rise over two days of more than $1.00 per share. We hope it lasts and that there is more to come. We assume that this recent refinancing had more to do with Ventas wanting to raise cash and extend maturities than with helping Sunrise. The deal with Freddie Mac, arranged by KeyCorp Real Estate Capital Markets, was for total debt of $126 million maturing in 2019 with net proceeds to Ventas of just over $46 million after paying down $71 million of existing debt. And 10-year money at 6.5% in this market is about as good as it gets. This is a good transaction for all sides.

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