KKR and Partners Buy Sunrise Management Business

In the wake of HealthCare REIT's announced acquisition of Sunrise Senior Living Inc., a partnership led by Kohlberg Kravis Roberts & Co. LP is buying Sunrise's management company business for about $130 million.

New York—In the wake of HealthCare REIT’s announced acquisition of Sunrise Senior Living Inc., a partnership led by Kohlberg Kravis Roberts & Co. LP is buying Sunrise’s management company business for about $130 million. Health Care REIT will also invest about $26 million for a 20 percent interest in the business.

The management company being acquired will include Sunrise’s existing management contracts covering 282 properties, including those that will be acquired by HealthCare REIT. Also included are leasehold interests in 15 properties and 12 development parcels. After closing the deal, a subsidiary of the management company will employ all employees of Sunrise and operate under the Sunrise brand.

Besides KKR, Beecken Petty O’Keefe & Co. and Coastwood Senior Housing Partners LLC are the other partners in the acquisition. Beecken Petty O’Keefe is a Chicago-based private equity management firm founded in 1996 to invest in middle-market buy-out transactions, recapitalizations, and other opportunities in the healthcare industry. California-based Coastwood is also a private firm that specializes in seniors housing.

In August, Sunrise agreed to be bought by HealthCare REIT for $14.50 per share. In September, HealthCare REIT said it would buy majority stakes in all the properties that Sunrise holds in joint ventures. All together, including the JV acquisitions, the real estate value of the merger will be about $3.2 billion. Those deals, as well as the acquisition of the management side of Sunrise, will close in the first half of 2013.

Healthcare REIT is bulking up its seniors housing holdings ahead of an expected expansion in demand for the properties. According to the U.S. Census Bureau, the number of Americans over age 65 will increase by 79 percent by 2030. By acquiring Sunrise, HealthCare REIT expands its presence in a number of major markets, such as New York and Los Angeles.