News
May 01, 2005
MAY 2, 2005-- Sunrise Senior Living Inc. said Monday it agreed to acquire Greystone Communities Inc., a developer and manager of continuing care retirement communities, in a move to expand into the not-for-profit sector.
Sunrise will pay $45 million plus about $1 million in transaction costs, representing about seven times Greystone's anticipated 2005 pretax earnings. Sunrise also will pay an additional $7.5 million if Greystone meets certain performance targets in 2005, 2006 and 2007 for a total potential purchase price of $52.5 million, plus transaction costs. The company said it expects to fund the acquisition through existing cash balances and corporate credit facility.
Sunrise said the acquisition will include management of 14 operating CCRCs with capacity for more than 4,000 residents, pre-opening and ongoing management of 17 communities that Greystone has under development for clients, as well as various other consulting and marketing agreements. Sunrise will not acquire any real estate in this transaction, which is expected to close before June 30.
Founded in 1982 and headquartered in Irving, Texas, Greystone will operate as a division of Sunrise under the continued leadership of existing Greystone senior management. The founders of Greystone -- Michael Lanahan and Paul Steinhoff -- as well as Greystone President Mark Andrews and Executive Vice President John Spooner, will enter into employment agreements with four-year terms with Sunrise, effective as of closing.
Greystone-developed communities are typically full-service CCRCs offering a mix of independent living, assisted living, Alzheimer's care and skilled nursing care. Since Greystone's typical management contracts are fixed-fee contracts, Sunrise said it doesn't expect to include their revenue under management in quarterly disclosures.
Sunrise said the purchase will add slightly to 2005 earnings, with additional accretion in 2006. The company is maintaining current 2005 earnings per share guidance of $1.82 to $1.92, which excludes income from property sales and one-time transition expenses relating to the Greystone transaction and Fountains acquisition.
Sunrise Senior Living shares rose 26 cents to $51.50 in morning trading on the New York Stock Exchange.
Preceding press release obtained from Washington Trust Bancorp at www.sunriseseniorliving.com. Berkshire Capital has reprinted this press release substantially in its entirety.
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