Sunrise Senior Living, Inc. (SRZ) said Tuesday that it has entered into a settlement and restructuring agreement with HCP, Inc. and certain of its affiliates to, among other things, transition Sunrise from management of 27 HCP-owned senior living communities for an aggregate cash payment of $50 million to Sunrise, and to settle the lawsuits between the company and HCP pending in Virginia and Delaware.
Under the settlement agreement, Sunrise received $40 million on August 31, the effective date of the agreement, and expects to receive $10 million in subsequent installments payable on the earlier of the completion of transitioning, on a portfolio-by-portfolio basis, the 27 senior living communities to a new manager or, subject to Sunrise's compliance with certain transition obligations, 12 months after the effective date. It is Sunrise's understanding that Emeritus Corporation will assume management of many of the transitioning communities.
In connection with the settlement and restructuring agreement, Sunrise made a $15 million principal repayment of its bank credit facility and entered into a 14th amendment to its credit agreement extending the maturity date to December 2, 2011.
Following the transition of the 27 senior living communities to new operators, which is expected to occur within the next 12 months, Sunrise will continue to manage up to 48 communities on behalf of HCP.
Additionally, Sunrise said that it had completed the previously announced sale of eight of the Company's nine German assisted living facilities to GHS Pflegeresidenzen Grundstucks GmbH and Prudential Real Estate Investors.
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