Pramerica/Sunrise sell UK senior centers to Morgan Stanley for $1.1bn

Morgan Stanley has partnered with Sunrise Senior Living to buy and operate 12 assisted living communities that had been developed through a Sunrise partnership with Pramerica.

The property arm of US investment bank Morgan Stanley has formed a joint venture with the US publicly traded company Sunrise Senior Living to acquire and manage 12 assisted living communities already developed or under development throughout the UK. The deal is worth $1.1 billion (€800 million).

The sites were part of a $1 billion Sunrise joint venture with Pramerica, the investment arm of Prudential Financial, struck in January. Under that agreement, Pramerica agreed to invest $160 million in exchange for an 80 percent stake in a project to develop 18 senior living communities in the UK. Sunrise contributed $40 million for a 20 percent stake in the development. Morgan Stanley has now bought 12 of those sites, six of which have already been completed, leaving six still retained by the Pramerica/Sunrise partnership.

It is the first deal in the UK’s senior living sector for Morgan Stanley Real Estate, which will own 90 percent of the new venture. Sunrise and Morgan Stanley have entered into a 30-year management agreement under which Sunrise will operate the communities.

“They ended up selling sooner than they expected,” says Laure Duhot, head of international capital markets at Sunrise. “This provides an quick and attractive exit for the Pramerica joint venture.”

Sunrise, which is based in Virginia and is traded on the New York Stock Exchange, was founded in 1981 and today operates more than 440 senior living communities throughout the United States, Canada, the United Kingdom and Germany. The company’s facilities have a combined resident capacity of more than 52,000. The company currently has 15 operational locations in the United Kingdom, which are typically made up of 80 to 90 high-end unites in wealthy areas.

Morgan Stanley Real Estate is making the investment from its sixth fund, and the beneficiary will be Prudential Real Estate Investors’ third opportunity fund in Europe, PRECO III.