Business & Finance
Business and Finance
Business and Finance
Thu, December 9, 2010
Wed, December 8, 2010 Ventas, Sunrise Senior Living, DineEquity, Brinker International and Denny's Corporation
CHICAGO--([ BUSINESS WIRE ])--Zacks.com Analyst Blog features: Ventas Inc. (NYSE: [ VTR ]), Sunrise Senior Living Inc. (NYSE: [ SRZ ]), DineEquity Inc. (NYSE: [ DIN ]), Brinker International Inc. (NYSE: [ EAT ]) and Denny's Corporation (Nasdaq: [ DENN ]) .
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Here are highlights from Tuesdaya™s Analyst Blog:
Ventas Completes Sunrise Acquisition
Ventas Inc. (NYSE: [ VTR ]), a leading healthcare real estate investment trust (aREITa™), has recently completed the acquisition of the full ownership of 58 high-quality senior living communities from Sunrise Senior Living Inc. (NYSE: [ SRZ ]), the largest provider of senior living services in the U.S., for $186 million (including $144 million in mortgage debt). Both the companies also modified the management agreements on the entire Sunrise portfolio.
Ventas previously had a 100% ownership stake in about 21 of the 79 senior housing communities that were managed by Sunrise. In the remaining 58 communities, Ventas had a partnership share of 75% to 85% with the balance owned by Sunrise. With the deal, Ventas would fully own the Sunrise portfolio, thereby strengthening its position in the senior living segment.
Ventas expects the transaction to be accretive to earnings. For full year 2010, the company has increased its recurring FFO guidance in the range of $2.84 a" $2.86 per share from $2.75 a" $2.80. Ventas has also increased its NOI guidance from Sunrise-owned properties to $150 million a" $154 million from $139 million a" $145 million. The management fee for the Sunrise portfolio for April 1 through December 31, 2010 was mutually agreed upon at 3.5% of revenues, while that of 2011 at 3.75%.
On the other hand, Sunrise has received a significant capital infusion from the asset sale that has increased its liquidity. The deal also eliminated the previously exercisable termination rights Ventas had under the existing management contracts, thereby augmenting Sunrisea™s corporate stability, yet maintaining its pre-eminent global brand in senior living.
DineEquity to Sell 30 Applebeea™s
California-based DineEquity Inc. (NYSE: [ DIN ]) announced that it has inked a deal to sell 30 company-owned Applebee's restaurants in Washington D.C. and nearby areas. The financial consideration of the deal comes at $32 million. This deal will likely prove to be beneficial in reducing financing obligations and to build up a franchise-centric operation.
In October 2010, DineEquity also announced the sale of 36 company-operated Applebee's restaurants in Missouri, Illinois and expects to close the deal in the first quarter of 2011.
The sale of 30 restaurants will bring in after-tax proceeds of approximately $27 million. Management expects to close the deal in first quarter 2011. Potomac Family Dining Group is the franchise partner in the deal.
Following the steps of most of the noted restaurant companies in the U.S., DineEquity is also shifting its focus toward franchised operations from company-owned restaurants as a de-risking strategy, given that expansion through franchising is less capital intensive and income is fixed in form of fee.
The company acquired Applebeea™s International in November 2007 in a $2 billion leveraged buyout. Since then, DineEquity has sold a total of 193 Applebee's company-operated restaurants, which include the sale of 63 company-operated Applebee's restaurants in Minnesota and parts of Wisconsin and 20 Applebee's restaurants located in Virginia during the fourth quarter of 2010.
The sale of company-owned Applebeea™s restaurants has reduced the debt burden of the company considerably by the use of free cash flow. As of September 30, 2010, long-term debt had reduced to 1,557.1 million from $1,637.2 million in December 2009.
At the end of third quarter, more than 88% of DineEquity's Applebee's and IHOP restaurants were franchised. Upon completion of all the pending sales, this percentage will rise to 93%. Although DineEquitya™s transition to a more franchise-based model will decrease company-owned revenues, this will enhance free cash flow generation by reducing capital employed.
With more than 3,500 Applebee's and IHOP restaurants combined, DineEquity is the largest full-service restaurant company in the world with brands leading in their respective categories of casual and family dining.
DineEquity's primary competitors are Brinker International Inc. (NYSE: [ EAT ]) and Denny's Corporation (Nasdaq: [ DENN ]).
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