Constellation sells assisted-living facilities

Sunrise of Fairfax, Va., to pay $88.2 million

August 03, 1999|By Kevin L. McQuaid | Kevin L. McQuaid,SUN STAFF

Constellation Energy Group Inc., continuing an effort to shed its real estate holdings, yesterday agreed to sell all but one of its senior assisted-living facilities to a Virginia company for $88.2 million in cash and assumed debt.

Fairfax, Va.-based Sunrise Assisted Living Inc.'s purchase of the 12 existing facilities -- together with three under construction and land for six others -- represents another major step in the company's quest to pare its real estate.

In December 1998, the corporate parent of Baltimore Gas and Electric Co. sold the bulk of its commercial real estate portfolio to a Philadelphia real estate investment trust for $153.3 million.

"We are very excited about this opportunity to acquire these high quality, well-run, solidly performing communities in our major metropolitan markets," said Paul Klaassen, Sunrise's chairman and chief executive.

The 12 centers, from Lutherville to Cary, N.C., have capacity for 893 residents. Locally, Constellation operates senior living centers in Annapolis, Ellicott City, Frederick, Lutherville, Pasadena, Severna Park and Silver Spring.

The three facilities under construction are in Bowie and Easton, Md., and Bloomfield, Conn., and have capacity for 165 residents. All three are expected to be completed before March.

Sunrise expects to complete the transaction, including $72.2 million in cash and $16 million in assumed debt, in the third quarter.

Constellation Energy wants to leave the real estate business and focus on its core utility business. Constellation Energy officials could not be reached for comment yesterday evening.

"Management's current strategy is to hold each real estate project until we can realize a reasonable value for it," BGE's 1998 annual shareholder report stated. "We anticipate that competing demands for our financial resources and changes in the utility industry will cause us to evaluate thoroughly all diversified business strategies on a regular basis so we can use capital and other resources in a manner that is most beneficial."

The deal marks the latest transaction between the two companies. In 1993, Sunrise and Constellation formed a joint venture partnership that developed and operated senior housing projects.

Sunrise is one of the nation's largest senior housing owners in the nation, operating 128 communities in 22 states. Its projects, valued at roughly $700 million, have a capacity for nearly 10,000 residents. Additionally, the company has 90 other projects in various stages of development.

Sunrise is expected to finance the Constellation transaction with proceeds from a $400 million revolving credit line it obtained last week from a 14-bank syndicate led by Bank of America Corp.

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