Market Overview

Sun Life Financial to Acquire Majority Stake in Bentall GreenOak

Share:

Sun Life Financial Inc. ("Sun Life Financial") (TSX:SLF) (NYSE:SLF)
today announced that it intends to merge Bentall Kennedy, its leading
North American real estate and property management firm which Sun Life
Financial acquired in 2015, with GreenOak Real Estate ("GreenOak"), a
global real estate investment firm with approximately $14 billion (US$11
billion) in assets under management and nine offices globally. Sun Life
Financial will acquire a majority stake in the combined Bentall Kennedy
and GreenOak entity that will be named Bentall GreenOak and be part of
Sun Life Investment Management. Senior management of Bentall GreenOak
will include executives from both Bentall Kennedy and GreenOak.

This press release features multimedia. View the full release here:
https://www.businesswire.com/news/home/20181218005987/en/

"This transaction is right on strategy, broadening our asset management
pillar by expanding the capabilities of our alternatives manager, Sun
Life Investment Management," said Dean Connor, President and CEO, Sun
Life Financial. "Combining the strengths of two leading and globally
respected real estate investment managers will bring Clients a broader
range of investment solutions that include core, core plus and value add
real estate1, plus senior and tactical real estate debt
strategies across North America, Europe and Asia."

Sun Life Financial will contribute its interest in Bentall Kennedy and
pay GreenOak shareholders $195 million (US$146 million) in cash in
exchange for a 56% interest in the combined Bentall GreenOak entity,
with GreenOak shareholders holding the remaining interest. As part of
the transaction, Sun Life will have an option to acquire the remaining
interest in Bentall GreenOak approximately seven years from the closing.
Sun Life Financial will also be acquiring the right to a portion of the
GreenOak shareholders' share of Bentall GreenOak net income in exchange
for a fixed amount to be paid in quarterly installments. This will
result in Sun Life Financial having the rights to approximately 90% of
Bentall GreenOak earnings prior to the Company exercising its option to
increase its ownership level.

"Combining Bentall Kennedy with GreenOak extends our capabilities in
real estate investment solutions, in a complementary way and increases
Sun Life Investment Management's total assets under management to $75
billion," said Steve Peacher, President, Sun Life Investment Management.
"Bringing together these two highly experienced teams provides a breadth
of strategies and market reach which will uniquely position Bentall
GreenOak to serve its Clients."

The common shareholders' equity of Sun Life Financial will be reduced by
approximately $730 million when the transaction closes, from the
establishment of a liability reflecting the present value of the
expected settlement price on the purchase of the remaining interest of
Bentall GreenOak2. The ultimate settlement price will reflect
the success of the combined Bentall GreenOak entity.

The transaction is expected to be accretive to underlying earnings per
share and return on equity in 2019 by $0.04 and 60 bps, respectively3.
The transaction will be financed through surplus cash, resulting in a
reduction of one point in the Life Insurance Capital Adequacy Test
(LICAT) ratio of Sun Life Financial (no impact on the LICAT ratio of Sun
Life Assurance Company of Canada). The transaction is expected to close
in the first half of 2019, subject to receipt of regulatory approvals
and satisfaction of customary closing conditions.

Berkshire Global Advisors served as financial advisor and Weil, Gotshal
& Manges LLP as legal advisor to Sun Life.

Slides related to this announcement are available at www.sunlife.com

Note to Editors: All figures in Canadian dollars unless otherwise
noted.

Forward-looking information

In this news release, "the Company", "we", "our" and "us" refer to Sun
Life Financial Inc. and its subsidiaries and joint ventures. Certain
statements in this news release are forward-looking, including but not
limited to, statements relating to: (i) our growth strategies and
strategic objectives, (ii) the expected timing of the closing of the
transaction, (iii) the expected source of funding, (iv) the expected
increase in the assets under management of Sun Life Investment
Management, (v) the expected impact of the transaction on our underlying
earnings per share and return on equity, shareholders' equity and LICAT
ratio, and (vi) other statements that are not historical or are
predictive in nature or that depend upon or refer to future events or
conditions. Forward-looking statements may also include words such as
"aim", "anticipate", "assumption", "believe", "could", "estimate",
"expect", "goal", "intend", "may", "objective", "outlook", "plan",
"project", "seek", "should", "initiatives", "strategy", "strive",
"target", "will" and similar expressions. All such forward-looking
statements are made pursuant to the "safe harbour" provisions of
applicable Canadian securities laws and of the United States Private
Securities Litigation Reform Act of 1995.

The forward-looking statements in this news release represent our
current expectations, estimates and projections regarding future events
and are not historical facts. These forward-looking statements are not a
guarantee of future performance and involve risks and uncertainties and
are based on key factors and assumptions that are difficult to predict,
including the assumption that the transaction, including the terms of
the transaction, will be approved and completed on terms acceptable to
the parties, or at all, and the assumption that Bentall Kennedy and
GreenOak will be successfully integrated. The forward-looking statements
do not reflect the potential impact of any non-recurring or other
special items or of any dispositions, mergers, acquisitions, other
business combinations or other transactions that may be announced or
that may occur after December 19, 2018. If any non-recurring or other
special item or any transaction should occur, the financial impact could
be complex and the effect on our operations or results would depend on
the facts particular to such item and we cannot describe the expected
impact in a meaningful way or in the same way we could present known
risks affecting our business. The forward-looking statements contained
in this presentation describe our expectations, estimates and projected
future events as at December 19, 2018. Except as may be required by
Canadian securities laws, we do not undertake any obligation to update
or revise any forward-looking statements contained in this news release.

Forward-looking statements are presented for the purpose of assisting
investors and others in understanding our expected financial position
and results of operations as at the date of this news release, as well
as our objectives for the transaction, strategic priorities and business
outlook following the transaction, and in obtaining a better
understanding of our anticipated operating environment following the
transaction. Readers are cautioned that such forward-looking statements
may not be appropriate for other purposes and undue reliance should not
be placed on these forward-looking statements.

The following are transactional risk factors that could have a material
adverse effect on our forward-looking statements: (1) the ability of the
parties to complete the transaction; (2) failure of the parties to
obtain necessary consents and approvals or to otherwise satisfy the
conditions to the completion of the transaction in a timely manner, or
at all; (3) our ability to realize the financial and strategic benefits
of the transaction; (4) failure to effectively or efficiently reorganize
the operations of Bentall Kennedy and GreenOak after the transaction has
closed; and (5) the impact of the announcement of the transaction and
the dedication of Sun Life Financial's resources to completing the
transaction on Bentall Kennedy and GreenOak. These risks all could have
an impact on our business relationships (including with future and
prospective employees, Clients, distributors and partners) and could
have a material adverse effect on our current and future operations,
financial conditions and prospects. Other important risk factors that
could cause our actual results to differ materially from those expressed
in or implied by the forward-looking statements in this news release are
listed in the annual information form of Sun Life Financial Inc. for the
year ended December 31, 2017 under the heading "Risk Factors" and other
regulatory filings filed or furnished to Canadian and U.S. securities
regulators available at www.sedar.com
and www.sec.gov.

About Sun Life Financial

Sun Life Financial is a leading international financial services
organization providing insurance, wealth and asset management solutions
to individual and corporate Clients. Sun Life Financial has operations
in a number of markets worldwide, including Canada, the United States,
the United Kingdom, Ireland, Hong Kong, the Philippines, Japan,
Indonesia, India, China, Australia, Singapore, Vietnam, Malaysia and
Bermuda. As of September 30, 2018, Sun Life Financial had total assets
under management of $984 billion. For more information please visit www.sunlife.com.

Sun Life Financial Inc. trades on the Toronto (TSX), New York (NYSE) and
Philippine (PSE) stock exchanges under the ticker symbol SLF.

About Sun Life Investment Management

Sun Life Investment Management comprises Sun Life Institutional
Investments (Canada) Inc. and Bentall Kennedy (Canada) Limited
Partnership in Canada, and Prime Advisors Inc., Ryan Labs Asset
Management and Bentall Kennedy (U.S.) Limited Partnership in the United
States.

These operations have combined third-party assets under management of
$61 billion as of September 30, 2018. Sun Life Investment Management is
supported by the investment division of Sun Life Assurance Company of
Canada that manages $146 billion in assets under management for the Sun
Life Financial group of companies as of September 30, 2018.

1 Value add and core plus strategies typically involve
properties that have in-place cash flows, but have the potential to
increase that cash flow over time by making improvements to, or
repositioning the property.

2 The transaction includes a put option that entitles the
minority owners of Bentall GreenOak to sell their 44% interest to Sun
Life approximately 8.5 years from the close of the transaction.

3 Accretion amounts represent estimated full year impacts.
Actual accretion will be subject to a number of factors, including the
anticipated timing of the closing of the transaction.

View Comments and Join the Discussion!