Ventas Wins Lawsuit Against HCP; Awarded $101M in Damages

Healthcare REIT Ventas Inc. has prevailed in its lawsuit brought against healthcare REIT HCP Inc. regarding Ventas' $2 billion acquisition of Toronto, Ont.-based Sunrise Senior Living REIT in April 2007.

By: Barbra Murray, Contributing Editor

Healthcare REIT Ventas Inc. has prevailed in its lawsuit brought against healthcare REIT HCP Inc. regarding Ventas’ $2 billion acquisition of Toronto, Ont.-based Sunrise Senior Living REIT in April 2007.

¬†Chicago-headquartered Ventas initiated the lawsuit in May 2007 accusing Long Beach, Calif.-based HCP of obstructing Ventas’ deal with Sunrise REIT to purchase its assets and hindering the voting process for the transaction. The jury for the case, which was filed in United States District Court for the Western District of Kentucky, concluded that Ventas’ allegation against HCP of “tortious interference with business expectation” had merit and awarded the company approximately $101 million in compensatory damages.

The trouble between Ventas and HCP originated after Ventas outbid HCP in the auction to acquire Sunrise REIT. HCP had been among the finalist, but the company removed itself from the process and decided against presenting a final binding proposal. At that point, HCP had a standstill agreement with Sunrise that prevented the company from making further proposals. But HCP did just that, making several new offers to buy Sunrise REIT, which forced Ventas to up its bid after its winning offer had been approved by Sunrise REIT’s Board of Trustees.

Ultimately, Ontario Superior Court of Justice ruled that HCP had violated the standstill agreement by making additional bids. Ventas later closed the Sunrise REIT deal, and commenced its lawsuit against HCP.

Although last week’s ruling was in its favor, Ventas didn’t get all it had hoped for in the lawsuit. The company, having originally pursued $300 million in compensatory and punitive damages, was denied an award for punitive damages. For its part, HCP suffered other defeats early on in the process, including the court’s dismissal of its counterclaim, which alleged that Sunrise REIT misrepresented the auction process.

Ventas won’t be collecting its $101 million in damages any time soon; HCP has announced it plans to appeal the jury verdict.