Emeritus Corporation (NYSE: ESC) announced last week that was approved for the purchase and sale agreement in the Sunwest bankruptcy auction with its joint venture partners and that it entered into a separate agreement with HCP, Inc. and Texas HCP Holdings, L.P. to lease four senior living communities located in Illinois and Texas consisting of approximately 400 assisted living units and 152 skilled nursing beds.
The previously announced joint venture between Emeritus, Blackstone Real Estate Advisors VI, L.P. and Columbia Pacific Advisors, LLC, an entity affiliated with Dan Baty, Emeritus’ Chairman and Co-CEO was formed specifically to acquire up to 149 communities formerly operated by affiliates of Sunwest Management ("Sunwest") for approximately $1.3 billion. The core 149 communities consist of approximately 12,152 units with approximately 8,820 assisted living/memory care units and 3,332 independent living units. Emeritus believes that the transaction will generate a 5% management fee that is immediately accretive to its cash flow and that the long-term value lies in Emeritus’ right of first opportunity to purchase the Sunwest communities, or the Joint Venture interests, and the ability to earn additional cash distribution incentives if the rate of return on membership interests in the Joint Venture exceeds established thresholds.
"We are excited that the Sunwest transaction has formally been approved by the court. This Joint Venture structure provides a built-in pipeline to propel our growth strategy over the next several years," said Mr. Baty in a statement.