Last week, Emeritus Corporation (NYSE: ESC), Blackstone Real Estate Advisors (an affiliate of The Blackstone Group), and Columbia Pacific Advisors announced the completion of the acquisition of 144 senior living communities formerly operated by affiliates of Sunwest Management (“Sunwest”) for approximately $1.2 billion. The sale of Stayton SW Assisted Living’s (“Stayton”) assets took place as part of the company’s chapter 11 plan of reorganization, which U.S. District Court Judge Michael Hogan approved in July.
Twelve of the 144 communities closings were deferred until finalization of consents with lenders and other matters. Of the 144 community portfolio, Emeritus will begin managing all but one as of the closing date. The 144 communities consist of approximately 11,769 units and the annualized revenues for the total portfolio approximate $346.8 million, with average occupancy of approximately 79.0% and an average rate per occupied unit of approximately $3,108.
Mr. Daniel Baty, Chairman and Co-Chief Executive Officer of Emeritus stated, “We are pleased that the Sunwest transaction has closed and we are able to welcome over 9,200 residents and 5,900 employees to the Emeritus family. The Joint Venture will contribute to our growth over the next several years and should provide a significant return for the Company over time.”
Emeritus will own 5.8% in the Joint Venture and that percentage may change over time as additional anticipated funding for capital expenditure projects is completed. Emeritus will receive a 5% management fee which represents an accretive cash flow opportunity and has rights of first refusal to purchase the Sunwest communities, or the Joint Venture interests. Former Sunwest investors will end up with approximately 15% of the joint venture.
“After nearly two years of discussions, negotiations, and hard work, we are pleased to bring resolution to investors and creditors impacted by the previous mishandling of Sunwest’s assets,” said Clyde Hamstreet, chief restructuring officer (CRO) for Stayton. “This transaction was the result of a large collaborative effort and provides Sunwest investors and creditors their best opportunity to recoup losses.”