Capital Senior Living Corporation (NYSE:CSU) announced last week that one of its joint ventures in which it has a 5% interest has entered into an agreement to sell four senior living communities to Health Care REIT, Inc. (NYSE:HCN). The four communities, known as the Spring Meadows Communities, have approximately 625 units with a combined resident capacity of 758 and include two independent and assisted living communities in Illinois, one independent and assisted living community in Connecticut and one assisted living community in New Jersey.
Capital Senior Living believes it will receive approximately $17 million from the sale and will get net proceeds of approximately $11.4 million on the transaction and the sale is expected to be completed during the first quarter of 2011. Upon closing, CSU will lease the communities from HCN and it currently manages the Spring Meadows Communities under long-term management agreements.
“We are extremely pleased with the returns the Company and its joint venture partner will receive in this transaction,” commented Lawrence A. Cohen, Chief Executive Officer of the Company. “The addition of the Spring Meadows communities to our consolidated operations will provide immediate benefits to our shareholders. Along with a significant increase in our revenues, the lease will be accretive to cash flow and earnings. While we have been earning management fees on these communities, we will now be able to consolidate the results of operations and benefit fully from further improvement in occupancies, margins and cash flow. We plan to use the proceeds from this transaction for acquisitions of senior living communities to strategically enhance the geographic concentration of our existing operating platform. We are pleased to add the Spring Meadows communities to our strong and growing relationship with HCN.”