Five Star Quality Care Announces Big Expansion Plans

Five Star Quality Care (NYSE: FVE) announced expansion plans involving a total of 28 senior living communities with 3,038 living units.

As part of the plan, the company entered into binding agreements to acquire six senior living communities in Indiana for approximately $123 million.

The communities include a total of 738 separate living units: 191 independent living apartments; 525 assisted living suites; and 22 units which are specially designated for Alzheimer’s care.The current occupancy at these communities is approximately 91% and all of the residents pay for services at these communities with private resources.


These six communities are in addition to 10 senior living communities (925 living units) currently operated by Five Star in Indiana, including the nationally recognized Meadowood Retirement Community located adjacent to Indiana University in Bloomington.

To acquire the communities, Five Star’s assuming existing mortgage debt on certain communities for approximately $19.5 million, by a one year bridge loan commitment from Senior Housing Properties Trust (NYSE: SNH) for up to $80 million, and by Five Star’s using cash on hand or borrowings under its revolving credit facility. The purchase of these six communities is expected to close starting in June 2011, subject to obtaining required regulatory approvals, lender consents for mortgage assumptions and satisfaction of other closing conditions.

At the same time, Five Star said it has agreed to assume operations at 20 senior living communities in the Southeast.  The 20 communities contain 2,111 living units, including 814 independent living apartments, 939 assisted living suites, 311 units specially designated for Alzheimer’s care and 47 skilled nursing beds (at two locations). These communities are all high quality facilities where over 80% of the historical revenues have been paid by residents from their private resources. The states in which these 20 communities are located and Five Star’s existing operations in those states are as follows:


For more information on the transactions, see here.