Capital Senior Living Acquires Eight Communities for $72.9 Million

Capital Senior Living Corporation (NYSE:CSU) announced on Wednesday it had completed the acquisition of eight senior living communities for $72.9 million.

The communities are located in Texas, Indiana, and Ohio and offer assisted living and memory care. Average occupancy for the eight-property portfolio is above 95%, with average monthly rents of about $3,200. The acquisition will generate additional cash from facility operations (CFFO) of $3.6 million, or $0.13 per share.

“These acquisitions continue the successful execution of our strategic plan for accretive growth. We continue to enhance our geographic concentration by acquiring high-quality senior living communities in existing markets that generate meaningful increases in CFFO and earnings,” said Lawrence A. Cohen, CSU’s CEO. “The exceptional returns generated by these acquisitions complement the positive results we are achieving in our operations with increases in occupancy and average monthly rents. These encouraging trends reflect the fundamental strength of our substantially all private-pay business as we benefit from need-driven demand and limited new supply.”

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CSU financed the acquisition with an aggregate of approximately $50.2 million of non-recourse mortgage debt consisting of about $29 million of 10-year debt with a fixed interest rate of 4.34%; about $3.2 million of assumed debt with a fixed interest rate of 4.48% and a remaining maturity of 33 years; and about $18 million of bridge financing.

The bridge loans consist of a $6.4 million loan that will be refinanced with a permanent mortgage in the fourth quarter of 2012 upon completing the installation of a sprinkler system to a portion of one of the buildings. The cost of the sprinkler installation will be covered by the seller. CSU has received a commitment for a 10-year fixed rate non-recourse refinancing of this bridge loan with similar terms to the others in the transaction.

The remaining $11.6 million bridge loan is for one of the newly-acquired communities that had a recent expansion in August of this year. This community—including the expansion—is 100% occupied and will be eligible for permanent financing within six months.

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The blended average interest rate on the $50.2 million of debt is approximately 4.50%.

Written by Alyssa Gerace

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