Senior Housing Investments & Transactions: Capital Senior Living

American House Acquires Spring Lake, Michigan Community

Bloomfield Hills-based American House Senior Living Communities is acquiring a 111-unit comment in Spring Lake, Mich., and has plans to renovate it, according to local reports.

The community, now American House Lloyd’s Bayou, contains a mix of one- and two-bedroom apartments that range in size from 670 to 900 square feet.

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American House, which did not disclose the purchase price, said it plans to start renovating the property early this year, with a grand re-opening expected in spring of 2016.

The project will feature several elements: the addition of an Anytime Café, expanding the dining facilities, a renovated wellness center, addition of a multipurpose room and more.

“This is an exciting time, as we continue to expand the family owned and operated business,” said Rob Gillette, COO of American House. “We are in a continued state of growth in the Grand Rapids area, and it feels like home.”

AdCare Subsidiaries Enter Into SNF Sublease Agreements

Earlier this month, 10 wholly owned subsidiaries of AdCare Health Systems, Inc. entered into separate sublease agreements to each lease one of 10 skilled nursing facilities located in Arkansas, and owned by a subsidiary of AdCare, to a wholly-owned subsidiary of Aria Health Group, LLC, beginning on March 1, 2015.

Each sublease agreement is structured as a triple-net lease. The initial lease term is five years with a five-year renewal option. The annual rent under all of the sublease agreements in the first year will be $6.5 million in the aggregate, and the annual rent under each sublease will escalate at 2% each year through the initial term and 3% per year upon renewal. The sublease agreements are cross-defaulted.

In connection with entering into the sublease agreements, each sublessor and sublessee also entered into an operations transfer agreement with respect to the applicable Arkansas facility.

Senior Living Investment Brokerage Facilitates Multiple Sales

On January 26, Senior Living Investment Brokerage, Inc. facilitated the sale of Hidden Oaks, located in Fort Myers, Fla. The 64-unit, purpose-built, community features 48 assisted living units and 16 memory care units. Further information was not made available.

The company also announced that Matthew Alley, managing director, sold a $4.5 million assisted living facility located in Hillsboro, Texas. The 29,780-square-foot facility consists of 46 units and was built in 1999 on more than 4.14 acres of land. A regional owner/operator based in East Texas purchased the facility.

“Senior Living was able to find a smaller, regional owner-operator that was looking to utilize a 1099 exchange for a recent sale,” Alley said in a written release. “The buyer paid for the seller to prepay its HUD loan and purchased the property using all cash.”

Additionally, Senior Living Investment Brokerage announced that Matthew Alley and Ryan Saul sold a $6 million continuing care retirement community (CCRC) located in Bluffton, Ind. The 138,920-square-foot facility consists of 137 units with 52 independent living, 41 assisted living, 14 memory care and 30 skilled nursing beds.

The CCRC was built in 2002 and is on more than 37.85 acres of land. A regional owner/operator who owns other communities in Indiana purchased the facility.

“The sale was part of a Chapter 11, planned bankruptcy sale,” said Ryan Saul, also a managing director, in a written release. “Senior Living Investment Brokerage, Inc. procured multiple offers and achieved a closing in 90 days from marketing commencement.”

Capital Senior Living Acquires 2 Communities, Closes Sale of 4

Capital Senior Living Corporation (NYSE: CSU), one of the nation’s largest operators of senior living communities, recently announced the completion of three transactions that will strengthen the company’s operating portfolio and enhance its cash position to provide for further growth: the acquisition of two senior living communities, the disposition of four non-core communities and the refinance of an existing community loan.

The company also announced that it recently executed early rate locks on refinancing transactions associated with two communities at an average interest rate of approximately 3.85%, both of which are expected to close by the end of the first quarter of 2015.

“We are extremely pleased to add two high-occupancy communities with excellent financial and operating metrics to our consolidated operations and to complete the sale of the four communities that are not core to Capital Senior,” said Lawrence A. Cohen, the company’s CEO, in a statement.

The two acquired communities were purchased for $32.8 million. One of the transactions was completed in mid-December and the other in mid-January. They are comprised of 127 assisted living units and are located in regions in which the company already has extensive operations. The communities are financed with $24.5 million of 10-year fixed-rate debt that is non-recourse to the company with a blended interest rate of 4.41%.

Capital Senior Living is conducting due diligence on additional acquisitions of high-quality senior living communities in states with extensive existing operations totaling approximately $45 million. Subject to completion of customary closing conditions, the acquisitions are expected to close in the first half of 2015.

In January, Capital Senior Living sold the four non-core communities for $36.5 million and will receive approximately $18 million in net proceeds after relieving the debt associated with the communities and paying customary transaction and closing costs. The communities sold were comprised of 547 independent living units. The net effect of the reinvestment of these proceeds in high-quality communities is expected to be accretive.

In December, the company refinanced the debt associated with one community, lowering the interest rate and yielding $9.3 million in incremental cash proceeds from the new loan after customary transaction and closing costs. The new mortgage is $18.9 million with a 4.46% fixed interest rate and matures in January 2025. The new mortgage replaced $8.4 million of fixed-rate debt with an interest rate of 5.75% that was set to mature in March 2017.

Capital Senior Living executed early rate lock agreements on $45.0 million of mortgage debt for two communities at an interest rate of approximately 3.85% with a 10-year maturity. These new mortgages will close by the end of the first quarter of 2015.

This debt will refinance an existing mortgage of $8.0 million with an interest rate of 5.46% due to mature in August 2015 and one short-term bridge loan of $21.6 million with floating rate interest of 2.92% due to mature July 2016. Net proceeds from these two refinance transactions will total approximately $15.0 million. The company plans to use these proceeds to pay off two short-term, floating-rate bridge loans totaling $14.0 million.

The company also noted that the previously announced plan to convert 360 independent living units to assisted living units at certain communities remains on or ahead of schedule. As of December 31, 2014, approximately 207 units had been converted with the remainder expected to be completed by the middle of 2015.

Summit Healthcare REIT Expands to Virginia 

Summit Healthcare REIT, Inc. announced recently that it acquired an 84-bed assisted living facility in Front Royal, Va., for  $14.3 million.

The 46,844-square-foot facility will be operated by and leased to an affiliate of Meridian Senior Living, LLC pursuant to a 15-year triple-net lease. Meridian is among the top 10 assisted living providers in the United States with the capacity to serve more than 7,000 residents.

Currently, Meridian operates 114 communities, including five other facilities in Summit’s portfolio, and spans 14 states.

“This is another exciting opportunity to partner with the excellent team at Meridian,” said Kent Eikanas, president and chief operating officer of Summit Healthcare REIT, Inc, in a statement. “We have been very pleased with the job they have done at our other facilities and together we have been able to work toward achieving mutual goals.”

Ziegler Announces $40.4 Million Sale of  176-Unit Community

Specialty investment bank Ziegler has recently announced the closing of the $40.43 million sale of Madison, Wisconsin-based Coventry Village on behalf of Harris Webber, Ltd., a regional senior housing operator.

Coventry Village is a 176-unit senior housing community that offers independent living, assisted living and memory care services. In addition, there are 46 owner-occupied condominiums with an opportunity to build an additional 11 units.

Coventry Village was developed by Harris Webber, Ltd., based in Libertyville, Ill. Built from 1999 to 2004, the community represents one of the newer, age-restricted senior living developments in Wisconsin.

Occupancy was stabilized and the community had experienced strong cash flow margins over the previous three fiscal years.

Ensign Group Acquires 2 Properties out of Bankruptcy Sales

In separate transactions, The Ensign Group, Inc. (NASDAQ: ENSG) announced that it had acquired a Nebraska CCRC and a Texas post-acute care campus, both in connection with Chapter 11 bankruptcies.

The Ensign Group acquired Nebraska-based Skyline Nursing and Rehabilitation, a 100-bed skilled nursing operation, and Skyline Assisted and Independent Living, an independent living, assisted living and seniors apartment operation with 209 units.

The acquisition, which cost a total of $13 million, was made in connection with the Chapter 11 bankruptcy filed by Skyline Manor, Inc. in May of last year and was effective February 1, 2015. Ensign expects operations in Skyline, which had an occupancy rate of approximately 69% at acquisition, to be mildly accretive to earnings in 2015.

In a separate announcement made on the same day, The Ensign Group, Inc. acquired the real estate and operations of Mesa Springs, a 44-acre post-acute care campus located in Abilene, Texas, comprised of a 75-bed skilled nursing operation and 60 independent living homes.

The $6.6 million purchase was made in connection with the Chapter 11 bankruptcy filed by Sears Methodist Retirement System in June of last year and was effective February 1, 2015.

Ensign expects the operation, which had an occupancy rate of approximately 80% at acquisition, to be accretive to earnings in 2015.

These acquisitions bring Ensign’s growing portfolio to 143 facilities, eleven hospice agencies, thirteen home health agencies, two home care businesses and sixteen urgent care clinics across 12 states.

Genesis Healthcare Merges with Skilled Healthcare Group, Inc.

Genesis HealthCare, LLC, one of the nation’s largest providers of skilled nursing and rehabilitation care, recently announced that, effective February 2, 2015, it has completed its previously announced merger with Skilled Healthcare Group, Inc. (NYSE: SKH).

The newly combined company will operate under the name Genesis Healthcare, Inc. The combination adds the skilled nursing facilities, assisted and independent living centers, and hospice and home health agencies operated by Skilled Healthcare’s subsidiaries, as well as Skilled Healthcare’s Hallmark Rehabilitation business, to the Genesis family.

Under the terms of the agreement, Skilled Healthcare shareholders will collectively own 25.75% of the vote and value of the fully-diluted equity of the combined company. Shareholders who held interests in Genesis will own the other 74.25%. The combined company will be traded on the NYSE with a new ticker symbol of GEN.

Headquarters for the combined company will remain in Kennett Square, Penn., and George V. Hager, Jr. will be the CEO of the newly-combined company.

The company’s post-combination Board of Directors consists of representative directors from both companies, as well as independent directors.

The combination of the two companies has created one of the largest post-acute care providers in the country, with more than 500 skilled nursing and assisted/senior living communities in 34 states. It has also expanded Genesis’ rehabilitation therapy business, Genesis Rehab Services, to more than 1,800 service locations in 47 states and the District of Columbia.

The new company will have nearly 95,000 employees and had combined annual revenue of approximately $5.5 billion on a trailing twelve month basis as of September 30, 2014.

Barclays and Bank of America Merrill Lynch served as Genesis’ financial advisors, and Skadden, Arps, Slate, Meagher & Flom LLP, Williams Mullen and Arnall Golden Gregory LLP acted as its legal advisors.

MTS Health Partners, L.P. served as Skilled’s exclusive financial advisor, and Kaye Scholer LLP acted as its legal advisor.

Joint Venture Sells Community for $35 Million

A joint venture between Chicago-based Focus Healthcare Partners and Artemis Real Estate Partners, based in the metro D.C. area, has sold a 198-unit senior housing facility located in Burlington, Wash., for $35 million.

Cascade Living Group, based in Bothell, Wash., now operates the property.

Focus invests in senior housing nationally and targets value-add as well as stabilized properties. It’s an active investor, having purchased $200 million in assets in 2014.

StoneBridge Senior Living Acquire Missouri Properties

Frene Valley Heathcare South and Frene Valley Heath Center in Owensville and Hermann, Mo., respectively, were acquired by StoneBridge Senior Living, according to local reports.

The facilities will be known as Frene Valley Healthcare South of Owensville, a StoneBridge Community, and Frene Valley Health Center of Hermann, a StoneBridge Community.

Michelle Gianino, is a partner and licensed nursing home administrator. A regional manager, she will be responsible for the oversight of both the Hermann and Owensville facilities.

The purchase prices were not disclosed.

HealthSouth Corporation Agrees to Acquire Rehab Hospital

HealthSouth Corporation (NYSE: HLS) recently announced it has entered into an agreement to purchase Cardinal Hill Rehabilitation Hospital in Lexington, Ky., from the Kentucky Easter Seal Society, Inc.

Cardinal Hill Rehabilitation Hospital is comprised of 158 licensed inpatient rehabilitation beds and 74 licensed skilled nursing beds, and offers inpatient rehabilitation, skilled nursing, outpatient rehabilitation and home health services.

The agreement is subject to customary closing conditions including regulatory approvals. The parties expect to close the transaction in the first half of 2015.

CareTrust REIT Acquires Colorado Skilled Nursing Facility

CareTrust REIT, Inc. (Nasdaq: CTRE) has announced that it has acquired Bethany Rehabilitation Center, a 170-bed skilled nursing facility in Lakewood, Colo., for $17.95 million. In conjunction with the purchase, CareTrust entered into a triple-net lease with Eduro Healthcare, LLC, which took over operations effective February 1, 2015.

“Partnering with CareTrust REIT to acquire Bethany Rehabilitation Center has created a unique and efficient pipeline
to growth capital, and also gives us access to CareTrust’s extensive expertise and contacts in the skilled nursing
world,” said Michael Bewsey, Eduro’s managing partner, in a statement.

Eduro Healthcare, LLC is a post-acute provider that operates facilities in Utah and Wisconsin.

Institutional Property Advisors brokered the transaction, which is CareTrust’s fifth announced transaction and first skilled nursing acquisition since its June 2014 spinoff from former parent The Ensign Group, Inc. (Nasdaq: ENSG).

It provides an initial cash yield of 9.65% on EBITDAR lease coverage of 1.30x, producing initial annual lease revenue of $1.7 million. The lease has an initial term of 15 years with two five-year extensions and CPI-based rent escalators.

Kansas City Assisted Living Community Sells for $28.5 Million

Senior Capital Advisors has announced the sale of Benton House of Shoal Creek, a 73-unit/88-bed assisted living and memory care community in Kansas City, Mo., for $28.5 million, or $390,000 per unit.

Senior Capital Advisors represented the seller, Principal Senior Living Group, based in Alpharetta, Ga., and procured the purchaser, New York-based American Realty Capital Healthcare Trust II.

PSLG will continue to manage the property on behalf of ARCHT II. The property’s all private-pay census was above 90% at closing. The community opened in 2012 and was expanded in late 2014. Due to consistently high census and strong market demand, the expansion units were heavily preleased and are expected to fill quickly.

Written by Emily Study

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