Capital Senior Living Completes Triple-Net Exit, Launches Management Business

Capital Senior Living (NYSE: CSU) has completed the previously announced exit from its triple-net leases and is now entering the growth stage of its turnaround effort, with a new management services business as one platform for expansion.

The Dallas-based provider had transitioned 23 formerly leased communities to other operators as of Dec. 31, 2020, according to a press release issued Thursday. Seven communities that were previously leased from Chicago-based real estate investment trust (REIT) Ventas Inc. (NYSE: VTR) now will be managed for a percentage of revenue under an auto-renewing annual agreement.

Capital Senior Living also is managing an Ohio community that the company sold in December, and is managing 16 communities under interim agreements or cash flow leases until transitions are complete.


“I appreciate the positive engagement we have had with our REIT partners and their confidence in our operational team and expertise,” CEO Kim Lody stated. “Managing these communities is a springboard for our newly established management services business. This diversified go-forward portfolio positions us well today and into the future.”

Completion of the triple-net exit improves Capital Senior Living’s cash flow by about $22 million annually and reduces lease-related liabilities by about $264.4 million.

When Lody took the reins as CEO about two years ago, she began leading a turnaround effort dubbed SING, for stabilize, invest, nurture and grow. The effort has included operational and leadership changes, as well as portfolio and balance sheet restructuring moves such as handing over 18 underperforming communities to Fannie Mae.


With the triple-net exit complete, Capital Senior Living is now ready to begin the growth phase of this effort, with a particular focus on serving a middle-market resident population, the company stated in its release.

The provider will be building on a portfolio of 60 owned communities in addition to the 8 it is managing. As of Q3 2020, the portfolio’s average occupancy was 78.4% and its NOI margin was 28.4%.

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