DALLAS--(BUSINESS WIRE)-- Capital Senior Living Corporation (the "Company") (NYSE:CSU), one of the country’s largest operators of senior living communities, announced today that joint ventures in which it holds a five percent partnership interest, have entered into an agreement to sell four senior living communities (the "Spring Meadows Communities") to Health Care REIT, Inc. (NYSE:HCN). Upon closing the transaction, anticipated in the first quarter of 2011, the Company will lease the communities from HCN. The Company currently manages the Spring Meadows Communities under long-term management agreements.
Highlights of this transaction include:
- Sales proceeds, including incentive distributions, total approximately $17.0 million, compared to original investment of $1.3 million.
- Increases annual revenue by $26.0 million.
- Adds $12.2 million of EBITDAR.
- Additional CFFO of $0.7 million, or $0.03 per share.
- Incremental earnings of $1.9 million, or $0.07 per share.
"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."
The Spring Meadows properties 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. Current occupancy of the combined portfolio is 79%, as two of the communities are in the process of converting a total of 28 vacant units to memory care units. These conversions are expected to be complete in the first quarter of 2011. The Company is also working toward the possible conversion of 14 vacant units to memory care at an additional community.
The Company anticipates receiving proceeds, including incentive distributions, from the sale by the joint ventures of approximately $17.0 million, compared to its original investment of approximately $1.3 million. After expected closing costs and taxes, the Company anticipates receiving net proceeds of approximately $11.4 million on the transaction. The gain realized from the sale of its joint venture interests will be amortized over the life of the initial lease term. The Company may receive additional proceeds after the joint venture settles its customary post-closing costs.
News Source: http://insurancenewsnet.com/article.aspx?id=241014