Capital, one of the nation's largest operators and developers of senior living communities, has been overseeing the properties for the past four years. James A. Stroud, Capital's chairman, says the merger is "strategically important ... aimed at increasing ownership of assets and enhancing cash flows." Stroud estimates annual cash earnings to jump more than 20%, or 11 cents, over its present rate.

The merger also promises to add nearly 1,300 buying seniors to the communities, where residences average more than $75,000 each, says Capital CEO Lawrence A. Cohen. "Furthermore, the merger is expected to increase revenues by more than $22 million over the next twelve months and EBITDA by approximately $10.5 million," he says. The merger also will result in a review of financing alternatives with regard to ILM II Senior Living Inc., the joint venture owner of Villa Santa Barbara.

GMAC Commercial Mortgage Corp. and its affiliate provided acquisition financing for the merger as well as refinancing three communities owned by Capital, which owns or operates 39 senior communities in 19 states with a total capacity of about 6,800 residents. Capital also is building 19 comparable communities for about 2,600 residents.