Diversified will also be paid property management fees for looking after Somerset's assets. The deal grows Diversified's assisted-living portfolio to 1,217 managed units from 478 units. But the company will not recognize any revenue or earnings from the cash-and-debt transaction until 2001. Diversified's total management portfolio comprises 2,100 units of multifamily housing and independent-living-with-services residences.
The deal gives Diversified a niche in the low to moderate-income seniors shelter market, says company CEO William G. Benton. In a prepared statement, Benton says the deal "will go a long way toward making us independent of interest rates, a position very few companies in our industry are in."
Benton expects to lease up the new asset quickly to about 95% occupancy because the product is in "an underserved market segment."
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