DALLAS-Capital Senior Living Corp. has inked an agreement with Signature Assisted Living of Texas LLC to acquire Signature’s interests in 12 leases with Health Care REIT Inc.
The buyer will pay $25 million plus an amount equal to 50% of Signature’s outstanding working capital loans not to exceed $750,000. The transaction is expected to close in the third quarter of 2010.
Health Care REIT is providing the acquisition funds, according to Capital Senior Living’s financial filings. Capital Senior Living will end up paying $8.9 million per year to Health Care REIT for the funds and the leases/interest.
The 12 leased communities are high-quality purpose-built assisted living and memory care facilities located in Texas. They offer about 677 units and include 532 units of assisted living and 145 units of memory care, with a combined capacity of 764 residents.
The communities average less than three years of age. To date, they are about 91% occupied.
“Upon closing the transaction, the Company will operate a significantly larger platform in Texas and benefit from the clustering of communities,” says Lawrence Cohen, CEO of Capital Senior Living. “The portfolio is extremely complementary to our existing footprint and provides additional opportunities to achieve operating leverage and synergies. Furthermore, we are pleased to complete our third transaction with HCN and continue to strengthen our relationship.”
Capital Senior Living is one of the nation’s largest operators of residential communities for senior adults. It currently operates 66 senior living communities in 23 states, and the 12 Signature communities will bring the total number of communities the company operates in Texas to 29.
The 12 communities provide annualized revenues of roughly $30.3 million with EBITDAR of approximately $13.5 million net of incremental general and administrative expenses. Given the annual payment to Health Care REIT, EBITDAR is expected to exceed the annual cash payment due HCN by approximately $4.6 million.
“We believe this transaction is very strategic and will create tremendous value for our shareholders by increasing the company’s CFFO by approximately $2.3 million or $0.09 per share,” Cohen says.
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