Five Star Quality Care (FVE) Acquires 10 Assisted Living Facilities; Sees Deal Immediately Accetive
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Five Star Quality Care, Inc. (AMEX: FVE) has purchased three assisted living facilities with 259 living units for $21.4 million and acquired the operations of an additional seven assisted living facilities with 614 living units for an annual rent payment of approximately $7.6 million per year. The 10 facilities combined have a total of 873 living units, an average occupancy of 82% and are located in Pennsylvania and New Jersey.
The 10 facilities were previously operated by NewSeasons Assisted Living Communities, Inc. ("NewSeasons") under leases from Senior Housing Properties Trust (NYSE: SNH) and FVE has assumed NewSeasons's lease obligations to SNH for seven of these facilities. In consideration of FVE's lease assumption, NewSeasons has paid FVE $10 million and transferred title to certain personal property located at the facilities which personal property was owned by NewSeasons.
"Five Star believes these operations may be immediately accretive to Five Star's financial results and that there may be additional financial upside from these operations when Five Star provides a new focus to these operations.
"Five Star's decision to purchase three of the NewSeasons properties is in keeping with its business plan to own certain properties in order to improve its financial flexibility. In addition to its leaseholds from SNH and HCP, Inc. (NYSE: HCP), Five Star owns several of its communities, including 14 communities (1,207 living units) unencumbered by mortgage debts."
FVE expects to use the payment it receives from NewSeasons and its available cash on hand to fund the purchase of the three properties being acquired and to provide the necessary working capital for these new operations. FVE's revolving bank credit facility for $40 million (expandable to $80 million in certain circumstances) remains undrawn and available for generally business purposes.[SM]
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