More than 21,000 units under new ownership in housing acquisitions

“News is news, but what do you do about it?” Turn to LTL for depth, analysis, perspective.

DES MOINES, IOWA-A merger between Life Care Services LLC (LCS) and CRSA Holdings, Inc., now sees 9,000 units in 29 CRSA retirement communities across 17 states under the ownership of LCS. Terms of the agreement were not disclosed.

Before the acquisition, LCS served more than 23,000 residents in 28 states, a portfolio that recognizes the company as the nation’s sixth-largest manager of senior housing.

According to LCS, this merger of the two companies will:

• Maintain the CRSA brand in the marketplace and continue to use Memphis as its main base of operations

• Combine the two brands under one umbrella

• Allow LCS access to new customers and markets, especially in the management of not-for-profit communities

“I am very proud of the 20 years of quality service CRSA has provided to seniors all across America, but as we looked at how best to position CRSA for the future the opportunity to affiliate with LCS was high on our list of possibilities, as they have an excellent track record of success and share our passion for creating quality lifestyles for seniors,” said Earl Wade, founder and former CEO of CRSA, who will assume the role of COO of the new CRSA/LCS operation.

In other acquisition news, the only bid received in the Sunwest bankruptcy action was from the joint venture between Emeritus, Blackstone Real Estate Advisors VI L.P., and Columbia Pacific Advisors, LLC, an entity affiliated with Emeritus’ chairman. The joint venture’s winning $1.3 billion bid acquired 149 communities formerly operated by an affiliate of Sunwest Management.

LTL NEWS TICKER

‖ Sunrise Senior Living, Inc., reported $16 million in losses during 1Q10, which was down from the $18.2 million in first quarter losses one year ago ‖ Seniors who consume a high level of dietary protein are less likely to suffer hip fractures, according to a study by the Institute for Aging Research of Hebrew SeniorLife ‖

The preliminary agreement to acquire these communities, comprised of 12,165 independent and assisted living units, was announced in September of 2009.

“We’ve worked long and hard to make this deal happen, and although we have a significant amount of work ahead of us, we are extremely pleased to have it finally come together,” said Dan Baty, chairman and Co-CEO of Emeritus.

The transaction, which is expected to close in the third quarter of 2010, includes assumption of approximately $1 billion in Sunwest debt to creditors, plus cash and membership interests. The purchase and sale agreement allows the existing Sunwest investors the option of rolling over their ownership interests into the joint venture for up to 49% of its total equity.

Blackstone will contribute approximately 80% of the remaining equity requirements with the balance split evenly between Columbia Pacific and Emeritus. Since existing Sunwest investors now have a greater opportunity to participate in the joint venture, Emeritus anticipates that its initial contribution will be a minimum of $17.4 million. It could increase to as much as $34.2 million if existing Sunwest investors do not participate.

Sunwest defaulted in 2008, a year that also saw its founder Jon Harder file for personal bankruptcy.

Seniors Housing Occupancy

Has occupancy reached a bottom?

The number of occupied units in seniors housing properties increased for the fourth consecutive quarter in 1Q10, up by 0.1% from last quarter. Although demand continued to rise, the supply of units in seniors housing properties increased at a faster rate, up 0.4% from last quarter.

Therefore, although absorption remained positive again this quarter, seniors housing’s overall occupancy declined to 88.0% from 88.3% last quarter (see above graph). Supply is likely to expand at a similar rate next quarter, but the rate of supply growth is expected to decline during the second half of this year, which may create positive upward pressure on occupancy if demand gains traction.

Source: NIC MAP Data & Analysis Service

Long-Term Living 2010 June;59(6):10