Blackstone Signs Contract For Sunwest Properties
January 19, 2010
After weeks of negotiation, due diligence and delays, Blackstone Real Estate Advisors, in a joint venture with Emeritus Corporation and Columbia Pacific Advisors, finally signed the contract to purchase 134 Sunwest Management properties, currently operated by an affiliate of Sunwest, for
approximately $1.15 billion. Several properties were removed from the original agreement of a few months ago ($1.245 billion), which resulted in a drop in the purchase price. Although the number of units associated with these 134 properties was not disclosed, on a pro rata basis it looks like the per-unit price increased from about $102,000 to $106,000, which makes sense if some less desirable properties were removed. The agreement is subject to bankruptcy court approvals, and we have been under the impression that Judge Hogan prefers another deal structure. Blackstone's exclusivity period is over, and the court process includes an open bidding period to allow other qualified parties to bid on the portfolio. We know of at least one group that may, but the new Blackstone offer includes a potential equity rollover of up to $25 million for exisitng Sunwest TIC investors who want to gain from any upside rather than cashing out now. While that may preempt other structures, will it be enough to keep the TICs happy? Stay tuned for the next issue of The SeniorCare Investor.