Health Care Deal News: Spotlight on Long-Term Care - May 2012

In the largest Long-Term Care deal of April, Ventas (NYSE: VTR) has acquired a portfolio of 16 private pay senior living communities from affiliates of Sunrise Senior Living (NYSE: SRZ). The value of this sale-leaseback transaction is $362.0 million, or approximately $284,140 per unit. This deal expands VTR’s relationship with SRZ, and is to be funded through borrowings under VTR’s revolving credit facility.

The Clare at Water Tower has finally found a buyer. Chicago Senior Care, a partnership between Senior Care Development, LLC, Fundamental Advisors, LP and Life Care Companies, LLC, agreed to pay $53.5 million in a bankruptcy auction for the 53-story CCRC. It has 248 independent living units, 39 assisted living apartments, 15 memory-support living suites and 32 skilled nursing beds. (The first few floors also have offices and classrooms for Loyola University.) The Clare was owned by the Franciscan Sisters of Chicago, who accrued $229.0 million in debt in developing it. Unable to reach sufficient occupancy during the economic downturn, it entered Chapter 11 bankruptcy proceedings on November 15, 2011. Chicago Senior Care offered a stalking horse bid of $29.5 million (they also offered to assume responsibility for the $57.0 million in existing residential deposits). Ultimately, David Reis of Chicago Senior Care was able to acquire this property at about one-fifth of its construction costs. The estimate to reach stabilized occupancy is approximately three years. Without the overhanging debt burden, Chicago Senior Care should be able to reach this goal and generate significant cash flow in the process. Let the marketing initiatives begin.

Terra Firma, a British private equity firm, is entering into the U.K. “care homes” business with a £825.0 million ($1.34 billion) deal to buy Four Seasons Health, the country’s largest operator. Four Seasons operates 445 care homes and has 24,000 beds. The deal thus works out to approximately $55,800 per bed. Terra Firma, which is 40% owned by the Royal Bank of Scotland, is stepping into the breach being left by Prime Minister Cameron’s overhaul of the National Health System..........Want to read more? Click here for a free trial to The Health Care M&A Information Source and download the current issue today