Seniors Housing Weekly Update: Ventas and Assisted Living Concepts End Relationship
June 19, 2012
Ventas and Assisted Living Concepts End Relationship
It became apparent that Ventas really didn’t want Assisted Living Concepts (ALC) as a tenant anymore. The lawsuit by Ventas to remove ALC from 12 communities in five states because of quality of care and licensing problems has now been settled. And the settlement is sort of a win/win for both parties. Assisted Living Concepts purchased the 12 properties for $97 million, or about $139,000 per unit, plus an additional $3 million for a litigation settlement fee to Ventas. Relative to the current cash flow, that seems to be a great price for Ventas. For ALC, the annual cash rent for the group was $6.4 million, and ALC will fund the full $100 million using its revolver, which is priced at LIBOR plus 3%. That means that ALC’s current annual cash savings will be more than $3.0 million. While we don’t know what the excess cash will be used for, a good start would be to increase staffing at these communities, increase the quality of the food and then beef up the marketing efforts once the current residents, and their families, are happier. Is anyone in Wisconsin listening?