Seniors Housing Weekly Update -- Assisted Living Concepts Deal Finally Closes
July 16, 2013
Assisted Living Concepts Deal Finally Closes
Last week, private equity firm TPG finally closed on its acquisition of Assisted Living Concepts, ending a sales process that began nearly two years ago. At $12 per share for most shareholders plus assumed debt, the value comes to about $458 million. TPG will have its work cut out for it, and they have hired Jack Callison as CEO, who most recently was the CEO of Holiday Retirement Corporation. He has a hospitality background and used home health care to boost occupancy at Holiday after census there declined significantly during the Great Recession. Based on first quarter results, ALC’s operating margin was just 8.5%, compared to 35.4% in the year-ago quarter, mostly because they finally started to staff their communities appropriately. We are sure TPG thinks at $58,000 per unit it got a bargain. But at 60% occupancy, TPG may decide to sell off those properties that are really struggling and focus on the ones that can make it. Either way, the task will not be easy, but we would like to be surprised.