Seniors Housing Weekly Update - 37 Assisted Living Concepts Buildings To Be Re-leased
January 14, 2014
37 Assisted Living Concepts Buildings To Be Re-leased
I sure do love the gift that keeps on giving. I’m speaking, of course, of Assisted Living Concepts. We assumed that when TPG bought the company last year, the 37 properties leased from LTC Properties, with a lease expiration at the end of 2014, would not be renewed. Our assumption has now turned into fact. Extendicare guaranteed those leases, and there was no reason to continue the guarantee after the lease expiration date. Although we have not heard how they have been performing, we believe that a year ago they covered the $11.0 million of annual lease payments and some or all of an implied management fee. As is usually the case, some properties performed better than others, but they were all in pretty good physical condition. Now, LTC is looking for new tenants for the buildings, which average about 39 units in size. They can be broken down into a Pacific Northwest region with 15 properties, a Midwest region with 14, and Texas with seven. Regional operators will do much better with these assets. There is one outlier in New Jersey, and if Governor Christie doesn’t run for president, he may be looking for a new career.