Capital Senior Living Corporation Acquires Two Communities and Closes on Sale of Four Non-Core Communities
January 29 2015 - 6:00AM
Business Wire
The Company also refinances existing debt at
favorable rates
Capital Senior Living Corporation (the “Company”) (NYSE:CSU),
one of the nation’s largest operators of senior living communities,
today announced the completion of three transactions that will
strengthen the Company’s operating portfolio and enhance its cash
position to provide for further growth: the acquisition of two
senior living communities, the disposition of four non-core
communities and the refinance of an existing community loan. The
Company also announced that it recently executed early rate locks
on refinancing transactions associated with two communities at an
average interest rate of approximately 3.85%, both of which are
expected to close by the end of the first quarter of 2015.
“We are extremely pleased to add two high-occupancy communities
with excellent financial and operating metrics to our consolidated
operations and to complete the sale of the four communities that
are not core to Capital Senior,” said Lawrence A. Cohen, the
Company’s Chief Executive Officer. “The completed loan refinance
reflects the appreciation in value of this owned community and
allows the Company to continue to benefit from historically low
interest rates and fix this debt at attractive rates while
extending the maturity to 2025, as do the two additional
refinancings which will be completed in the first quarter. On a net
basis, the completed and upcoming transactions announced today
provide us with $35 million in incremental cash proceeds that we
will use to continue to invest in the acquisition of
high-performing communities, enhance our cash reserves and pay off
short-term bridge loans.”
The two acquired communities were purchased for $32.8 million.
One of the transactions was completed in mid-December and the other
in mid-January. They are comprised of 127 assisted living units and
are located in regions in which the Company already has extensive
operations. The communities are financed with $24.5 million of
10-year fixed-rate debt that is non-recourse to the Company with a
blended interest rate of 4.41%.
The Company is conducting due diligence on additional
acquisitions of high-quality senior living communities in states
with extensive existing operations totaling approximately $45
million. Subject to completion of customary closing conditions, the
acquisitions are expected to close in the first half of 2015.
In January, the Company sold the four non-core communities for
$36.5 million and will receive approximately $18.0 million in net
proceeds after relieving the debt associated with the communities
and paying customary transaction and closing costs. The communities
sold were comprised of 547 independent living units. The net effect
of the reinvestment of these proceeds in high-quality communities
is expected to be accretive.
In December, the Company refinanced the debt associated with one
community, lowering the interest rate and yielding $9.3 million in
incremental cash proceeds from the new loan after customary
transaction and closing costs. The new mortgage is $18.9 million
with a 4.46% fixed interest rate and matures in January 2025. The
new mortgage replaced $8.4 million of fixed-rate debt with an
interest rate of 5.75% that was set to mature in March 2017.
The Company executed early rate lock agreements on $45.0 million
of mortgage debt for two communities at an interest rate of
approximately 3.85% with a 10-year maturity. These new mortgages
will close by the end of the first quarter of 2015. This debt will
refinance an existing mortgage of $8.0 million with an interest
rate of 5.46% due to mature in August 2015 and one short-term
bridge loan of $21.6 million with floating rate interest of 2.92%
due to mature July 2016. Net proceeds from these two refinance
transactions will total approximately $15.0 million. The Company
plans to use these proceeds to pay off two short-term,
floating-rate bridge loans totaling $14.0 million.
Additional highlights of the acquisitions, refinance and rate
locks include:
Acquired Communities
- Increases annual revenue by $5.2
million
- Increases CFFO by $1.2 million, or
$0.04 per share
- Improves earnings by $0.4 million, or
$0.02 per share
- Average monthly rent for the
communities is approximately $3,606
Mortgage Debt Refinance
- $18.9 million of 10-year fixed-rate
mortgage debt at 4.46%
- 129 basis point reduction in the
fixed-debt interest rate
- Cash proceeds to the Company of $9.3
million
- Extends maturity to 2025
Mortgage Rate Locks
- $45.0 million of 10-year fixed-rate
mortgage debt at 3.85%
- Net proceeds of $15.0 million upon the
refinance of the two mortgages
- Proceeds used to pay off short-term
bridge loans of $14.0 million
The Company also noted that the previously-announced plan to
convert 360 independent living units to assisted living units at
certain communities remains on or ahead of schedule. As of December
31, 2014, approximately 207 units had been converted with the
remainder expected to be completed by the middle of 2015.
ABOUT THE COMPANY
Capital Senior Living Corporation is one of the nation’s largest
operators of residential communities for senior adults. The
Company’s operating strategy is to provide value to residents by
providing quality senior living services at reasonable prices. The
Company’s communities emphasize a continuum of care, which
integrates independent living, assisted living, and home care
services, to provide residents the opportunity to age in place. The
Company operates 114 senior living communities in geographically
concentrated regions with an aggregate capacity of approximately
15,000 residents.
Contact Carey Hendrickson, Chief Financial Officer, at
972-770-5600 for more information.
Capital Senior Living CorporationCarey Hendrickson,
1-972-770-5600Chief Financial Officer
Capital Senior Living (NYSE:CSU)
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