Current Report Filing (8-k)
October 08 2015 - 6:07AM
Edgar (US Regulatory)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT
TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) October 8, 2015
Capital Senior Living Corporation
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
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| 1-13445 |
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75-2678809 |
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File Number) |
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(IRS Employer
Identification No.) |
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| 14160 Dallas Parkway
Suite 300 Dallas,
Texas |
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75254 |
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(Zip Code) |
(972) 770-5600
(Registrant’s telephone number, including area code)
Not applicable
(Former
name or former address, if changed since last report)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 7.01 |
Regulation FD Disclosure. |
As previously announced, on October 8, 2015 Capital
Senior Living Corporation (the “Company”) will host an investor and analyst day (the “Investor and Analyst Day”) during which it will present various business and financial information. Attached hereto as Exhibit 99.1 is the
Investor and Analyst Day presentation. The Company will simultaneously webcast its Investor and Analyst Day presentation beginning at 9:00 am Eastern time on October 8, 2015, which should conclude by approximately 11:30 am Eastern time. A link
to the live webcast will be available prior to the scheduled presentation time on the Company’s website (www.capitalsenior.com) under the Investor Relations link. The webcast will be available for replay in the Investor Relations section of the
Company’s website for a period of 90 days after the date of the Investor and Analyst Day presentation.
The information being
furnished under Item 7.01 and Exhibit 99.1 shall not be deemed “filed” for purposes of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act
of 1933, as amended, or the Exchange Act, except as may be expressly set forth by specific reference in such a filing. The Investor and Analyst Day presentation contains, and may implicate, forward-looking statements regarding the Company and
include cautionary statements identifying important factors that could cause actual results to differ materially from those anticipated.
In the Investor and Analyst Day presentation, the Company’s management utilizes financial measures of operating performance, including
adjusted EBITDAR, adjusted EBITDAR margin and adjusted CFFO, that are not calculated in accordance with U.S. generally accepted accounting principles (“GAAP”). Non-GAAP financial measures may have material limitations in that they do not
reflect all of the amounts associated with the Company’s results of operations as determined in accordance with GAAP. As a result, these non-GAAP financial measures should not be considered a substitute for, nor superior to, financial results
and measures determined or calculated in accordance with GAAP. The Company believes that these non-GAAP measures are useful in identifying trends in day-to-day performance because they exclude items that are of little or no significance to
operations and provide indicators to management of progress in achieving optimal operating performance. In addition, these measures are used by many research analysts and investors to evaluate the performance and the value of companies in the senior
living industry. The Company strongly urges you to review the reconciliation of net income from operations to adjusted EBITDAR and adjusted EBITDAR margin and the reconciliation of net loss to adjusted CFFO, each of which is included at the end of
the Company’s earnings releases, along with the Company’s consolidated balance sheets, statements of operations, and statements of cash flows.
By filing this Current Report on Form 8-K, the Company does not acknowledge that disclosure of this information is required by Regulation FD
or that the information was material or non-public before the disclosure. The Company assumes no obligation to update or supplement forward-looking statements in the Investor and Analyst Day presentation that become untrue because of new
information, subsequent events or otherwise.
| Item 9.01 |
Financial Statements and Exhibits. |
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*99.1 |
Capital Senior Living Corporation Investor and Analyst Day Presentation. |
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This exhibit to this Current Report on Form 8-K is not being filed but is being furnished pursuant to Item 9.01. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
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| Date: October 8, 2015 |
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Capital Senior Living Corporation |
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By: |
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/s/ Carey P. Hendrickson |
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Name: |
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Carey P. Hendrickson |
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Title: |
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Senior Vice President and Chief Financial Officer |
EXHIBIT INDEX
| *99.1 |
Capital Senior Living Corporation Investor and Analyst Day Presentation. |
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This exhibit to this Current Report on Form 8-K is not being filed but is being furnished pursuant to Item 9.01. |
| Investor
and Analyst Day October 8, 2015
Exhibit 99.1 |
| Investor
& Analyst Day Agenda 9:00 am
Transformation of Capital Senior Living and Executing
Capital Senior Living’s Sustainable Growth Strategy
Larry Cohen 9:20 am Operations David Beathard 9:40 am Sales and Marketing Gary Fernandez 10:00 am Acquisition Program Joe Solari 10:20 am Seniors Housing Lender Panel Dan Biron, Berkadia Roosevelt Davis, Fannie Mae Laura McDonald, Protective Life 10:40 am Financial Overview Carey Hendrickson 11:00 am Break 11:15 am Q&A Larry Cohen 11:30 am Lunch at The Westin Governor Morris 12:15 pm Transportation to Spring Meadows Summit 12:30 pm Community Tour 1:15 pm Dessert at Spring Meadows Summit 1:30 pm Transportation to The Westin Governor Morris 2 |
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Transformation of Capital Senior Living and
Executing Capital Senior Living’s Sustainable
Growth Strategy Larry Cohen Chief Executive Officer |
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Forward-Looking Statements
• The forward-looking statements in this presentation are subject to certain risks and uncertainties that
could cause results to differ materially, including, but not without limitation to, the
Company’s ability to complete the refinancing of certain of our
wholly owned communities, realize the anticipated savings related to such
financing, find suitable acquisition properties at favorable terms, financing, licensing, business conditions, risks of downturns in economic conditions generally, satisfaction of closing
conditions such as those pertaining to licensures, availability of insurance at
commercially reasonable rates and changes in accounting principles and
interpretations among others, and other risks and factors identified from
time to time in our reports filed with the Securities and Exchange Commission • The Company assumes no obligation to update or supplement forward-looking statements in this
presentation that become untrue because of new information, subsequent events or
otherwise. 4 |
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Non-GAAP Financial Measures
• Adjusted EBITDAR, Adjusted EBITDAR Margin, Adjusted Net Income and Adjusted CFFO are
financial measures of operating performance that are not calculated in accordance with
U.S. generally accepted accounting principles (“GAAP”).
Non-GAAP financial measures may have material limitations in that they
do not reflect all of the amounts associated with our results of
operations as determined in accordance with GAAP. As a result, these non-GAAP
financial measures should not be considered a substitute for, nor superior
to, financial results and measures determined or calculated in accordance
with GAAP. The Company believes that these non-GAAP measures are
useful in identifying trends in day-to-day performance because they
exclude items that are of little or no significance to operations and provide indicators
to management of progress in achieving optimal operating performance. In
addition, these measures are used by many research analysts and investors
to evaluate the performance and the value of companies in the senior
living industry. The Company strongly urges you to review the
reconciliation of net income from operations to Adjusted EBITDAR and Adjusted EBITDAR
Margin and the reconciliation of net loss to Adjusted Net Income and
Adjusted CFFO, each of which is included at the end of the Company’s
earnings releases, along with the Company’s consolidated balance
sheets, statements of operations, and statements of cash flows.
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| Capital
Senior Living Well Positioned For Sustainable Growth
• Value leader in geographically concentrated regions providing quality seniors housing and care at reasonable prices • Highest percentage of wholly-owned communities among top seniors housing operators generating strong cash flow • Straight forward private-pay business model • Executing on disciplined accretive growth initiatives through acquisitions, conversions to higher levels of care, renovations and refurbishments • Industry benefits from need-driven demand, limited new supply and an improving housing market and economy 6 |
| The
Seniors Housing Market is Highly Fragmented Independent Living
Companies 75%
20% 25% Top 10 Top 25 Assisted Living Companies 63% 29% 37% Top 10 Source: IBISWorld, Provider Magazine, and Barclays Research Top 10 Top 25 Top 25 Remaining Market 7 |
| Largest
U.S. Seniors Housing Operators Rank
Company Units Operated % Owned 1 Brookdale Senior Living 110,443 33.8% 2 Holiday Retirement 37,657 36.6% 3 LCS 32,172 14.9% 4 Five Star Senior Living 31,267 9.8% 5 Sunrise Senior Living LLC 22,561 0.0% 6 Erickson Living 20,517 28.2% 7 Senior Lifestyle Corporation 20,334 82.0% * 8 Atria Senior Living Inc. 17,958 0.0% 9 Capital Senior Living Corporation 11,632 57.8% 10 Elmcroft Senior Living 8,874 0.0% Source: ASHA 50 2015 * Mostly minority interests in joint ventures 8 |
| Capital
Senior Living’s Competitive Advantages in Highly Fragmented
Industry •
Exceptional talent and reputation
• Economies of scale and operating efficiencies • Strong cash flow funds investments in technology, training, systems, renovations, refurbishments and accretive growth • Enhanced sales and marketing initiatives • Quality Assurance Programs 9 |
| Capital
Senior Living Geographic Concentration •
Capital Senior Living operates 119 communities in geographically
concentrated regions with the capacity to serve 15,200 residents
AR. 173 CT. 178 FL. 226 IA. 122 IL. 650 IN. 2,381 MI. 244 MN. 173 MO. 662 MS. 143 NC. 432 SC. 669 NE. 668 NJ. 98 NY. 537 OH. 2,172 TX. 3,870 VA. 317 CA. 408 Number of residents by State Greater than 2,000 500 - 2,000 Less than 500 As of August 11, 2015 Resident Capacity By State WI. 591 GA. 168 MA. 87 AZ. 189 10 |
| NIC MAP
Markets Source: NIC MAP
Capital Senior Living
locations Capital Senior Living has operations in 29 of NIC-MAP’s 99 primary and
secondary markets 11 |
| Demand
& Supply Conditions Affect Metro Areas Differently
Seniors Housing –
Primary Markets Supply and Demand Changes as of Q2 2015
Source: NIC MAP Data Service
12 |
| Demand
Pull/Cost Push Pressures Favor Senior Living
Age- Restricted Housing Independent Living Assisted Living Memory Care Skilled Nursing Hospital • Aging, Demographics, Acuity Levels and Disabilities • Rising Penetration Rates • Fewer Family Caregivers • Social Engagement, Support and Emotional Well-Being • Accountable Care Organizations • Post Acute Care Collaboration • Fee-For-Service Framework vs. Quality and Value-Based Outcomes (Cost Considerations) Source: 2015 NIC for Seniors Housing & Care 13 |
| Assisted
Living Is a Lower Cost Alternative for Post-Acute
Care Higher Average Cost
Lower Average Cost Acute Care Post-Acute Care Continuum Hospital $1,819/day Long-Term Care Hospital $1,450/day Inpatient Rehab Facility $1,314/day Skilled Nursing Property $432/day $190/day Home w/ Home Health Care Assisted Living $121/day Sources: Medicare Payment Advisory Committee (MedPAC), Report to Congress, March 2012; American Hospital Association (AHA)
Statistics, 2012 Edition; Genworth Financial 2013 Cost of Care Survey; MEDICARE&
MEDICAIDRESEARCH REVIEW/ 2012 Statistical Supplement; NIC
MAP ®
Data Service 1Q 2013
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| Seniors
Housing Yields Consistent High Investment Returns Source: NCREIF, NIC MAP
Data Service NCREIF Annualized Total Investment Returns (1, 3, 5,
10-Year Periods, as of Q2 2015) 15
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Transformation: Wholly-Owned Portfolio Growth
25 69 45 50 7 0 25 50 75 100 125 150 2010 Current Owned Leased Joint Venture 77 Total Properties Owned % 32.5% 58.0% 119 Total Properties 16 |
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Transformation: Increased Level of Care
• Average monthly rent has increased from $2,754 in Q2 10 to $3,364 in Q2 15 17 |
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Transformation: Significant Growth in Key Metrics
81.1% 88.0% 75.0% 80.0% 85.0% 90.0% Q2 10 Q2 15 Occupancy $188 $406 $0 $100 $200 $300 $400 $500 Q2 10 Annualized Q2 15 Annualized Resident Revenue $0.64 $1.64 $- $0.50 $1.00 $1.50 $2.00 Q2 10 Annualized Q2 15 Annualized CFFO Per Share ($ in millions) 33.1% 36.8% 30.0% 32.0% 34.0% 36.0% 38.0% Q2 10 Q2 15 Adj. EBITDAR Margin 18 |
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Transformation: Age of Portfolio
11.9 15.1 0 5 10 15 20 New Acquisitions All Others Average Age in Years Currently 78 communities are undergoing conversions and renovations to be completed in the next 18 months 19 |
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Transformation: New Independent Directors
• Strengthened the Board by adding 5 independent directors with extensive experience in seniors real estate and care: • Philip Brooks – 28 years experience in commercial real estate finance, including $5B of seniors housing and healthcare financings • Rodney Hornbake, MD – practicing physician specializing in geriatrics and former Chief Medical Officer for large health services organizations • Kimberly Lody – executive-level experience in marketing services and products to seniors and branding healthcare companies • Ronald Malone – public company executive and board experience with extensive senior level operational experience in healthcare and wellness services • Michael Reid – 34 years of senior-level investment banking, public REIT and real estate experience 20 |
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Transformation: New Key Senior Personnel
• New positions: • Vice President Corporate Development • Two Regional Operations Vice Presidents • Quality and Clinical Director • Regional Clinical & Quality Assurance Director • New people in key positions: • Chief Financial Officer • Vice President National Marketing & Sales • Director of Human Resources 21 |
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Transformation: Consistent Significant Growth in
Key Metrics Revenue * Adjusted EBITDAR ($ In Millions) $197 $257 $305 $343 $380 2010 2011 2012 2013 2014 * Excludes community reimbursement revenue and management services revenue
Adjusted EBITDAR Margin
Adjusted CFFO per share
32.4% 35.0% 35.4% 34.9% 35.9% 2010 2011 2012 2013 2014 * Excludes prepaid resident rents and tax
savings related to cost segregation studies
of $0.25 in 2012 and $0.14 in 2013
($ In Millions) 22 |
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Operations David Beathard Senior Vice President, Operations |
| Mission
Statement “We
are committed to providing quality housing and services based on the highest standards of excellence in the industry. Our goal is to enrich the daily lives of our senior residents by providing an environment that stimulates them physically, mentally and emotionally.” 24 |
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Capital Senior Living’s Greatest Resource – Our Employees • Starts with hiring the right people with a heart for seniors • Most important hire is the Executive Director with senior housing experience • Community empowerment is essential due to the local nature of the markets that we serve • Empowerment requires Capital Senior Living’s ARA Management Philosophy: A – authority and autonomy R – responsibility A – accountability • Regional and corporate team are a support and resource to our onsite operations 25 |
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Operations and Marketing Organization Chart
Keith Johannessen (37)
President & COO Glen Campbell (43) Vice President Asset Management 2 Project Managers David Beathard (41) Senior Vice President Operations 4 Regional Managers 2 District Managers Greg Boemer (21) Vice President Operations 5 Regional Managers 1 District Manager Gary Fernandez (18) Vice President – National Sales & Marketing eMarketing Director 9 Marketing Regionals Regional Clinical Quality & Clinical Director Director of Human Resources Employee Relations, Benefits and Payroll (32) – Average Years of Senior Housing Experience 26 |
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• Regional/District Operations Managers average 17 years of senior housing experience • 10 of 12 Regional/District Operations Managers were promoted from Capital Senior Living Executive Directors • Regional Marketing Directors average 18 years of senior housing experience • 6 of 9 Regional Marketing Directors were promoted from Capital Senior Living Sales Directors Experienced Corporate Team 27 |
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• Capital Senior Living has transformed over the past 4 years from predominantly an Independent Living operator to 53% Assisted Living/Memory Care and 47% Independent Living • Increased the utilization of technology: • Real Page resident assessment tool and associated level of care charges commenced June 2012 • Level of care charges have increased 35% Q2’14 to Q2’15 • Employee online training through Redilearning rolled out in January 2015 • Capital Senior Living University orients new Executive Directors to Capital Senior Living System Capital Senior Living System 28 |
| Capital
Senior Living System – Continued
• Increased Risk Management Programs: • Quality Assurance Program led by Quality and Clinical Services Director and a Regional Clinical Director, both RNs • Established Quality Assurance Committee (President, 2 VPs of Operations and General Counsel) • Perform care audits and develop improvement plans • Developed quarterly Regional Manager audit tool • Developed monthly community self-audit to identify and quantify trends on care metrics • Developed an enhanced Work Place Safety Program 29 |
| Organic
Growth •
Focus on occupancy improvement through weekly meetings on
communities with occupancy below 90% focusing on pricing
and marketing initiatives
• Increase average rents through level of care charges, market rents and in-house rent increases: • Effective September 1 st , increased market rents by 3% on all communities with occupancies 93% or greater • Increased market level of care charges by 10% on 9/1 and in- house on 10/1 • In-house rents increased by 3% on resident one-year anniversary dates on all communities 30 |
| Organic
Growth •
Proactive expense management including:
• Group Purchasing Program discounts through Premier GPO, including US Food program (average savings of 16.5% for past 4.5 years). • Fixed discounted electricity rates of $0.05 per KWH through 2019 in Ohio and 2020 in Texas • Spenddown sheets tied to reduction in expenses based on occupancy and billing compared to budget • Converting units to higher level of care • Cash flow and value enhancing renovations and refurbishments in process on 78 communities 31 |
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Transformation of Sales and
Marketing Gary Fernandez Vice President, National Marketing and Sales |
| Sales
& Marketing Overview •
Increased focus on sales
• Daily focus calls: review hot prospects, next steps, outreach marketing • Weekly Matrix Care / REPS review and accountability • Weekly zone calls • Continue to build brand awareness • Re-branding started in 2012 • Branded marketing materials • Increase web traffic and leads • Better lead tracking • Implement API system with website and Internet referral partners • Industry challenges: • Changing resident profile • Higher acuity • More need driven 33 |
| Building
Brand Awareness Flyer example
Postcard example Storefront Order Screen • Capital Senior Living continues its aggressive branding strategy to develop name recognition, market awareness and to position our quality products and services with our core customers. 35 |
| New
Vehicle Wraps •
Vehicle wrap design mirrors community website home page
and print media, branded collateral
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| New
Property Signage New property monument sign rendering
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Transformation of Lead Generation
Shift in Media and Marketing |
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Transformation of Lead Generation
• Technology and changing consumer behaviors have altered the landscape in senior living marketing • Today’s consumer decides: • When to evaluate • Where to turn for answers • Who should be on the short list for consideration • Capital Senior Living has changed the way and sources we use to market our products and services 39 |
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Transformation of Lead Generation
• 220 million Americans have registered their number on the Federal Trade Commission’s National Do Not Call Registry • 86 percent of television viewers use technology to skip advertising • Newspaper paid circulation has been on a steady decline for the past 20 years • Nearly half of all direct mail is never opened 40 |
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Transformation of Leads: The Internet
• Internet leads represent approximately 50% of all new lead generation in the senior living industry • Capital Senior Living: Internet leads represent 64% of total leads • Capital Senior Living: Internet referral partners represent 51% of total leads • Internet lead development: • Capital Senior Living website/organic leads • Pay-per-click • SEO • Pay per move-in sources • A Place for Mom • Caring.com • OurParents.com • SeniorHousingNet.com (pilot program) 41 |
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42 Transformation of Lead Generation 3,250 1,348 1,190 922 12,615 2,253 485 831 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 Internet Referrals Family/Friend Traditional Media Professional Referral 1Q/2Q 2012 vs. 1Q/2Q 2015 Lead Generation Trends 2012 2015 +11.2% Capital Senior Living Executive Report/Standing Dog/Matrix Care |
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43 Capital Senior Living Quarterly Web Traffic Trends 118,679 124,521 131,495 137,396 0 25,000 50,000 75,000 100,000 125,000 150,000 Q1 Q2 Q1 and Q2 Capital Senior Living Web Traffic Trends +11.2% +10.3% +10.8% Capital Senior Living Executive Report/Standing Dog 2014 2015 |
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44 Capital Senior Living Website Lead Generation 1,048 1,029 2,077 1,122 1,168 2,290 0 1,000 2,000 Q1 Q2 Total Q1 and Q2 Capital Senior Living Web Leads Trends +11.2% +10.3% Capital Senior Living Executive Report/Standing Dog 2014 2015 |
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45 Email Trigger and Nurturing Program • Capital Senior Living launched a very robust Email Trigger and Nurturing Program in Q1 2015 as a way to actively engage prospects throughout the selling cycle. • Email Trigger and Nurturing Program • Includes all new lead contacts • Allows us to mine our existing database of prospects • Content is centered on Capital Senior Living, our network of communities and senior living topics • Interactive invitations to community events and ongoing follow up |
| Event
Email and Trigger Email Creative 46 |
| Prospect
Tour Surveys and Resident Referral Forms 47
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| Call
Center •
Capital Senior Living launched its Call Center to serve as a link
between our customers / prospects and a Capital Senior Living
community. The center gives customers immediate access to
information when they need it most
• Call Center objectives • Immediate response to calls/inquiries • Increase call-to-tour conversion ratios • Better tracking of calls/inquiries • Incoming traffic to Call Center • Capital Senior Living website and online directories such as SuperPages.com, Yellow Pages.com, etc. • Call-to-tour conversion ratio average 30% through 2Q 2015 48 |
| Capital
Senior Living Sales Initiatives |
| Capital
Senior Living Sales Systems •
In order to effectively manage the sales process, it is important
to have good sales systems in place
• What systems are in place at Capital Senior Living communities? • Inquiry system: to capture and convert traffic to on-site visits • Referral prospecting system: to drive traffic • Visit planning system: to get deposits and schedule next step in process • Follow up system: to work those NOT ready to buy today, which is the MAJORITY of our leads • Source: Bild & Company 50 |
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51 Capital Senior Living Sales: Closing Ratios 26 23 27 27 0 5 10 15 20 25 30 Q1 Q2 2014 vs. 2015 Closing Ratio % Trends 2014 2015 Closing Ratio % Based on Net Deposits/Tours Capital Senior Living Month End Compliance and Occupancy Reports / REPS Industry Trend Source: Bild & Co. IL Industry Average IL Industry Average AL Industry Average AL Industry Average |
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Acquisition Program Joe Solari Vice President Corporate Development |
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53 General Acquisition Criteria • IL, AL and MC communities located in geographically concentrated regions • Predominantly private-pay • Recently built or renovated • Single properties or portfolios • Building size = 75 - 150 units • Strong occupancy, average rents and margins • Favorable demographics 53 |
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54 Types of Deals Brokered • National and local brokers • Seniors housing • Multi-family Off-Market • Local / regional developers • “Moms and pops” • Industry relationships / referral sources • Repeat sellers “Quasi” Off- Market • Brokers and sellers who approach only 3-5 qualified buyers |
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55 Competition for Deals Public REITs Prefer larger transactions in major metropolitan markets Need to partner with operators Non- Traded REITs Prefer larger transactions but will compete for single properties Will buy in primary and secondary markets Need to partner with operators Private Equity Firms Prefer newer, larger, Class A properties and portfolios Will buy in primary and secondary markets Need to partner with operators Other Operators Not very active on their own Most participate via a capital partner |
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56 Capital Senior Living Competitive Advantages • Name recognition • Long and successful track record of closing on a timely basis • Certainty in securing financing • Reputation for being responsive, fair and “straight-shooters” • Owner / operator • Sellers deal with one party (i.e., no capital partner) • Continuity of operations post-closing • Staff and resident comfort level with Capital Senior Living |
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57 Acquisition Activity Jan 2011 – Aug YTD 2015 Market Off-Market Tot./Avg. Signed Confidentiality Agreements (CA’s) 184 83 267 Pct. Of Total CA’s Signed 69% 31% 100% Offers Submitted 55 45 100 Pct. of Signed CA’s 30% 54% 37% # of Properties 99 124 223 Offers Accepted 19 27 46 Pct. of Offers Submitted 35% 60% 46% # of Properties 19 53 72 Properties Acquired 14 36 50 Pct. Of Total Properties Acquired 28% 72% 100% |
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58 Keys to Off-Market Success • Extensive industry relationships • Name recognition and track record of closing acquisitions • Establishing rapport and trust with sellers and local brokers • Discipline and persistence • Doing the little things that matter: • Returning all unsolicited calls – no matter how speculative • Being accessible and responsive • Following through – doing what we say we’re going to do • Keeping transactions confidential |
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59 Acquisition Process & Timeline Sign Confidentiality Agreement Initial Underwriting and Submittal of Letter of Intent • 2-3 weeks Negotiation and Execution of Purchase & Sale Agreement • 2-4 weeks Due Diligence and 3 rd Party Reports • 4-6 weeks Financing Commitment and Licensure Approval • 4-6 weeks |
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60 A Team Approach Acquisitions * Relationship with Broker and/or Seller * Underwriting & Financial Modeling * Negotiation of LOI & Purchase & Sale Agreement * Coordination of Due Diligence Legal • Purchase & Sale Agreement • Legal Due Diligence • Title & Survey • Licensure Operations • Operational Due Diligence • Transition Planning & Execution Finance • Debt Financing • Property Tax Analysis • Closing Prorations • Settlement Statement • Financial Due Diligence • Treasury & Accounting Transition |
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61 Excerpt from The Daily Star Oneonta, NY - May 31, 2015 "We knew that, at some point, we would sell," Biedenkopf said by phone Sunday. "There were a lot of suitors.. but Capital Senior Living rose above the others, with phenomenal depth and scope of experience and an appreciation for what The Plains offers.” “Of course we are emotional … this is a business about caring for people," Biedenkopf said in the release. "At the same time, there is such pride in the accomplishments of The Plains community, and a genuine confidence in the capabilities of Capital. So, overall, I truly am happy about the handing over of the Heritage to Capital Senior Living.” |
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62 Seller Testimonials • “You and your team have made this potentially very stressful experience a very good one.” • “This has been a tremendous experience. I know my people are in good hands or I would not have proceeded! My sincerest thanks to all of you for making this as pain free as is humanly possible.” • “It was a true pleasure dealing with you on these transactions. Susan and I wish you and Capital Senior Living the best in the future operations of these facilities. You are a class act and we appreciate your hard work, dedication, honesty and patience in getting these deals closed.” |
| Seniors
Housing Lender Panel Moderator: Carey Hendrickson, Chief Financial
Officer Dan Biron, Berkadia Commercial Mortgage
Roosevelt Davis, Fannie Mae
Laura McDonald, Protective Life Insurance Company
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Financial Overview Carey Hendrickson Chief Financial Officer |
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65 Multiple Avenues of Growth • Core Growth • Conversion of units to higher levels of care • Accretive acquisitions • Will add back communities currently excluded from our non- GAAP financial measures when repositioning is complete |
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66 Core Growth • Goal is to increase revenue at a rate 50 to 100 bps higher than expenses • Occupancy growth is resulting in pricing power • Continue to enhance sales and marketing initiatives • Renovations and refurbishments enhance growth prospects • Proactive expense management • Wage pressure is not a concern |
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67 Conversions: Significant Increases in Occupancy, Revenue and CFFO Occupancy Prior to Conversions (1) IL AL Total Total Units 6,192 5,434 11,626 Occupied Units 5,287 4,869 10,156 Occupancy % 85.4% 89.6% 87.4% Planned IL to AL Conversions IL AL Vacant Units (225) 225 At 90% Stabilized Occupancy 203 Incremental Conversions (175) 175 (1) As of June 30, 2014 - excludes CCRC’s , Autumn Glen, and Veranda Club Occupancy After Conversions IL AL Total Total Units 5,792 5,834 11,626 Occupied Units 5,112 5,247 10,359 Occupancy % 88.3% 89.9% 89.1% Annual Financial Impact Incremental CFFO: Approx. $0.20 per share Initial 400 Units Converted |
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68 Significant Occupancy Improvement After Conversion 50% 55% 60% 65% 70% 75% 80% 85% 90% 95% 100% Prior to Conversion June 30, 2015 80.5% 92.7% • Occupancy has increased 122 basis points at communities where conversions were completed in 3Q and 4Q 2014 |
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69 Conversions: Significant Increases in Occupancy, Revenue, and CFFO • 400 units converted at June 30, 2015 • Includes 94 units at two of the four communities currently excluded from our Non-GAAP results • $0.20 per share of CFFO • 100 units to be converted in second half of 2015 • $0.03 per share of CFFO • 200 units to be converted in 2016 • $0.05 per share of CFFO |
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70 Strategic Accretive Acquisitions *Based on share count at time of transaction (in millions except number of communities) 2011 2012 2013 2014 Jan – Aug 2015 Combined Purchase Price $83.4 $181.3 $150.4 $160.2 $109.0 $684.3 Communities 7 17 11 8 7 50 Units 551 1,367 881 819 602 4,220 Debt $59.3 $129.5 $112.3 $119.7 $78.9 $499.7 Weighted Average Int. Rate 5.1% 4.5% 5.4% 4.5% 4.2% 4.7% Equity $24.1 $51.8 $38.1 $40.5 $30.1 $184.6 First Year Revenue $21.3 $49.1 $35.1 $36.4 $24.2 $166.1 First Year EBITDAR $7.3 $19.1 $14.1 $15.0 $9.7 $65.2 First Year Cash Flow from Operations (CFFO) $3.4 $9.1 $5.8 $6.7 $4.6 $29.6 First Year CFFO per
share* $0.13 $0.34 $0.20 $0.23 $0.16 $1.06 Cash on Cash Return 14.1% 17.6% 15.2% 16.5% 15.3% 16.0% |
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71 Strategic Accretive Acquisitions • Have achieved an average cash on cash return of 16.0% • Cash has come from internally generated cash flow • Pipeline is robust • Financing environment remains favorable |
| Balance
Sheet •
As of June 30, 2015 (in millions)
ASSETS Cash and Securities $ 51.7 Other Current Assets 23.8 Total Current Assets 75.5 Fixed Assets 811.1 Other Assets 35.4 TOTAL ASSETS $ 922.0 LIABILITIES & EQUITY Current Liabilities $ 71.4 Long-Term Debt 660.2 Other Liabilities 55.9 Total Liabilities 787.5 Stockholders’ Equity 134.5 TOTAL LIABILITIES & EQUITY $ 922.0 72 |
| Debt
Overview : 100% Mortgage Debt Debt Maturities
Weighted Average Interest Rate
(In thousands)
$636,096 $0 $0 $0 $43,660 $0 $0 $0 $100,000 $200,000 $300,000 $400,000 $500,000 $600,000 $700,000 2021 & After 2020 2019 2018 2017 2016 2015 Average duration of debt is 8 years, with approximately 94% of all debt maturing in 2021 and after Weighted Average Interest Rate has decreased 136 bps since 2010 * This debt is scheduled to be refinanced in the fourth quarter of 2015.
* 73 6.00% 5.79% 5.25% 5.25% 4.70% 4.64% 4.00% 4.50% 5.00% 5.50% 6.00% 6.50% 2010 2011 2012 2013 2014 2015 YTD |
|
74 Impacts of a Rising Interest Rate Environment • Ninety-eight percent of existing debt has fixed interest rates • Increases in short-term rates do not necessarily result in increases in long-term rates • The rising income of our residents would allow us the opportunity to implement higher rate increases • Increases in short-term rates would increase the cost of construction and limit new supply • Lenders would seek out borrowers like Capital Senior Living with high credit quality and a strong balance sheet • Cash-on-cash returns from acquisitions are expected to remain in the mid-double digits |
|
Accelerated CFFO Growth through 2018
Note: This chart illustrates the potential financial impact of successful execution of
our strategic plan; it is not intended as financial guidance.
Please see Capital Senior Living’s disclosure related to forward-looking statements. • EBITDAR would increase approximately 50%, or $75M, through 2018 $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 2015 2016 2017 2018 Canton &Towne ($0.08 thru 2018) 200 Conv ($0.05 incremental in total) 100 Conv ($0.03 incremental in total) 400 Conv (additional $0.15; $0.05 included in 2015) Acquisitions ($0.20 per year) Core Growth ($0.15 per year) Base (2Q15 Annualized) 75 |
|
Investor and Analyst Day
October 8, 2015 |
|
Investor and Analyst Day
October 8, 2015 |
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