Midwest Portfolio Holdings LP has completed the sale of five senior living communities to Health Care REIT (NYSE: HCN) in a joint venture deal. The portfolio includes four assisted living communities in Nebraska and one assisted living community in Iowa.
Upon the closing of the transaction April 19, Dallas-based Capital Senior Living Corp. (NYSE: CSU) — which held an 11% partnership interest in Midwest Portfolio Holdings — leased the communities from Health Care REIT based in Toledo, Ohio.
Capital Senior Living previously managed the five communities in the joint venture under long-term management agreements. The communities being leased in this transaction include approximately 295 units with a combined resident capacity of nearly 390 residents.
“This transaction adds significant top-line growth to the company, as well as solid cash flow and earnings,” stated Lawrence Cohen, CEO of Capital Senior Living, in a press release. “We can now consolidate the results of operations and benefit fully from further improvement in occupancies, margins and rental rates.
“These five high-quality assets establish an excellent foundation for our new relationship with Health Care REIT, a leading healthcare REIT that invests across the full spectrum of senior housing and health care real estate,” added Cohen.
The five communities generate a combined $11.1 million in revenue annually and $5.5 million of EBITDAR (earnings before interest, taxes, depreciation, amortization and rent). Those figures are based on annualized fourth-quarter results for the five communities with a financial occupancy of 92%
Capital Senior Living received proceeds from Midwest Portfolio Holdings of approximately $3.2 million and will recognize a gain of approximately $800,000. The company may receive additional proceeds after the joint venture settles its customary post-closing costs.
One of the nation's largest operators of residential communities for senior adults, Capital Senior Living currently operates 66 senior living communities in 23 states with an aggregate capacity of approximately 10,000 residents. The company’s stock closed at $5.57 per share at the end of trading Friday, April 23, up from $3.52 a year earlier.
Health Care REIT, an S&P 500 company, is a major investor in both seniors housing and health care real estate. As of March 31, the company's portfolio consisted of 608 properties in 39 states. The share price of Health Care REIT stock closed at $45.23 on Friday, April 23, up from $33.72 a year earlier.