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
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Increases annual revenue by $5.2 million
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Increases CFFO by $1.2 million, or $0.04 per share
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Improves earnings by $0.4 million, or $0.02 per share
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Average monthly rent for the communities is approximately $3,606
Mortgage Debt Refinance
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$18.9 million of 10-year fixed-rate mortgage debt at 4.46%
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129 basis point reduction in the fixed-debt interest rate
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Cash proceeds to the Company of $9.3 million
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Extends maturity to 2025
Mortgage Rate Locks
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$45.0 million of 10-year fixed-rate mortgage debt at 3.85%
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Net proceeds of $15.0 million upon the refinance of the two mortgages
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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.
Copyright Business Wire 2015