SEATTLE-Emeritus Corp. has agreed to buy Blackstone's 81% interest in 24 assisted living facilities totaling 1,867 units that Emeritus has been operating in a JV with Blackstone. The net purchase price to acquire Blackstone’s 81% interest in the joint venture is expected to be approximately $99 million, based on a total portfolio value of $310 million, according to an Emeritus announcement regarding the deal.
Dan Baty, Emeritus chairman, commented regarding the transaction: “We have operated these communities under a management agreement that incentivized us to improve operations. That incentive represents a significant portion of the equity required to complete this purchase transaction.” Emeritus has been operating the communities since late 2006 under management agreements for a fee equal to 5% of collected revenues.
Baty added that Emeritus, in light of the success of its joint venture with Blackstone, will “look forward to delivering similar results on the much larger Sunwest portfolio of 144 communities.”
Emeritus expects to finance the acquisition with mortgage debt of approximately $220 million, approximately $40 million in cash on hand, excluding acquisition and financing costs, and the balance from the company’s final equity interests in the joint venture representing the company’s 19% interest in the joint venture and the promote structure incentive based on the final rate of return to the joint venture members. Final closing of the transaction is subject to “routine closing conditions normal for an acquisition of this nature,” Emeritus said.
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