Capital, one of the nation's largest operators and developers ofsenior living communities, has been overseeing the properties forthe past four years. James A. Stroud, Capital's chairman, says themerger is "strategically important ... aimed at increasingownership of assets and enhancing cash flows." Stroud estimatesannual cash earnings to jump more than 20%, or 11 cents, over itspresent rate.

The merger also promises to add nearly 1,300 buying seniors tothe communities, where residences average more than $75,000 each,says Capital CEO Lawrence A. Cohen. "Furthermore, the merger isexpected to increase revenues by more than $22 million over thenext twelve months and EBITDA by approximately $10.5 million," hesays. The merger also will result in a review of financingalternatives with regard to ILM II Senior Living Inc., the jointventure owner of Villa Santa Barbara.

GMAC Commercial Mortgage Corp. and its affiliate providedacquisition financing for the merger as well as refinancing threecommunities owned by Capital, which owns or operates 39 seniorcommunities in 19 states with a total capacity of about 6,800residents. Capital also is building 19 comparable communities forabout 2,600 residents.