Capital Senior Living Corporation Announces Agreement for $43 Million, Six Community Sale/Leaseback; Exercise of Purchase Option Will Result in Immediate Gain and Increase Net Revenues by 10%.DALLAS -- Capital Senior Living Corporation (NYSE NYSE See: New York Stock Exchange :CSU See DSU/CSU. 1. CSU - California State University. 2. CSU - Cleveland State University. 3. CSU - Channel Service Unit. ) (the "Company"), one of the country's largest operators of senior living communities, today announced that it has entered into an agreement for a six community sale/leaseback transaction valued at approximately $43.0 million. In August 2004, the Company announced the acquisition of a management company in Fort Worth, Texas Fort Worth is the fifth-largest city in the state of Texas, 18th-largest city in the United States[1], and voted one of "America’s Most Livable Communities. that operated 16 senior living communities, including seven that the management company owned. As part of the transaction, Capital Senior Living received the exclusive right and option to purchase the seven owned communities for $41.0 million through February 2007. The option price was subsequently adjusted to $40.4 million. The Company has now exercised its option to purchase the seven communities and, upon completion of the acquisition, will immediately sell six of the seven at a sales price of approximately $43.0 million and lease them back. The Company is marketing the seventh community and intends to complete a sale as soon as possible. The six communities being sold by the company and leased back are in the Texas towns of Abilene, Burleson, Cedar Hill Cedar Hill can refer to:
n. A living arrangement in which people with special needs, especially older people with disabilities, reside in a facility that provides help with everyday tasks such as bathing, dressing, and taking medication. communities with a total of 270 units. Occupancy on the collective properties is approximately 96% at the present time. In 2005, the six senior living properties had approximately $11.3 million in revenues and $4.3 million in EBITDAR Earnings Before Interest, Taxes, Depreciation, Amortization, and Restructuring Costs - EBITDAR An indicator of a company's financial performance calculated as: = Revenue - Expenses (excluding tax, interest, depreciation, amortization, and restructuring costs) , before management fees of $0.6 million. "The exercise of this purchase option demonstrates the Company's ability to create value," stated James A. Stroud This article or section needs sources or references that appear in reliable, third-party publications. Alone, primary sources and sources affiliated with the subject of this article are not sufficient for an accurate encyclopedia article. , Chairman of the Company. "In less than two years' time, it has become attractive for us to realize the gain inherent in the option and to begin consolidating the operations of these six communities." The Company anticipates that it will record a gain of between $3 and $4 million dollars on the sale of these six communities, with the gain to be recognized equally over the initial ten-year term of the lease. Net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). are expected to be approximately $4.5 million, net of transaction costs Transaction Costs Costs incurred when buying or selling securities. These include brokers' commissions and spreads (the difference between the price the dealer paid for a security and the price they can sell it). . The triple net operating lease Operating Lease A lease contract that allows the use of an asset, but does not convey rights similar to ownership of the asset. Notes: An operating lease is not capitalized it is accounted for as a rental expense. will have two ten-year renewal options beyond the initial term. The initial lease rate is 8% and is subject to CPI-based escalation es·ca·late v. es·ca·lat·ed, es·ca·lat·ing, es·ca·lates v.tr. To increase, enlarge, or intensify: escalated the hostilities in the Persian Gulf. v.intr. provisions pursuant to the terms of the lease. The transaction is expected to close in the next sixty days, pending approvals and other customary closing conditions. "This six community sale/leaseback transaction, along with the recently announced sale/leaseback of three of our owned communities, will combine for a nine community sale/leaseback," added Lawrence A. Cohen cohen or kohen (Hebrew: “priest”) Jewish priest descended from Zadok (a descendant of Aaron), priest at the First Temple of Jerusalem. The biblical priesthood was hereditary and male. , Chief Executive Officer. "Collectively, this $97.0 million transaction will generate gains for the Company of approximately $16.0 million, resulting in an amortized gain of approximately $1.6 million per year for the next ten years. In addition, the Company will retire $29.6 million of debt and receive cash proceeds of approximately $28.0 million. We plan to use a portion of these proceeds to pay down other debt and refinance Refinance 1. When a business or person revises their payment schedule for repaying debt. 2. Replacing an older loan with a new loan offering better terms. Notes: When a business refinances they typically extend the maturity date. nearly all of the remaining variable rate debt at fixed interest rates about 200 basis points below current levels." A schedule detailing the first year effects of all recently announced transactions is attached. 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 philosophy emphasizes 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 currently operates 59 senior living communities in 21 states with an aggregate capacity of approximately 9,200 residents, including 37 senior living communities which the Company owns or in which the Company has an ownership interest, 7 leased communities and 15 communities it manages for third parties. In the communities operated by the Company, 82 percent of residents live independently, 16 percent of residents require assistance with activities of daily living and 2 percent receive skilled nursing services. The forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. in this release 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 find suitable acquisition properties at favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. terms, financing, licensing, business conditions, risks of downturns in economic conditions generally, satisfaction of closing conditions such as those pertaining per·tain intr.v. per·tained, per·tain·ing, per·tains 1. To have reference; relate: evidence that pertains to the accident. 2. to licensure licensure (lī´s  nsh , 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.Contact Ralph A. Beattie, Chief Financial Officer, at 972-770-5600 or Matt Hayden, Hayden Communications, Inc. at 858-704-5065 for more information.
Capital Senior Living Corporation
First Year Incremental Effects of Recently Announced Transactions
($millions)
GE
Georgetowne Healthcare
Blackstone JV Place JV Midwest Towne Centre
Sale/Leaseback Lease Portfolio Sale/Leaseback
--------------- ----------- ----------- ---------------
Release Date 10/6/2005 10/19/2005 1/13/2006 2/1/2006
Effective Date 10/6/2005 10/19/2005 4/1/2006 4/1/2006
Revenue:
Resident Revenue $20.5 $4.0 -- --
Management Fee (0.9) -- 0.5 --
EBITDAR 9.7 1.8 0.5 --
Depreciation -- -- -- (0.6)
Lease Expense 6.5 1.6 -- 2.3
Amortized Gain 0.4 -- -- 1.5
Interest Savings -- -- -- 1.3
Pre-Tax Profit 3.6 0.2 0.5 1.1
Total Gain 4.2 -- -- 14.5
Cash Proceeds 6.1 -- -- 12.4
3 Property CGIM 6 Property
Sale/Leaseback Sale/Leaseback Total
---------------- ---------------- ---------
Release Date 3/8/2006 3/13/2006
Effective Date 5/1/2006 5/1/2006
Revenue:
Resident Revenue -- $11.3 $35.8
Management Fee -- (0.6) (1.0)
EBITDAR -- 4.3 16.3
Depreciation (1.4) -- (2.0)
Lease Expense 4.3 3.4 18.1
Amortized Gain 1.3 0.3 3.5
Interest Savings 2.5 -- 3.8
Pre-Tax Profit 0.9 1.2 7.5
Total Gain 13.0 3.0 34.7
Cash Proceeds 23.5 4.5 46.5
Note:
Based on 2005 actual results
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