American Retirement Corporation to Acquire 8 Senior Living Communities
NASHVILLE, Tenn.--(BUSINESS WIRE)--Sept. 15, 2005--American Retirement Corporation (NYSE: ACR) ("ARC" or the "Company"), a leading national provider of senior living housing and care, today announced that it has entered into a definitive asset purchase agreement with an affiliate of Epoch Senior Living, Inc. ("Epoch") to acquire eight senior living communities located in seven states for an aggregate purchase price of $138 million plus customary transaction expenses. The communities are located in Arizona (2), Colorado, Georgia, Kansas, Minnesota, Nevada, and Texas.
The portfolio is well situated in predominantly large metropolitan markets and averages 104 units per community. The portfolio has a total of 831 units, comprised of 742 assisted living units and 89 Alzheimer's units. The eight communities generated annualized total revenues of approximately $29 million for the six months ended June 30, 2005 with ending occupancy for the month of August at 89% for the portfolio. "We are extremely pleased to be adding these class-A assets to our portfolio. We believe this is a unique opportunity to acquire difficult-to-replicate assets at a discount to their replacement cost. These communities fit our strategy of targeting major metropolitan markets and match our operating paradigm extremely well," said Bill Sheriff, Chairman, President and CEO of the Company. Mr. Sheriff added, "The four communities located in Phoenix, Tucson, Denver and Houston will nicely complement our existing portfolio in these core ARC markets. We see significant upside potential in these assets, which ended August at 84% occupancy, and expect to leverage the full resources of ARC to quickly add operating and marketing support as well as introduce our array of ancillary services. The other four communities, which ended August at 94% occupancy, are situated in highly desirable markets providing us with strategic entry-points into these new markets. We will be adding our ancillary services into at least two of these communities. We estimate that the transaction will be slightly accretive in 2006 and will provide additional guidance upon finalization of the transaction. We are excited about adding these communities into our portfolio and providing high-quality care and services to these residents." The communities, which were developed between 1997 and 1999, are currently operated by Epoch, a Massachusetts-based owner, operator and manager of skilled nursing and assisted living communities. To facilitate the initial closing of the transaction, ARC has obtained a firm commitment from Merrill Lynch Capital, a division of Merrill Lynch Business Financial Services Inc. (the current lender on the facilities), to provide all of the debt financing for the transaction. Under this commitment, ARC may draw up to $110 million of 5-year term financing, if necessary. In addition, ARC is evaluating opportunities to work with prospective joint venture partners in an effort to optimize the long-term use of its corporate capital resources. The capital structure will be finalized taking into consideration various tax, legal and financial matters. The consummation of the transaction is subject to receipt of required regulatory approvals and satisfaction of certain closing conditions and contingencies. The transaction is expected to close no later than December 15, 2005. The Company has filed a Form 8-K with the SEC which provides further information concerning the transaction. Company Profile American Retirement Corporation is a national senior living and health care services provider offering a broad range of care and services to seniors, including independent living, assisted living, skilled nursing and Alzheimer's care. Established in 1978, the Company believes that it is a leader in the operation and management of senior living communities, including independent living communities, continuing care retirement communities, free-standing assisted living communities, and the development of specialized care programs for residents with Alzheimer's and other forms of dementia. The Company's operating philosophy is to enhance the lives of seniors by striving to provide the highest quality of care and services in well-operated communities designed to improve and protect the quality of life, independence, personal freedom, privacy, spirit, and dignity of its residents. The Company currently operates 67 senior living communities in 14 states, with an aggregate unit capacity of approximately 13,200 units and resident capacity of approximately 14,900. The Company owns 18 communities, leases 43 communities, and manages six communities pursuant to management agreements. Approximately 84% of the Company's revenues come from private pay sources. Safe Harbor Statement Statements contained in this press release and statements made by or on behalf of ARC relating hereto may be deemed to constitute forward-looking information made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include all statements that are not historical statements of fact and those regarding the intent, belief or expectations of the Company or its management, including, without limitation, all statements regarding the consummation of the acquisition and the related financing, and all statements regarding the Company's expectations concerning the future financial performance of the acquired communities and their effect on the Company's financial performance. These forward-looking statements may be affected by certain risks and uncertainties, including without limitation the following: (i) the Company's ability to successfully complete the Epoch portfolio acquisition and integrate it into the Company's operations, (ii) the Company's ability to consummate the anticipated financing, (iii) the Company's ability to obtain the required regulatory approvals and satisfy the other closing conditions, (iv) the risk that the Company will be unable to improve its results of operations, increase cash flow and reduce expenses, (v) the risks associated with adverse market conditions of the senior housing industry and the United States economy in general, (vi) the risk associated with the Company's significant leverage, and (vii) the risk factors described in the Company's Annual Report on Form 10-K/A for the year ended December 31, 2004 under the caption "Risk Factors" and in the Company's other filings with the SEC. In light of the significant uncertainties inherent in the forward-looking statements included herein, the Company's actual results could differ materially from such forward-looking statements. The Company does not undertake any obligation to publicly release any revisions to any forward-looking statements contained herein to reflect events and circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. |  |
