Senior Living News Wire

Sunrise Senior Living, Inc. (NYSE: SRZ) has entered into a settlement and restructuring agreement with HCP (NYSE:HCP) to transition Sunrise from management of 27 HCP-owned senior living communities for an aggregate cash payment of $50 million to Sunrise, and to settle the lawsuits between the Company and HCP pending in Virginia and Delaware.  HCP paid $40 million to Sunrise on August 31, 2010 and expects to pay $10 million in subsequent installments payable on the earlier of the completion of transitioning in the next 12 months.  HCP stated that it will enter into new arrangements for the 27 communities that are anticipated to reflect improved operating margins of the communities and will be making announcements on those arrangements in the coming months. 

"We are pleased that we have restructured our relationship with Sunrise in a manner that will benefit both parties," said HCP Chairman and Chief Executive Officer, Jay Flaherty. "This transaction highlights the most recent example of HCP’s active approach to asset management as we continue to find ways in this economic environment to unlock additional value in our portfolio. Arrangements with replacement operators are at an advanced stage and we anticipate achieving a substantial return on our $50 million investment and attractive accretion to our 2011 and 2012 earnings profile."

In connection with the settlement and restructuring agreement, Sunrise made a $15 million principal repayment of its bank credit facility and entered into a 14th amendment to its credit agreement extending the maturity date to December 2, 2011. Outstanding consolidated debt under the Company’s bank credit facility after the $15 million payment is $8.4 million, down from $95 million at December 31, 2008. Sunrise and HCP will also negotiate to restructure the leasing and management agreements of up to 35 other senior living communities.  Sunrise also announced that it has completed the previously announced sale of eight of the Company’s nine German assisted living facilities to GHS Pflegeresidenzen Grundstucks GmbH and Prudential Real Estate Investors.

"We are very pleased with the agreement with HCP as it brings Sunrise additional capital that will be used to fulfill many of our financial obligations – and it puts to rest the HCP litigation while paving a path toward a new, positive relationship. These are two very important steps that strengthen Sunrise," said Mark Ordan, Sunrise’s chief executive officer. "We have stated our need to refinance the company, and this deal goes a long way toward that goal. While we continue to pursue balance sheet-enhancing transactions, including asset sales, we do not foresee a need to sell additional community management portfolios. We are, of course, also pleased to complete the previously announced sale of eight German communities to Pramerica."

Representatives from the Illinois Housing Development Authority (IHDA) and local dignitaries recently celebrated the grand opening of Thomas Place Fox Lake new development of 100 rental homes for low-income seniors.  The project features 67 two-bedroom, and 33 one-bedroom units for residents who are at least 55 years old with monthly rents ranging from $598 to $837.

“Our state’s seniors are living on a fixed income, and must make choices about expenses that could impact their ability to afford quality homes. We are proud to fulfill our role as Illinois’ housing finance agency to forge public-private partnerships to create more affordable rental homes for low-income seniors, such as Thomas Place Fox Lake,” said Gloria L. Materre, IHDA Executive Director. “Our investment in housing also benefits the local economy by creating jobs.”

The state of Illinois provided significant financing for the project that included $2.4 million in federal Low-Income Housing Tax Credits from IDHA, and $511,000 in Illinois Affordable Housing Tax Credits to build the development. The federal tax credits, which were a result of a special allocation for counties hit by severe flooding in 2008, generated an additional $16.5 million in private equity to finance the development.

Several dozen ABHOW residents, staff members, family members and others collectively created a memory quilt for the company’s annual meeting in February.

While ABHOW’s long-established Fresno continuing care retirement community is busy adding new amenities and stylish renovations to its campus, it is also embracing a brand-new name.

Catholic Health Initiatives (CHI) and Bethesda, Inc. recently announced that the two entities have agreed to the sale of Bethesda, Inc’s subsidiary Consolidated Health Services, Inc to CHI.  Consolidated Health Services currently operates in 30 locations in Indiana, Kentucky and Ohio and includes American Nursing Care, which provides home health services; Patient Transport Services, which handles patient transportation; AmeriMed, which offers home infusion therapy; and Cornerstone Medical, a joint venture which sells durable medical equipment.

“We already share similar cultures, missions and values. As part of Catholic Health Initiatives, we will have opportunity to learn from one another and to bring our quality home care services into new markets across the country,” said Dan Dietz, Consolidated Health Services president and CEO.

Consolidated Health Services also participates in a number of other joint ventures in the Ohio, Kentucky and Indiana region, including partnerships with Mercy Health Partners and St. Elizabeth Healthcare.

“Bethesda Inc. is focused on supporting, developing and delivering health care initiatives in the Greater Cincinnati region,” said James Pearce, chairman, Bethesda Inc. “Through this transaction with a valued partner, Bethesda Inc. can ensure high quality home care services continue to be available in the region, while allowing Consolidated Health Services to expand to new markets.”

The transaction is expected to be completed by Sept. 30, 2010. Terms of the transaction were not disclosed.

Seniors and Baby Boomers may not be classified as early technology adopters but research is showing that they’re catching up quickly.  A new report from Pew Research Center’s Internet & American Life Project shows that social networking use among internet users ages 50 and older nearly doubled—from 22% in April 2009 to 42% in May 2010.  The research shows that between April 2009 and May 2010:

• Social networking use among internet users ages 50?64 grew by 88%–from 25% to 47%
• Use among those ages 65 and older grew 100%–from 13% to 26%
• By comparison, social networking use among users ages 18-29 grew by 13%—from 76% to 86%.

Use of social networking sites such as Facebook and Twitter have seen sizable growth over the past 12 months.  The study shows that one in ten internet users ages 50 and older now say they use Twitter or another service to share updates about themselves or see updates about others. Other statistics include:

• Just 5% of users ages 50?64 had used Twitter or another status update service in 2009, and 11% now say they use these tools.
• On a typical day, 6% of online adults ages 50?64 make Twitter a part of their routine, up from the 1% who did so in 2009.

• One in five (20%) online adults ages 50?64 say they use social networking sites on a typical day, up from 10% one year ago
• Among adults ages 65 and older, 13% log on to social networking sites on a typical day, compared with just 4% who did so in 2009

Young adults continue to be the heaviest users of social media, but their growth pales in comparison with recent gains made by older users,” explains Mary Madden, Senior Research Specialist for the Pew Research Center’s Internet & American Life Project and author of the report. “Email is still the primary way that older users maintain contact with friends, families and colleagues, but many older users now rely on social network platforms to help manage their daily communications.”

Last week, the the Superior Court of the State of California, County of Humboldt, denied the Motion for Mistrial or New Trial on Grounds of Juror Misconduct filed previously by Skilled Healthcare Group, Inc. (NYSE: SKH).  In early July, Skilled Healthcare announced that the jury returned a verdict against the company for $671 million dollars. 

As part of the hearing, the Court also granted an order for permanent injunction requiring Skilled Healthcare Group and those California skilled nursing facilities owned and operated by the Skilled Healthcare Group to provide specified nurse staffing levels, comply with specified state and federal laws governing staffing levels and posting requirements, and provide reports and information to a monitor.  Skilled Healthcare stated that it has filed a notice of appeal on the injunction and maintains that the skilled nursing facilities are properly staffed to provide quality patient care. The company notes that settlement discussions in the case are ongoing.

In an effort to combat fears over the costs of reverse mortgage, FHA is proposing a variation of the traditional reverse mortgage product aimed at seniors looking for options to access home equity with lower costs.  The proposed HECM Saver will have a upfront mortgage insurance premium (MIP) of .01% of the maximum claim amount and will have principal limits 10 to 18% less than the traditional reverse mortgage providing an options for less proceeds in exchange for lower costs.  This solution provides a low cost alternative to a home equity loan for seniors who may not meet the income and asset criteria needed by bank lenders offering home equity lines of credit While final details are still being finalized with FHA and HUD, it is expected that final details on the HECM Saver will be released in late September 2010. 

COLLAGE, a consortium of aging service organizations, is sponsoring a symposium, Integrating Data and Technology to Advance Healthy Aging — Implications for Aging Service Organizations.  The symposium is scheduled for September 27 and 28 in Chapel Hill, North Carolina and will examine what opportunities exist by participating in COLLAGE and using research data to provide better solutions for healthy aging.  Some of the speakers include:

Jason Allaire, PhD, Associate Professor, Developmental Psychology, North Carolina State University; Brightleaf Consulting Group, NC

Majd Alwan, Executive Director, Center for Aging Service Technology (CAST), District of Columbia

Melissa Batton, Wellness Nurse, Carroll Lutheran Village, MD

David Gehm, CEO/President, Lutheran Home of Michigan, MI

Elizabeth Howard, Northeastern University & Institute for Aging Research, MA

Kathryn Kelly, Wellness Nurse, Orchard Cove, MA

Peter Kress, VP/CIO, ACTS Retirement-Life Communities, PA

Kevin McLeod, President and CEO, Carolina Meadows, NC

Gary Mohn, CEO/President, Alexian Village of Milwaukee, WI

AV Powell, CEO, AV Powell & Associates, LLC, GA

Robert Schreiber, MD, Physician-in-Chief, Clinical Instructor in Medicine, Harvard Medical School & Hebrew SeniorLife, MA

For more details visit:  http://www.collageaging.org/Site/Docs/CollageSymposium0910_LowRes.pdf

Financial reform was touted as a way to further protect consumers but it appears that those protections are coming through as increased costs for mortgage transactions.  According to Bankrate’s 2010 Closing Cost Survey, closing costs are on the rise.  The study found the average origination and title fees on a $200,000 mortgage in 2010 totaled $3,741, up 36.6 percent from $2,739 in 2009.  The state with the highest fees in the nation was New York with average costs of $5,623.  Some lenders attribute the increased costs due to increased labor requirements for regulatory compliance because closing costs at the time of application must be more accurate or they risk being penalized. 

The survey analyzed lenders’ origination fees and title and settlement fees, but did not include taxes or prepaid items.  The analysis was based upon fees for a 30 year fixed-rate mortgage for borrowers with a 20 percent down payment and good credit to buy a single-family home.

2010 Closing Costs For Mortgages

Kindred Healthcare, Inc. (NYSE: KND) announced last week that its subsidiaries have signed a definitive agreement to acquire five long-term acute care ("LTAC") hospitals from Vista Healthcare, LLC ("Vista") for a purchase price of $180 million in cash.  Kindred also announced that its subsidiaries have signed a definitive agreement to acquire three recently constructed nursing and rehabilitation centers in the Dallas-Fort Worth market for a purchase price of $38 million in cash.

The Vista facilities currently generate annualized revenues of approximately $150 million and earnings before interest, income taxes, depreciation and amortization of approximately $27 million.  The Vista transaction includes four freestanding hospitals and one hospital-in-hospital with a total of 250 beds all located in southern California.  The transaction is expected to close in fourth quarter 2010.

Kindred announced as part of the acquisition of the Texas facilities that it intends to develop two of these three nursing centers into transitional care centers, focused on short-term rehabilitation and medically complex patients, and add a transitional care unit to the third nursing center.  The three facilities have 405 beds and currently generate annualized revenues of approximately $24 million and earnings before interest, income taxes, depreciation and amortization of approximately $3 million.  The transaction is expected to be completed by end of the third quarter 2010.

"We view the Vista transaction as a great opportunity to meet the growing demand for our services in southern California and expand our hospital operations. The Vista hospitals provide high quality services and care for patients with high acuity levels. The Vista hospitals also provide several clinical service offerings not currently available in our area hospitals providing us with an opportunity to expand our clinical services as well as attract more commercial and managed care business," said Paul J. Diaz, President and Chief Executive Officer of the Company.

The Department of Health and Human Services (HHS) announced earlier this month that more than $32 million in FY 2010 funds have been made available to increase access to health care for Americans living in rural areas. The funds reach across seven programs administered by the Office of Rural Health Policy in HHS’ Health Resources and Services Administration (HRSA).  Telehealth programs to support rural communities received over $3 million in funding including more than $2 million for the Telehealth Network Grant Program, which helps communities build capacity to develop sustainable telehealth programs and networks and more than $1 million for the Telehealth Resources Center Grant Program, which provides technical assistance to help health care organizations, networks and providers implement cost-effective telehealth programs serving rural and medically underserved areas and populations.

"These funds reflect the priorities spelled out by President Obama in providing the best health care possible to rural Americans," said Sebelius. "The ultimate goal is to build healthier rural populations and communities."

Lists of awards from HRSA’s 2010 appropriation

ACTS Retirement-Life Communities topped the list of 370 of Florida’s finest senior living organizations when its members won the most highly acclaimed awards presented by the Florida Association of Non-Profit Homes and Services for the Aging (FAHSA) at their recent convention at the Boca Raton Resort and Club.

The 2009 American Housing Survey, recently released by the U.S. Census Bureau and the U.S. Department of Housing and Urban Development, provides detailed information on the characteristics of the nation’s current housing profile.  The survey covered a wide range of housing and lifestyle topics and some of the highlights include:

• the median year housing units were built was in 1974, with owner-occupied units being slightly newer (median of 1975 compared with 1971 for renter-occupied units).
• the median purchase price of homes was $107,500; for a newly constructed home, it was $240,000.
• thirty-two percent of owner-occupied units were owned free and clear, 66 percent had a regular and/or home equity mortgage and 2 percent had only a line-of-credit.
• the most important consideration for recent movers in choosing their homes was financial (28 percent), followed by room layout/design (15 percent) and size of home (10 percent).
• the most common reasons recent movers had for choosing their neighborhoods were convenience to job (20 percent), convenience to friends or relatives (14 percent), look/design of neighborhood (10 percent) and the house itself (10 percent).
• about two-thirds (64 percent) of the units used a warm-air furnace for heating; 12 percent used an electric heat pump; and 11 percent used a steam or hot water system.
• about two-thirds of housing units (65 percent) had central air conditioning and another 21 percent had window units; for new units, the percentage with central air conditioning was even higher (89 percent).

Cambridge Realty Capital recently announced a series of financing transactions for California assisted living and skilled nursing properties totaling over $26 million dollars.  Cambridge has been actively financing skilled nursing homes and assisted living facilities in California for over 15 years and has recently increased its focus in Southern California with the addition of Hymie Barber who manages the regional presence for the company.  Some of the recent financing activities include:

• a $14 million, three-year conventional mortgage loan for a portfolio of three assisted living properties located in Glendale and Valley Village, California, the Glen Park East Retirement Community and Glen Park West Retirement Community in Glendale, California., 12 years ago in 1998.  The third property included in the transaction is the Laurel Canyon Retirement Community in Valley Village.
• a $4.08 million FHA-insured HUD Lean loan to refinance Wyndham Residence, a 58-unit assisted living property in Arroyo Grande, California
• a $8.6 million FHA-insured HUD Lean mortgage loan for Apple Valley Christian Care Center, a 99-bed skilled-care nursing facility in Apple Valley, California

“The demographics and demand for senior living finance and capital options drives our presence in California based upon the number of operators and facilities there,” said Jeffrey Davis, Chairman of Cambridge Realty Capital. “We also find that the relationship between the providers and the state government in Sacramento is extremely positive which helps drive overall demand for skilled nursing facilities.”