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Emeritus/Blackstone Joint Venture Announced as Sole Bidder in Sunwest Bankruptcy Auction

^{Published on 2010-05-11 04:46:11 - Market Wire}
 

SEATTLE--([ BUSINESS WIRE ])--Emeritus Corporation (NYSE: ESC), a national provider of assisted living and Alzheimera™s care services to seniors, today announced that the only bid received in the Sunwest bankruptcy action was from the previously announced joint venture between Emeritus, Blackstone Real Estate Advisors VI, L.P. (aBlackstonea), and Columbia Pacific Advisors, LLC, an entity affiliated with Emeritusa™ Chairman and Co-CEO (aColumbia Pacifica). This joint venture (the aJoint Venturea) was formed specifically to acquire up to 149 communities formerly operated by an affiliate of Sunwest Management (aSunwesta). The final court order from U.S. District Court Judge Michael Hogan authorizing the Joint Venturea™s purchase and sale agreement is expected to be entered on May 17, 2010.

"Wea™ve worked long and hard to make this deal happen, and although we have a significant amount of work ahead of us, we are extremely pleased to have it finally come together."

Mr. Dan Baty, Chairman and Co-CEO of Emeritus, stated aWea™ve worked long and hard to make this deal happen, and although we have a significant amount of work ahead of us, we are extremely pleased to have it finally come together.a Mr. Baty continued, aThis transaction represents a huge opportunity for Emeritus and we are pleased to again partner with Blackstone in what I believe is a significant milestone for the Company.a

The transaction includes up to 149 communities with a total estimated purchase price of approximately $1.3 billion, which is comprised of debt assumption of approximately $1.0 billion and the balance in a combination of cash and membership interests. The purchase and sale agreement allows the existing Sunwest investors the option of rolling over their ownership interests into the Joint Venture in the aggregate amount of up to 49% of the Joint Venturea™s total equity, which amount is expected to equal up to $167.6 million. Blackstone will contribute approximately 80% of the remaining equity requirements with the balance split evenly between Columbia Pacific and Emeritus. Since existing Sunwest investors now have a greater opportunity to participate in the Joint Venture, Emeritus anticipates that its initial contribution will be a minimum of $17.4 million, including other contributions for working capital and capital expenditure requirements, and would increase to as much as $34.2 million if there is no participation by existing Sunwest investors, representing a 5% to 10% equity position in the Joint Venture.

As previously disclosed, Emeritus will enter into agreements with the Joint Venture to manage the portfolio of communities for a fee equal to 5.0% of collected gross revenues. In addition, the Joint Venture agreement allows Emeritus a right of first opportunity to purchase the communities or the Joint Venture interests at fair value, and includes a profit sharing provision for Emeritus if the Joint Venturea™s internal rate of return exceeds established thresholds.

The 149 communities are comprised of approximately 12,165 units consisting of 3,332 independent living units and 8,833 assisted living/memory care units. Annual revenues currently approximate $344.0 million for the 149 properties. The ultimate community count and, therefore, transaction value, may change based on the Joint Venturea™s limited ability to change the portfolio of communities included in the transaction and final debt assumption negotiations. The closing of the transaction, which is subject to the satisfaction of certain closing conditions, is expected to occur in the third quarter of 2010.

ABOUT THE COMPANY

Emeritus Corporation is a national provider of assisted living and Alzheimera™s and related dementia care services to seniors. Emeritus is one of the largest and most experienced operators of freestanding assisted living communities located throughout the United States. These communities provide a residential housing alternative for senior citizens who need assistance with the activities of daily living, with an emphasis on personal care services, which provides support to the residents in the aging process. Emeritus currently operates 316 communities in 36 states representing capacity for approximately 27,500 units and approximately 32,800 residents. Our common stock is traded on the New York Stock Exchange under the symbol ESC, and our home page can be found on the Internet at [ www.emeritus.com ].

aSafe Harbora Statement under the Private Securities Litigation Reform Act of 1995:A number of the matters and subject areas discussed in this report that are not historical or current facts deal with potential future circumstances, operations, and prospects.The discussion of such matters and subject areas is qualified by the inherent risks and uncertainties surrounding future expectations generally, and also may materially differ from our actual future experience as a result of such factors as: the effects of competition and economic conditions on the occupancy levels in our communities; our ability under current market conditions to maintain and increase our resident charges in accordance with our rate enhancement programs without adversely affecting occupancy levels; increases in interest costs as a result of refinancings; our ability to control community operation expenses, including insurance and utility costs, without adversely affecting the level of occupancy and the level of resident charges; our ability to generate cash flow sufficient to service our debt and other fixed payment requirements; our ability to find sources of financing and capital on satisfactory terms to meet our cash requirements to the extent that they are not met by operations, and uncertainties related to professional liability and workersa™ compensation claims.We have attempted to identify, in context, certain of the factors that we currently believe may cause actual future experience and results to differ from our current expectations regarding the relevant matter or subject area.These and other risks and uncertainties are detailed in our reports filed with the Securities and Exchange Commission, including aItem 1A. Risk Factorsa in our Annual Report on Form 10-K for the year ended December 31, 2009.