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Diversified Senior Services Sells Assisted Living Management Contracts WINSTON-SALEM, N.C.—Diversified Senior Services Inc. has sold its seven remaining assisted living management contracts for $200,000 to Salem Senior Housing Inc., which earlier had purchased Diversified’s apartment management subsidiary for $650,000. Proceeds of the sale formed part of an overall settlement with First Charter Bank, Charlotte, N.C., Diversified’s last short-term development lender. In addition, Diversified transferred several tracts of land held for development and title to two completed residential facilities. In exchange, Diversified received a complete release from further liability to the bank. According to William G. Benton, Diversified chairman and chief executive officer, the transactions “effectively end the company’s operations in the senior living and apartment management areas. What we have is a corporate shell without any ongoing operations but with a respectable balance sheet.” He added that Diversified’s major focus at this time “is to investigate ways to restore shareholder value.” Benton also said Salem Senior Housing is owned by himself and Bud Clark, Diversified’s chief financial officer. He said Diversified’s sales to Salem were necessary to facilitate the overall settlement with First Charter. Diversified has the right to repurchase the management contracts for the amount it paid. American Society On Aging Accepting Nominations For Business and Aging Awards SAN FRANCISCO—The American Society on Aging (ASA), in collaboration with the Business Forum on Aging, a constituent group of ASA, is still inviting nominations for its 15th annual Business and Aging Awards. The awards recognize for-profit companies for exemplary programs and services that meet the needs of older people and their families, expand public awareness of the private sector’s increasing involvement with older adults, and create performance models for other companies to emulate. Examples include human resources programs, initiatives responding to community aging needs, employment and volunteer programs for older workers and retirees, and work and family benefits initiatives. For-profit companies of all sizes are eligible for the Business and Aging Awards. Companies will be judged in two categories: small (less than 1,000 employees) and large (1,000 or more employees). Submission deadline is October 15, 2003. Past winners of the Business and Aging Awards have included AT&T Work & Family Program, Ageless Design, Gold Violin, Lifeline Systems, Georgia Power, The Hartford Financial Services Group, SBC Communications, Sit and Be Fi™, Southwest Airlines, Vialog Corporation, IBM, Age Wave, Work/Family Directions, Metropolitan Life Insurance Company, May Department Stores, Moving Solutions, Ceridian Lifeworks Services, and Home Instead Senior Care. The ASA Business and Aging Awards will be presented at the 2004 Joint Conference of the American Society on Aging and The National Council on the Aging, Hilton San Francisco, San Francisco, April 14-17, 2004. For more information about the Business and Aging Awards, visit www.asaging.org/awards/business.cfm, or contact Linda Jones at (415) 974-9638. Pacer Health Completes First Phase of Next Acquisition MIAMI—Pacer Health Corp., an owner-operator of assisted living and residential care facilities, has completed the initial phase of due diligence to acquire more than 1,000 skilled care beds in multiple northern California locations. Senior Consulting, LLC is serving as buyer’s agent and consultant for Pacer Health in this acquisition. Letters of intent to purchase these facilities were finalized with an acquisition price of approximately $39,000,000. A second phase of due diligence will be conducted prior to execution of purchase agreements. These facilities have maintained consistent occupancy and compliance with DHS regulations. Most of them are located in non-metropolitan areas, allowing staff to be available at lower wages. The facilities are well maintained with gross revenues for 2002 exceeding $48,000,000. Conventional or HUD debt with mezzanine debt and seller debt is also under consideration. Several senior members of the existing California-based management team will remain with new management on behalf of Pacer Health. The new management will be led by a senior executive experienced in long-term care and acute hospitals in northern California, with ongoing consulting services provided by Senior Consulting, LLC. Pacer Health has indicated that it strongly believes these facilities have a stable history that can be improved with expanded ancillary services. Bankruptcy Court Confirms Fountain View’s Plan of Reorganization FOOTHILL RANCH, Calif.—The United States Bankruptcy Court for the Central District of California has confirmed Fountain View Inc.’s Plan of Reorganization. The plan provides for payment in full of all creditor claims and retention of substantially all the equity in the reorganized enterprise by existing shareholders. “Chapter 11 has enabled us to restructure our debts and maximize value for all constituents by strengthening our operations, while continuing to serve the needs of our residents and the communities in which our facilities are located,” stated chief executive officer, Boyd Hendrickson. The Plan of Reorganization will be funded by the company’s cash on hand and new credit facilities in an aggregate amount of $150 million that will be used to refinance existing debt and provide additional working capital. Fountain View, along with 22 operating subsidiaries, filed voluntary petitions for Chapter 11 reorganization nearly two years ago in the Central District of California, Los Angeles division. The company has long-term care facilities throughout Southern and Central California, as well as in 18 counties in Texas, including 43 skilled nursing and five assisted living facilities. Senior Living Financial and Performance Indicators Show Assisted Living Occupancy Down in First Quarter 2003 ANNAPOLIS, Md.—The first quarter of 2003 showed many assisted living properties struggling with their occupancy levels, according to Key Financial Indicators released by the National Investment Center for the Seniors Housing & Care Industries (NIC). The loan volume placed in the first quarter was down about $300 million compared to the fourth quarter of 2002. But a discussion by lenders participating in a recent, quarterly NIC Executive Circle conference call confirmed that this is a normal seasonal decline due to lenders rushing to close deals by the end of the year. Loan performance that is delinquent or foreclosed showed improvement at 96.3 percent for the quarter and was up substantially compared to a year ago when the first quarter of 2002 was at 89.3 percent. Anthony J. Mullen, executive-in-residence for the Johns Hopkins/NIC Seniors Housing & Care Program, noted two areas of caution. First, the overall, industry-wide delinquency rate of 2.3 percent is still higher than the 1.75 percent or lower than the secondary market would like to see for other real estate asset classes, he said. Second, he noted that when broken down by property type, skilled nursing is still experiencing significant delinquencies in both permanent (at 9.75 percent) and short-term debt (doubling from 3.75 to 7.22 percent since the previous quarter) and is predominately responsible for driving up the overall delinquency rate. According to Mullen, the numbers for permanent debt for congregate and assisted living were positive. Congregate with zero delinquencies and assisted living under one percent are actually exceptional, he said. Although assisted living did well in loan performance, the sector saw a sizeable drop in occupancy rates during the quarter with the median declining three percentage points from 86 to 83 percent and the mean dropping from 85 to 83.5 percent. The NIC speculates that this drop could be attributed to several factors. For a full report visit www.nic.org, or call (410)267-0504.
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