Maryland REIT buys Birmingham facilities for $14M
Birmingham Business Journal - by Jimmy DeButts Staff
A Maryland real estate investment firm has agreements to purchase two Birmingham-area assisted living facilities for $14 million.
Senior Housing Properties Trust is awaiting approval from the Department of Housing and Urban Development (HUD) to close on the sale of Lake View Estates Assisted Living and Memory Care and Ashton Gables in Riverchase.
In state filings, Senior Housing said the HUD decision could delay closing until the middle of September.
Lake View Estates is located on Valleydale Road. Ashton Gables is on Parkway Lake Drive in Hoover.
If the deal is approved, Senior Housing will pay Birmingham's Paragon Assisted Living LLC $7.8 million for 64-bed Lake View and $6.2 million for 48-bed Ashton Gables.
Dave Hegarty, president of Senior Housing, said his company will own the properties and lease them to Five Star Quality Care Inc.
Five Star is a spinoff from Senior Housing and they operate out of the same building.
Five Star owns assisted living facilities in Auburn, Cullman, Decatur, Fayette, Madison and Sheffield.
It has 163 independent and assisted living facilities in 28 states. Hegarty, whose company is incorporated in Maryland, said Five Star is looking to broaden its Alabama footprint.
Doug Harper, Five Star's business director, said the two properties are located in the fastest growing area of Alabama in affluent communities.
Lake View was built for $4.5 million and opened in 2000. Ashton Gables opened in 2001.
"Those are good indicators for properties of this type," Harper said.
Hegarty said there are built-in advantages of acquiring existing facilities.
"It is very important because this industry is a local business at the end of the day," Hegerty said. "Most of your residents come from a 5-mile radius of the community. It's important to have a good reputation in the marketplace."
In its state filing, Senior Housing said it will not seek additional beds or the conversion of existing beds.
It does not have plans to purchase additional equipment or perform any construction to the current facilities.
Senior Housing expects its operating costs will be equivalent to Paragon's which was $1.5 million in 2006 for Ashton Gables.
It will continue to offer the same services currently provided at the two facilities.
According to its Web site, Senior Housing owns $1.8 billion in senior living properties in 32 states including properties in Cullman, Sheffield and Madison it leases to Five Star.
University of Alabama Professor of Strategic Management Lonnie Strickland said national chains often seek established commodities to expand their presence.
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