January 2, 2014, Newton, MA, Business Wire - Five Star Quality Care, Inc. (FVE) ("FVE" or "Five Star") today announced that effective December 31, 2013, it has transferred the operations of two rehabilitation hospitals to entities affiliated with Reliant Hospital Partners, LLC (Reliant) of Richardson, TX.
The two hospitals are New England Rehabilitation Hospital located in Woburn, MA and Braintree Rehabilitation Hospital located in Braintree, MA, plus several leased in-patient and out-patient locations in eastern Massachusetts which are affiliated with these hospitals. The hospitals were formerly leased by FVE from Senior Housing Properties Trust (SNH). SNH sold the hospitals' real estate assets to HSRE-TST III, LLC, a joint venture comprised of affiliates of The Sanders Trust, LLC of Birmingham, AL and Harrison Street Real Estate Capital, LLC of Chicago, IL (HSRE).
With the hospitals' sale and operations transfers complete, FVE expects to realize cash proceeds of approximately $8.0 million from the retention of its working capital investment in these hospitals. FVE will be relieved of rent obligations totaling approximately $11.5 million per year, including rents to SNH and rents to third parties.
In connection with the transfer of operations of the hospitals, FVE's $35 million secured revolving credit facility was reduced to $25 million because the accounts receivable generated at the two rehabilitation hospitals will no longer be available as collateral. FVE also has an additional $150 million revolving credit facility secured by certain FVE owned real estate that is unaffected by the transfer of the hospitals' operations.
Bruce Mackey, President and Chief Executive Officer of FVE, made the following statement concerning this transaction:
"By exiting these hospital operations, Five Star increases its focus on its core business of private pay senior living communities. I believe the fact that the large majority (approximately 77%) of Five Star's total revenues are from residents and patients who pay for services with private resources is an indication of the high quality of FVE's services."
Jefferies LLC acted as a financial advisor in connection with this transaction.
Five Star Quality Care, Inc. is a senior living and healthcare services company that owns, leases and manages senior living communities, including primarily private pay independent and assisted living communities located throughout the U.S. FVE is headquartered in Newton, Massachusetts.