In what may have been one of the fastest financial restatement’s in corporate history, Skilled Healthcare Group released its restated income statements for the first quarter 2009 and the full years 2006 through 2008.  The cumulative charges for the restatement were $8.4 million, which is in the range previously provided by management of $8.0 to $9.0 million.  The problem related to a former employee’s interpretation of reserves for accounts receivable.  While this was much simpler than the accounting restatement by Sunrise Senior Living, it is refreshing that it was done quickly and with little pain.

Late last year HCP, Inc. transitioned the management of 11 of its owned properties from Sunrise Senior Living to Emeritus Corporation, and then a few weeks ago announced 15 additional properties will be transitioned away from Sunrise effective October 1, 2009.  Late yesterday HCP announced that it and three of its tenants have filed complaints against Read more…

As we approach the end of the second quarter, most of the seniors housing and care stocks are simply treading water, with investors waiting for the next bit of news, company specific or not.  Most stocks were close to flat last week, but there were some exceptions.  Late on Friday, a block of 2,195,000 shares of Five Star Quality Care traded at $1.64 per share, sending the shares down by nearly 21% for the week ended June 26.  Trading volume in Five Star is usually quite light, so this was a big trade and we have not yet discovered who the seller was.  The other company with a big drop for the week was Brookdale Senior Living, which fell by 9.5% to close at $9.27 per share.  And this was after selling 16 million shares at $10.75 per share early in June.  The only stock to show some bounce was Capital Senior Living, up 18% for the week to $4.41 per share, but we did not hear any news that may have caused the jump. 

In the skilled nursing side, the market was relatively calm and we don’t think there will be much activity until there is more clarity with Medicare.  The problem is, when is there ever any clarity with Medicare?  And combined with Medicaid reimbursement problems at the state level, this uncertainty is what is keeping most investors away from the sector, where most stocks still look undervalued despite the health care reform discussions in Washington.  Skilled nursing stocks may continue to trade sideways, but seniors housing stocks will be more heavily influenced by the second quarter results, especially with regard to occupancy and unit pricing trends.

Although not a surprise, HCP Inc. announced late yesterday that it had terminated the management contracts, effective October 1, 2009, on the 15-property “EdenCare” portfolio that has been managed by Sunrise Senior Living.  The reason for the termination was Sunrise’s failure to achieve certain performance thresholds, and HCP is not required to pay any termination fees.  HCP will be transitioning the management of these 15 facilities to other operators in the second half of the year.  We have estimated that Sunrise will lose approximately $3 million of annual management fee revenue.

HCP has now reduced the number of Sunrise-managed properties to 75 from 101 in 2006 when HCP purchased CNL Retirement Properties.  The management of the other 11 properties was also terminated because of failure to achieve certain performance thresholds.  HCP believes that under new management the operating margins of these properties can be increased, which has apparently been the case with the first 11 that were transferred last December.

In a surprise announcement early today, which one analyst referred to as coming “in the middle of the night,” Skilled Healthcare Group revealed that it will have to restate all of its annual and quarterly financial statements from January 1, 2006 through March 31, 2009, and that investors should no longer rely on past Read more…

On June 2, Brookdale Senior Living sold 13,953,489 shares of common stock at a price of $10.75 per share.  Underwriters have the option to sell an additional 2,093,023 shares for 30 days, an option which we assume they will exercise because the price is a bit higher now Read more…

After more than doubling in value in April, shares of Brookdale Senior Living kept on rising by another 20% in May based on a decent first quarter from a cash flow basis in what was a dismal economy, even though occupancy continued to slip a bit.  Brookdale’s shares hit Read more…

As part of an announcement today that the company was going to “downsize” and reduce overhead by more than $20 million annually from a reduction in non-care related administrative costs, Sunrise Senior Living also stated that its CFO, Richard Nadeau, would be Read more…

Two days before the April 30, 2009 deadline of the last amendment to their credit agreement, Sunrise Senior Living announced the 12th, and hopefully final, amendment to the credit agreement, and this one will last until December 2, 2009, as opposed to the various 30-day extensions of the recent past.  In addition to eliminating virtually all financial Read more…

Everyone knows that it is difficult to obtain bank financing for seniors housing transactions, but one lender and mortgage originator is taking matters into their own hands.  In what can be considered a unique way to expand their health care and seniors housing lending Read more…