Effective the next annual meeting of shareholders of Sunrise Senior Living, scheduled for this coming November, Sunrise founder and CEO Paul Klaassen will give up his CEO title and become the nonexecutive chairman of the board. Mark Ordan, who joined the company earlier this year as the chief investment and administrative officer, will become the new CEO. With Mr. Ordan’s arrival several months ago, there was much speculation, denied by the company, that he was really hired to ultimately replace Mr. Klaassen, or else clean the company up for its sale. I guess that argument has been settled. Mr. Klaassen intends to focus on public policy, product design and leadership training, and he will continue visiting the company’s communities to boost morale. The current chairman of the board, Lynn Krominga, will become the lead independent director in November. To us, it looks as if an era has come to an end. While Mr. Klaassen will still be a vocal advocat for the seniors housing industry, and its residents, it just won’t be the same.
It was bad enough when Brookdale Senior Living plunged by 23% in June, but it has dropped by another 26% in the first half of July on no real news. It is not alone, however, as both Sunrise Senior Living and Five Star Quality Care have declined by 22% so far this month, and Capital Senior Living has decreased by 10%. The one company that has seemed to bottom out is Emeritus Corporation, up 10% from a new low reached last week. So, what is going on?
The answer is, no one really knows, other than the obvious concerns about occupancy and the housing market. The basic business still seems to be in okay shape, and even some declines in occupancy certainly do not warrant these huge drops in value. Perhaps with Brookdale, investors are assuming they will cut their dividend again, or eliminate it entirely, in an effort to conserve capital. Investors have questioned why the company has not taken advantage of the huge price drop with its stock repurchase program, and the only logical answer is that they need (or want) to conserve their capital in case the market continues to spiral downward. That may be smart, especially since accessing the capital markets is not easy today. While occupancy has been the buzz word for the past six months, liquidity may be the buzz word for the next six months.
In this Expert Opinion, Senior Living Business editor Jane Zarem talks to Jackie Harris, CEO of Trinity Senior Living Communities about their new model of senior living, called “Sanctuary.”
You can listen to the interview here by clicking here or read the transcript below.
Jane Zarem
I’m speaking with Jackie Harris, President and CEO of Trinity Senior Living Communities, which is incorporating a new “Sanctuary” concept for senior living into the 33 communities it operates in Michigan, Maryland and Indiana.
Jackie, how would you describe your new Trinity Senior Living Community Sanctuary model and your overall culture change strategy? Read more…
After about the worst month in history for publicly traded seniors housing companies (June), it continued to get worse in the early part of this month. After a 29% drop in price in June, Five Star Quality Care dropped by another 14% by July 8, while Brookdale Senior Living dropped by another 13% by July 7 after falling 23% in June. Four of the six stocks in the sector hit new 52-week lows on either July 7th or 8th, with only Capital Senior Living and Sunrise Senior Living not hitting new lows. The good news is that it appears the sector may have hit the bottom, at least for now, and most of the stocks have come up a bit from the lows. There seems to be some speculation that second quarter occupancy results may be even worse than expected, and this, combined with continued housing market woes, is driving investor sentiment.
Senior Living Business editor Jane Zarem talks with Elsie Norton about ACTS’ culture change initiative, the ACTS “Signature Experience.” You can listen to the interview by clicking here or read the transcript below.
Jane Zarem
I’m speaking with Elsie Norton, Senior Vice President for Quality Care for ACTS Retirement Life Communities, which owns and operates 19 communities in six states and is the nation’s largest not-for-profit owner, operator and developer of CCRCs.
Elsie, you’re currently incorporating a culture change initiative called ACTS Signature Experience at each of your communities. How would you describe this new model and your overall culture change strategy? Read more…
Formation Capital has announced it signed an agreement to purchase Connecticut-based Haven Healthcare, which has been in Chapter 11 bankruptcy protection since late last year. Genesis HealthCare will manage the 27 facilities on behalf of Formation Capital and Senior Care Development. We understand the price is approximately $85 million. The buyer has a few weeks to complete due diligence, and subject to pending regulatory and licensing approvals, the deal is expected to be finalized on August 1. Genesis is a major operator in New England, so its knowledge of the local markets should be very helpful. We don’t know whether the price will drop a bit, however, if census has decreased and losses have increased. Repairing the reputation will take some time with all the negative press.
According to a report by the Washington Post, the lawsuit filed by the former CFO of Sunrise Senior Living, Brad Rush, has been dismissed, but no one is talking about it. It is curious, however, that Sunrise has not filed this information with the SEC, since a $13.5 million lawsuit by a former CFO was deemed to be material a year ago, and the dismissal of said lawsuit would also be a material piece of information for investors. The company claimed all along that the lawsuit lacked factual and legal merit, but some people thought where there’s smoke, there’s fire. The fact that neither side will discuss the matter leads us to believe that the lawsuit was “dismissed” because the two sides had reached a settlement, which if true, should have happened long ago. Otherwise, our guess would be that Mr. Rush had just decided to move on and didn’t want to incur additional legal fees.
Although it has been expected for several weeks, Capital Senior Living formally announced, after the market close today, that a special committee of the Board has hired Banc of America Securities as its financial advisor to assist the committee in actively exploring and considering a range of “strategic alternatives.” Outside shareholders, two of whom are now on the Board, had been pushing for management to maximize shareholder value through a sale or break-up of the company, so now they will get their chance to see what the company might be worth in this unsettled market. We are not, however, holding our breath, as we believe that a higher price could be achieved by waiting. More on this in our June issue of The SeniorCare Investor.
Starting at 10:00 am today, the bidding was to begin for the assets of Haven Healthcare, the Connecticut-based nursing facility chain that filed for bankruptcy protection late last year. The stalking horse bid had been for about $105 million, but we are not sure that was still on the table by bidding time. We actually tried to go to the site of the auction, but we were not successful in finding out the address in Hartford. So much for our contacts getting back to me, but perhaps we weren’t wanted as it may be a very loud auction process. Direct quotes are usually not favored in those situations. Read more…
After a nearly 35% jump in its stock price since hitting a low of $5.46 per share in late March, the share price of Assisted Living Concepts has drifted down again to about $6.35, and today is about 13% lower (or $1.00 lower) than the closing price on April 30. The two most probable reasons for the price decline are that it went up too high too fast, and first quarter occupancy numbers were disappointing and did not support that 35% rally. The timing of the decision to convert Medicaid units to private pay units was Read more…
