Emeritus JV Wraps Up Stayton Portfolio Buy

By Barbra Murray, Contributing Editor

Emeritus Corp.’s portfolio has just gotten a lot bigger. The Seattle-based assisted living provider, in a joint venture with Blackstone Real Estate Advisors VI L.P., an affiliate of The Blackstone Group, and Columbia Pacific Advisors, has closed the $1.2 billion acquisition of a 144-property seniors housing portfolio from Portland-headquartered Stayton SW Living L.L.C.  Stayton, formerly known as Sunwest Management, parted with the assets as part of its Chapter 11 plan of reorganization.

Completion of the transaction–which includes 12 assets that were deferred–comes about three months after an auction in which the Blackstone/Emeritus joint venture acted as the stalking horse bidder. The joint venture has walked away with the group of communities by forking over cash and securities and assuming existing debt. 

The seniors housing portfolio, currently 79 percent occupied, encompasses 11,769 units and will offer annualized revenues of approximately $346.8 million. Emeritus, which made an equity contribution of $19 million for a 5.8 percent stake in the joint venture, has already commenced its role as manager of 143 of the 144 properties and will benefit from a 5 percent management fee. Additionally, Emeritus has the right of first opportunity to acquire additional former Sunwest properties.

“The joint venture will contribute to our growth over the next several years and should provide a significant return for the company over time,” Daniel Baty, Emeritus chairman & co-CEO, noted in a prepared statement. The company now operates a portfolio of 460 properties spanning 44 states.

For Stayton, the closing of the deal was a long time coming. Hamstreet & Associates’ Clyde Hamstreet joinedas chief restructuring officer in November 2008, a month before 25 Sunwest affiliates filed Chapter 11 bankruptcy cases. And in March 2009, the Securities and Exchange Commission filed a lawsuit against the company. Michael Grassmueck, receiver in the SEC action, said, “This transaction will provide a distribution to creditors that did not appear possible at the beginning and is a very positive resolution.”