In October 2012, we entered an agreement to sell two skilled nursing facilities, or SNFs, with a total of 271 living units that we own which are located in Michigan for a sale price of $8.0 million, including the transfer of $7.6 million of HUD mortgage debt to the buyer. These two SNFs receive the majority of their revenues from Medicare/Medicaid reimbursements. The losses generated at these facilities are included in our discontinued operations. Completion of this sale is subject to customary closing conditions and we can provide no assurance that a sale of these SNFs will be completed.
Bruce Mackey, President & CEO, made the following statement regarding the third quarter results of operations and recent activities:
“For the third quarter of 2012, Five Star grew EBITDA excluding certain items by approximately 22% compared to last year’s third quarter. This improvement was largely driven by improved community expense margin management. Sequentially, our occupancy increased 20 basis points to 85.7% from 85.5% between the second and third quarters of 2012 for our owned and leased senior living communities, which was primarily driven by increases in occupancy at our independent and assisted living communities. Also, the amount of senior living revenue from private sources increased to 75% from 73% between the third quarters of 2012 and 2011, respectively.
During the last several months, we made substantial progress towards further focusing our operations on the private pay independent and assisted living business. Since May 2012, we have either begun to manage or agreed to manage 14 senior living communities with a combined 3,159 living units which are primarily providing independent and/or assisted living services and generate a large majority of their revenues from residents’ private resources. In September 2012, we completed the sale of our institutional pharmacy business, which is primarily dependent upon Medicare Part D revenues, for an effective total expected cash receipts of $37.8 million and recognized a pre-tax gain of $23.3 million. In October 2012, we reached an agreement to sell two Medicare/Medicaid dependent skilled nursing facilities located in Michigan with a total of 271 living units for a sale price of $8.0 million.”