After completing the transaction, Emeritus will continue to operate the 133 Communities purchased by HCP under long-term triple-net master leases (collectively, the “HCP Lease”). Rent in the first year of the HCP Lease will amount to $105.5 million and will increase each year in the manner specified in the lease. Emeritus has committed to make $30 million in capital improvements with respect to these Communities and such expenditures are expected to be made within the first two years of closing the transaction.
On November 1, 2012, the Company announced that it has entered into an agreement to purchase Nurse on Call, Inc. (“NOC”), the largest Medicare-licensed home health care provider in Florida and one of the largest such providers in the United States. Emeritus will pay $102 million in cash for 91% of the equity of NOC’s parent company, and the remaining equity will be owned by certain members of NOC’s management team. The Company will fund the purchase primarily from net proceeds realized from the sale of the Blackstone JV Communities. Final closing of this transaction is subject to customary closing conditions for an acquisition of this nature and is expected to be completed in the fourth quarter of 2012.
2012 Guidance Update
The Company provides guidance for the Company’s existing portfolio and excludes future acquisitions and dispositions.The Company’s guidance for 2012 is as follows:
- Community and management fee revenue in the range of $1.35 billion to $1.37 billion
- Routine capital expenditures in the range of $23.0 million to $25.0 million
- General and administrative expenses as a percent of total operated revenue of approximately 4.8%, excluding non-cash stock-based compensation expenses
- CFFO, as adjusted, in the range of $1.65 to $1.75 per share, excluding expenses for significant transactions.