In recent articles we have discussed how a growing economy, occupancy gains, and rent increases are all helping to fuel a strong senior housing market. Industry participants are taking advantage of this dynamic by adding additional senior housing properties to their portfolios in order to strengthen them. One of the primary companies that is engaging in this strategy of strength through acquisitions is the California-based Ensign Group.
The Ensign Group has been on an acquisitions tear this year, with 11 announced purchases through early October. It recently added some additional purchases to its tally by announcing that it is acquiring the operations of nine skilled nursing and assisted living facilities, a private home care business, and a home health agency from the San Diego-based provider Shea Family Care. This purchase includes all except one of the properties in Shea’s portfolio, and adds 711 beds to Ensign’s portfolio.
The largest property in the deal is the 120-bed skilled nursing facility (SNF) Shea Family Care Victoria; the smallest property is the 52-bed skilled nursing facility Shea Family Care Parkside. Ensign will also pick up the 65-bed SNF and sub-acute care facility Shea Family Care Somerset; the 99-bed SNF Shea Family Care Magnolia; the 68-unit assisted living facility Shea Family Living LoHar; the 59-bed SNF Shea Family Care La Jolla; the 86-bed SNF Shea Family Care Grossmont; the 68-bed SNF Shea Family Care Mission Hills; and the 94-bed SNF Shea Family Care South Bay.
According to Shea Family’s CEO Ken Lund, the company felt that, with new regulations and other factors driving consolidation in the industry, now was a good time to pursue an exit strategy. Once this decision was made, they spoke with a number of potential suitors, but ultimately agreed on a deal with the Ensign Group because of the similarities that the companies share when it comes to their values and business methods. Ensign is also extremely pleased with this deal, as evidenced by comments made from its Chief Operating Officer, Barry Port, who said, “This strategic acquisition significantly strengthens our presence in the San Diego healthcare community and adds to our ability to partner with hospital systems and managed care providers to serve customers with post-acute solutions across the continuum of care. [The Shea Family’s] locations, spectrum of services, strong core values, reputation for quality and market position are an ideal fit.”
The Ensign Group expects this transaction to close by the end of the year, and once it does, it will increase the number of healthcare facilities that the company owns to 136. Ensign continues to pursue opportunities in the space, and industry watchers would not be surprised if it announced additional acquisitions before the year is up. Other providers who are also seeking to grow through acquisitions should continue to look to the Chicago-based financing firm Cambridge Realty Capital for assistance in financing these types of transactions.
