The Ensign Group Announces Sale-Leaseback Transaction with Mainstreet Health Investments Inc.
March 14 2017 - 6:00AM
The Ensign Group, Inc. (NASDAQ:ENSG), the parent company of the
Ensign™ group of skilled nursing, rehabilitative care services,
home health care, hospice care, and assisted living companies,
announced today that it has entered into definitive agreements to
simultaneously sell and lease two skilled nursing facilities and
one assisted living community to Mainstreet Health Investments Inc.
(TSX:HLP.U) (“MHI”). Upon closing the transaction,
Ensign will lease the properties from MHI under a triple-net master
lease with an initial 20 year term and CPI-based annual escalators.
The properties are located within high-density neighborhoods of the
Los Angeles and Phoenix metro markets and have been owned and
operated by Ensign for many years. In conjunction with the
transaction, MHI has agreed to release Ensign from its lease
obligations on three transitional care facilities in Kansas and
Texas that are currently under development.
“This transaction not only demonstrates the
significant value inherent in our owned real estate, but it also
shows that we have several levers we can pull to strengthen our
already healthy balance sheet,” said Christopher Christensen,
Ensign’s President and Chief Executive Officer. “As with the
spin-off transaction that we completed in June 2014, we took a very
conservative approach to both the sale price and the lease
structure. We are very excited to capture some of the value we’ve
created in these real estate assets while simultaneously ensuring
that we will continue serving each of these communities for decades
to come,” he said, noting that the anticipated lease to EBITDAR
ratios will exceed two times as of the commencement date.
The proposed transaction is subject to certain
closing conditions, including satisfactory completion of due
diligence. There can be no assurances that any such conditions will
be satisfied or that the transaction will be consummated.
Upon closing this transaction, the number of
Healthcare Resorts that are currently operated by an Ensign
subsidiary, and were developed by Mainstreet Property Group
(“MPG”), will include five in Kansas, one in Texas and one in
Colorado. In addition, Ensign affiliates will no longer have
any outstanding lease obligations with MHI or MPG with respect to
facilities under development. As a result of the sale-leaseback
transaction, Ensign affiliates will own the real estate of 48 of
the 211 healthcare facilities within the portfolio.
Mr. Christensen reaffirmed that Ensign continues
to see many opportunities for growth within its existing footprint
and in new markets. He also indicated that the organization is
actively seeking and negotiating several other transactions to
acquire real estate and to lease both well performing and
struggling skilled nursing, assisted living and other
healthcare-related businesses.
About EnsignTM:
The Ensign Group, Inc.'s independent operating
subsidiaries provide a broad spectrum of skilled nursing and
assisted living services, physical, occupational and speech
therapies, home health and hospice services, and other
rehabilitative and healthcare services at 211 healthcare
facilities, fifty-one of which are owned, twenty hospice agencies,
seventeen home health agencies and three home care businesses
across fourteen states. More information about Ensign is available
at http://www.ensigngroup.net.
About Mainstreet Health Investments Inc.
Mainstreet Health Investments Inc. is a North
American health care real estate company with a growing portfolio
of high quality properties located in the United States and Canada
and operated by best-in-class senior living and care operators
primarily under long-term leases. Its mission is to create
long-term shareholder value while providing an investment
opportunity that matters. For more information, visit
www.mainstreethealthinvestments.com.
SOURCE: The Ensign Group, Inc.
CONTACT: The Ensign Group, Inc., (949) 487-9500, ir@ensigngroup.net
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