Constellation Makes $77M Exit from Assisted Living Biz

BALTIMORE, MD-Constellation Energy Group has made its exit from the senior housing business with the recent disposition of its interest in the 15-property portfolio of its subsidiary Constellation Health Services Inc. in a $77-million deal. Five Star Quality Care Inc. and Senior Housing Properties Trust–both of Newton, MA–joined forces to acquire the assisted- and independent-living facilities, which are located in Connecticut, Maryland, North Carolina, and Virginia. The cash deal includes the buyers’ assumption of existing mortgages.

“Constellation Energy Group’s core competencies are distribution, generation, and origination,” Constellation’s Sharon Sasada tells GlobeSt.com of the company’s motive behind the sale. “We’re focusing on these core areas and divesting our non-core assets.” While the acquisition was a joint endeavor, Five Star and Senior Housing divided the purchases, with Five Star taking seven properties for $27 million including the assumption of $15.8 million in mortgage debt, and Senior Housing taking eight properties for $50.15 million.

The deal leaves Five Star with a total of 407 units comprising nearly 256,000 sf of space among one complex in Connecticut and six complexes in Maryland. The other half of the buying team ends up adding to its portfolio 609 residential units in 423,000 sf of space among five complexes in Maryland, one in North Carolina and two in Virginia. As of last month, the properties were at an average 86% occupancy level.

Constellation came close to disposing of its assisted-living properties three years ago. Sunrise Assisted Living Inc. had agreed to purchase 12 of the company’s homes and three that were under construction for $72 million plus a $16 million debt assumption. However, that deal fell through just a few months after the announcement. This time around, Constellation has succeeded in leaving the senior-housing property business in one fell swoop. The profit from the dispositions, Sasada says, “will be re-deployed into Constellation Energy Group’s core businesses.”