An affiliate of real estate investment and management company Senior Star has made a $325 million bid to purchase the 33 senior living facilities of Five Star Quality Care, which so far has rebuffed the offer.
The bid was disclosed Tuesday in a U.S. Securities and Exchange Commission filing by Tulsa, Okla.-based Gemini Properties, identified as an affiliate of Tulsa, Okla.-based Senior Star, a privately held company that owns senior living facilities in Iowa, Illinois, Missouri, New Mexico, Ohio and Oklahoma.
Five Star, based in Newton, Mass., is among the top five companies by revenue on Modern Healthcare's 2015 list of the largest skilled-nursing providers.
The company has made it clear it's not for sale, according to a letter included in the SEC filing describing a Nov. 30 meeting in Boston.
Senior Star argues in the letter, addressed to Five Star CEO Bruce Mackey, that the company should reconsider the offer. Of the $325 million in gross proceeds from the proposed deal, $44.3 million would go toward mortgage debt retirement, $172.3 million would go to capital reinvestment and $91.5 million would go to lease deleveraging, according to the letter. That would leave Five Star with $16.9 million in reserve funds from the transaction.
“We do not believe that Five Star can borrow its way to a better future, as continuing to leverage the balance sheet will lead to greater devaluation of the company,” Senior Star Principal William Thomas said in the letter.
Five Star reported $1.3 billion in revenue in fiscal 2014. The company announced Tuesday that its board elected Richard Doyle Jr. as chief financial officer and treasurer.