Arnold Whitman, Founder and Chairman of Formation Capital
Meet Arnold Whitman, founder and chairman of Atlanta-based Formation Capital. Whitman founded the company in 1999 after a “tsunami” of negative events, including the credit crisis of 1998, a change in the prospective payment system and a host of liability issues. Having spent 15 years in the senior housing business at that time, Whitman decided to shift his approach from debt to equity. With more than $6 billion in transactions to date, he hasn’t looked back.
Today, Formation Capital is an active senior housing investor and “Arnie” has personally made a name for himself in the industry as Chairman Emeritus of the National Investment Center for Seniors Housing and Care (NIC), as co-chairman of Genesis Healthcare, as a partner to Aging2.0 and more. We sat down with Arnie to hear his definition of leadership, how a big risk can pay off and why senior housing provides a unique upside not found in other industries.
Take me back to the early days of Formation. What did your first investment look like?
We had a nice business plan and were very fortunate in that we secured our first transaction in Florida by acquiring (or trying to acquire) 53 facilities from Beverly Enterprises. It was 49 skilled nursing and four assisted living buildings for $165 million in July 2001. My partner and I put down all of the money that we had, literally.
We did that because we had debt and equity lined up alongside us, and said ‘OK, we’re ready to go, we’re going to make our first big investment.’
Florida was under huge pressure from all of the trial lawyers that were suing for anything they could as far as liability went at the time. In Florida, under the patient rights bill, if you served cold food, you could be sued. It was a very negative environment and all of the public companies were trying to get out of the state at that time. We had gone to Beverly, made this deal, we had the deal under contract, and we were thinking, ‘OK, we’re going to be on the map.’
Then 9/11 comes.
Two weeks later we went to New York to see UBS and Black Acre (which was our equity partner), and both of them bailed.
Now, we had had firm contracts with them to finance us. They used what’s called an MAC clause, [which address the possibility of a] material adverse change, to say ‘We are no longer going to do this deal.’ Everybody was, as you know, stunned.
The Trade Centers had come down, capital markets had crashed, everything was negative. So we were sitting there, everything we had on the table, and wondering, ‘Are we going to survive? Are we going to get through this? And what’s going to happen?’ My partner Steve Fishman and I literally pounded the pavement in New York looking for a way to finance that deal. It was pure desperation.
It took us about three months. There were a lot of threats thrown at us from Beverly Enterprises. If you’d been there you would have just been stunned.
Read entire feature here - http://leadership.seniorhousingnews.com/arnold-whitman-founder-and-chairman-of-formation-capital/
RHA Health Services (RHA) is pleased to announce it has been acquired by funds managed by Formation Capital and Safanad Limited.
All programs and services have been acquired and will be incorporated into the new RHA. RHA’s management team will remain the same, with corporate headquarters in Asheville, NC and the financial services division in Atlanta, GA.
“We are thrilled to be the first company focused on mental health, substance abuse, and intellectual and developmental disabilities services in Formation Capital’s portfolio,” said Gordon J. Simmons, CEO of RHA Health Services, LLC. “Formation Capital, along with its strategic partner Safanad, will provide RHA with board-level guidance, strategic advice and greater access to equity and debt capital that will support the continued growth of RHA’s operations through the Mid-Atlantic and Southeast regions.”
People supported by RHA will see little to no change in the company’s day-to-day operations. “RHA’s focus remains the same,” said Simmons. “We will continue to focus on quality care, treatment and service for the people and communities we support.”
RHA Health Services, LLC provides a broad range of person-centered, integrated, and high-quality supports and services focused on children and adults living with mental health and substance abuse challenges, as well as those living with intellectual & developmental disabilities. RHA has over 5,000 employees in North Carolina, Tennessee, Georgia and Utah. For more information regarding RHA Health Services, LLC, visit www.rhahealthservices.org. Formation Capital is a global private investment management firm solely focused on healthcare services investment and healthcare real estate opportunities. Since 1999,
Formation Capital and its affiliates have sponsored over $9.0 billion of investments in healthcare services, seniors housing and care and post-acute services. For more information regarding Formation Capital, visit www.formationcapital.com. Safanad is a global principal investment firm that invests in real estate, private equity and public markets. Safanad’s investment focus is primarily within the healthcare, education, and financial services sectors. Since 2009, Safanad and its affiliates have invested in over $6.0 billion of investments in healthcare services, seniors housing and care and post-acute services. For more information, visit www.safanad.com.
MARKHAM, ON, Jul 02, 2015 (Marketwired via COMTEX) -- Extendicare Inc. ("Extendicare" or the "Company") (EXE) today announced that effective July 1, 2015, it has completed its previously disclosed sale of the Company's U.S. business (the "Transaction") to a group of investors led by Formation Capital, LLC and an affiliate of Safanad (the "Purchaser"), for US$870 million ($1.1 billion using the closing U.S./Canadian dollar exchange rate of 1.249 as at June 30, 2015), partially settled through the assumption by the Purchaser of mortgage loans and other third-party indebtedness relating to the U.S. business of approximately US$655 million, and working capital and other specified adjustments. Extendicare currently estimates aggregate net after-tax proceeds from the Transaction of approximately US$240 million, or C$300 million using the closing foreign exchange rate of 1.249 at June 30, 2015.
The Company also today announced that Extendicare Health Services, Inc. (EHSI), which owned and operated the Company's U.S. business, was successful in closing on the sale of all of the 10 centres that were excluded from the Transaction for net-after tax cash proceeds of approximately US$11 million. All of the net after-tax cash proceeds related to the 10 centres were distributed to the Company prior to the closing of the Transaction in the form of intercompany cash dividends. The Company has also benefitted from the receipt of additional cash dividends from EHSI of approximately US$9 million during the first six months of 2015.
"We are pleased to have completed this strategic transaction which will facilitate the repositioning of Extendicare as a pure-play Canadian senior care and services company," commented Tim Lukenda, Extendicare's President and CEO.
"In addition to using part of the proceeds to repay a bridge loan associated with our recent home health acquisition, we intend to use the proceeds to further expand and grow our Canadian operations including growing our long-term care revenue through redevelopment, and exploring opportunities in the private-pay retirement space," Lukenda added.
The Company thanks the employees of EHSI for their loyal services and wishes them all of the best for the future.
Guggenheim Securities acted as financial advisor, and Bennett Jones LLP acted as legal advisor to the Board of Directors and its Strategic Committee in connection with the Transaction.
BofA Merrill Lynch and Desjardins Capital Markets acted as financial advisors, and Skadden, Arps, Slate, Meagher & Flom, LLP and Goodmans LLP acted as legal advisors to Formation Capital, LLC.
Extendicare is a leading provider of care and services for seniors in Canada. Through our network of 112 operated senior care centres (58 owned/54 managed) as well as our home health care operations, we are committed to delivering care throughout the health care continuum to meet the needs of a growing seniors' population in Canada. Our qualified and highly trained workforce of 22,400 individuals is dedicated to helping people live better through a commitment to quality service and a passion for what we do.
Information provided by Extendicare from time to time, including this release, contains or may contain forward-looking statements concerning anticipated financial events, results, circumstances, economic performance or expectations with respect to Extendicare and its subsidiaries, including, without limitation, statements regarding the Company's expected net cash proceeds from the sale of the U.S. business, the expected growth opportunities resulting from the Transaction, and the Company's business operations, business strategy, and financial condition. Forward-looking statements can be identified because they generally contain the words "anticipate", "believe", "estimate", "expect", "intend", "objective", "plan", "project", "will" or other similar expressions or the negative thereof. Forward-looking statements reflect management's beliefs and assumptions and are based on information currently available, and Extendicare assumes no obligation to update or revise any forward-looking statement, except as required by applicable securities laws. These statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of Extendicare to differ materially from those expressed or implied in the statements. Given these risks and uncertainties, readers are cautioned not to place undue reliance on Extendicare's forward-looking statements. Further information can be found in the disclosure documents filed by Extendicare with the securities regulatory authorities, available at www.sedar.comand on Extendicare's website at www.extendicare.com.
GENESIS HEALTHCARE COMBINES WITH SKILLED HEALTHCARE GROUP, INC.
The Combined Company Will Trade on the NYSE With a New Ticker Symbol of GEN
Kennett Square, PA – February 2, 2015 - Genesis HealthCare, LLC, one of the nation’s largest providers of skilled nursing and rehabilitation care, today announced that, effective February 2, 2015, it has completed its previously announced combination with Skilled Healthcare Group, Inc. (Skilled Healthcare) (NYSE: SKH). The newly combined company will operate under the name Genesis Healthcare, Inc. (Genesis). The combination adds the skilled nursing facilities, assisted and independent living centers, and hospice and home health agencies operated by Skilled Healthcare’s subsidiaries, as well as Skilled Healthcare’s Hallmark Rehabilitation business, to the Genesis family.
Under the terms of the agreement, Skilled Healthcare shareholders will collectively own 25.75% of the vote and value of the fully-diluted equity of the combined company. Shareholders who held interests in Genesis will own the other 74.25%. The combined company will be traded on the NYSE with a new ticker symbol of GEN. Headquarters for the combined company will remain in Kennett Square, PA, and George V. Hager, Jr. will be the Chief Executive Officer of the newly-combined company.
The company’s post-combination Board of Directors consists of representative directors from both companies, as well as independent directors. We believe this creates a governance structure that will facilitate and help to build strategic value. The post-combination board members consist of: Steven Fishman, Chairman of the Board of Directors, co-founder of Formation Capital; Arnold Whitman, co-founder of Formation Capital; David Reis, Chief Executive Officer of Senior Care Development, LLC; George Hager, Chief Executive Officer of Genesis; Glenn S. Schafer, former President and Vice Chairman of Pacific Life Insurance Company; James V. McKeon, President of Valentine Associates LLC; Jim Bloem, former Chief Financial Officer of Humana Inc.; John F. DePodesta, co-founder of Primus Telecommunications Group, Inc.; Joshua Hausman, Managing Director of Onex Corporation; Robert H. Fish, former Chief Executive Officer of Skilled Healthcare; and Robert Hartman, Chairman of NuCare Services Corp.
The combination of the two companies has created one of the largest post-acute care providers in the country, with more than 500 skilled nursing and assisted/senior living communities in 34 states. It has also expanded Genesis’ rehabilitation therapy business, Genesis Rehab Services, to more than 1,800 service locations in 47 states and the District of Columbia. The new company will have nearly 95,000 employees and had combined annual revenue of approximately $5.5 billion on a trailing twelve month basis as of September 30, 2014.
“This is an exciting time for Genesis as we become a publicly-traded company and further expand the services we provide to patients and residents nationwide,” stated Mr. George Hager. “We believe the opportunities of scale created by this combination better position Genesis to meet the challenges facing the post-acute industry and enhance the company’s ability to successfully partner with payors and providers across the country.”
Barclays and Bank of America Merrill Lynch served as Genesis’ financial advisors, and Skadden, Arps, Slate, Meagher & Flom LLP, Williams Mullen and Arnall Golden Gregory LLP acted as its legal advisors.
MTS Health Partners, L.P. served as Skilled’s exclusive financial advisor, and Kaye Scholer LLP acted as its legal advisor.
Jeanne Moore, Genesis Healthcare
Lori Mayer, Genesis Healthcare
Formation Capital Buys In U.S. And UK
Two More Mega-Deals Top Off Record M&A Year
After the blistering pace of M&A activity the past several months, the number of transactions in November appeared to taper off a bit. But don’t tell that to Formation Capital. In the span of five days, the private equity firm announced two transactions totaling just over $1.6 billion. Each of the two may end up being in the top 10 deals in terms of dollar value this year. And they come just 11 weeks after one of Formation Capital’s operating companies, Genesis HealthCare LLC, agreed to take Skilled Healthcare Group(NYSE: SKH) private in a $710 million transaction. (continues)
ATLANTA, July 18, 2014 /PRNewswire/ -- Formation Capital, a healthcare-focused private investment firm, together with Safanad Limited, a global principal investment firm, today announced the acquisition of fourteen skilled nursing facilities in the mid-Atlantic region for approximately $150 million. The portfolio is comprised of 1,658 beds with eleven facilities in Virginia, two in Maryland and one in Pennsylvania, and is operated by Consulate Health Care, the sixth largest provider of skilled nursing care.
"This transaction represents another solid investment that gives us an opportunity to leverage our healthcare and operating expertise as well as strengthen our relationship with a best in class operator," commented Arnold Whitman, Chairman of Formation Capital.
"We are very pleased to announce the close of this transaction as it represents another step in the multi-year strategic partnership between Formation Capital and Safanad," said Vincent Pica, managing partner and president of Safanad Inc., the US subsidiary of Safanad Ltd. "We continue to explore investment opportunities in the healthcare real estate sector and this acquisition demonstrates our commitment to the sector and to our investment partners."
NEW YORK, March 17, 2014 -- NorthStar Realty Finance Corp. (NYSE: NRF) ("NorthStar") today announced that it has entered into a definitive agreement to acquire a $1.05 billion healthcare real estate portfolio (the "Portfolio") from investment partnerships owned and managed by Formation Capital, LLC or its affiliated entities (collectively "Formation") and Safanad Limited. The Portfolio is comprised of 43 primarily private-pay senior housing facilities and 37 skilled nursing facilities. Inclusive of this portfolio, NorthStar has an approximately $1.6 billion healthcare real estate portfolio consisting of over 160 properties.
NorthStar is acquiring the Portfolio in a joint venture with Formation (the "Joint Venture"). Formation is a leading private investment firm focused on senior care real estate and services and post-acute healthcare. NorthStar and its affiliates will contribute approximately 92% of the $430 million of equity to purchase the Portfolio and the Joint Venture will assume in-place financing for the remainder of the purchase price.
NorthStar's Chairman and Chief Executive Officer, David Hamamoto, commented, "We are very pleased to have a diversified, quality portfolio of healthcare properties added to our existing healthcare portfolio that we expect will produce attractive current and overall returns. Since joining our healthcare real estate team only two months ago, Jay Flaherty has sourced an investment pipeline through his relationships in the industry that is adding significant value to the NorthStar franchise."
Flaherty, who oversees NorthStar's healthcare real estate platform, added, "This transaction represents an initial step towards our goal of expanding NorthStar's healthcare portfolio into a preeminent healthcare real estate business. We are enthusiastic that this will be the first of many compelling transactions that we can complete with our partners at Formation Capital."
- The purchase price for the Portfolio represents a cap rate of 9.4%, an initial unlevered yield of 7.8% and an initial levered current yield of approximately 12%.
- The Portfolio is located across 14 states with the heaviest concentration (35%) in Florida.
- 36 of the 43 senior housing facilities will be owned through a RIDEA structure and the remaining facilities, including all 37 skilled nursing facilities, will be owned under triple-net leases across five separate master leases.
- The portion of the Portfolio under triple-net leases is expected to have a year-one aggregate lease coverage ratio of approximately 1.3x and all of the leases have fixed rent escalators between 2-3% annually.
About NorthStar Realty Finance Corp. NorthStar Realty Finance Corp. ("NorthStar") is a diversified commercial real estate investment and asset management company that is organized as a REIT. NorthStar recently announced a plan to spin-off its asset management business into a separate public company. For more information about NorthStar, please visit www.nrfc.com.
About Safanad Limited Safanad is a global principal investment firm that invests in real estate, private equity and public markets. With offices in New York, Dubai, London and Geneva, the firm seeks to identify attractive investment opportunities primarily within the healthcare, education, financial services and retail sectors. For more information regarding Safanad, please visit www.safanad.com.
Forward Looking Statements This press release contains certain "forward‑looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward‑looking statements are generally identifiable by use of forward‑looking terminology such as "will," "expect" or other similar words or expressions. Forward-looking statements are not guarantees of performance and are based on certain assumptions, discuss future expectations, describe plans and strategies, contain projections of results of operations or of financial condition or state other forward-looking information. Such statements include, but are not limited to, the performance of the Portfolio and NorthStar's healthcare real estate portfolio generally, NorthStar's ability to close on the Portfolio, NorthStar's ability to source and complete additional transactions in healthcare real estate through the Joint Venture or other ventures with Formation Capital, the ability to allocate a portion of NorthStar's investment in the Portfolio to an affiliate of NorthStar, including NorthStar's healthcare non-traded REIT, and the amount and timing of such allocation, if any, the ability of the third party property operators to successfully manage the facilities in the Portfolio, NorthStar's ability to achieve strong current and overall returns on its healthcare real estate portfolio, NorthStar's ability to source additional opportunities through its joint venture with Mr. Flaherty, the scalability of NorthStar's healthcare platform, the amount of cash flow generated by the Portfolio, if any, in excess of the lease payments, NorthStar's ability to achieve anticipated levels of year-one coverage, NorthStar's future cash available for distribution and NorthStar's ability to maximize shareholder value. Additional factors that could cause actual results to differ materially from those in the forward-looking statements are specified in NorthStar's Annual Report on Form 10-K for the year ended December 31, 2013 and its other filings with the Securities and Exchange Commission.
Any forward-looking statements contained herein speak only as of the date of this press release. NorthStar expressly disclaims any obligation to publicly release any updates or revisions to any forward-looking statements contained herein to reflect any change in its expectations with regard thereto or change in events, conditions or circumstances on which any statement is based.
Investor Relations, Joe Calabrese, (212) 827-3772
Formation Capital has acquired 36 seniors housing communities for approximately $400 million. With a footprint in 13 states, the portfolio comprises over 2,600 units representing a diversified care mix of 65% assisted living, 18% independent living and 16% memory care. Formation closed this transaction with its investment partner SAFANAD, a global principal investment house with locations in New York, Geneva, London and Dubai.
The communities will be managed by Senior Lifestyles Corporation, Frontier Management, Prestige Senior Living and other high quality senior living operators.
“This transaction demonstrates Formation Capital’s continued focus on expanding its real estate footprint in private pay seniors housing,” said Brian Beckwith, Formation Capital’s Chief Executive Officer. “We believe this portfolio presented a rare opportunity to acquire high-quality real estate managed by best-in-class operating partners. We are excited to begin new strategic relationships with Senior Lifestyles Corporation and Prestige Senior Living and continue our strong relationship with Frontier Management.”
About Formation Capital
Formation Capital is a leading private investment management firm focused on equity and debt healthcare investment opportunities. Since 1999, Formation Capital has invested over $5.5 billion of capital in seniors housing and care, post-acute services and health care real estate. For more information regarding Formation Capital, visit www.formationcapital.com
About Frontier Management
Frontier Management operates and manages quality seniors housing communities throughout the United States with expertise in Retirement, Assisted Living, and Memory Care. Currently, Frontier manages more than 41 communities in 8 states, stretching from the Pacific Northwest to the Southeast. For more information, go to www.frontiermgmt.com.
About Senior Lifestyles Corporation
Senior Lifestyle, founded in 1985, is a privately-held owner, operator and developer of seniors housing communities. With a portfolio of more than 115 communities, located throughout 22 states, Senior Lifestyle offers independent living, assisted living, memory care and skilled nursing for the luxury, moderate and affordable segments. Senior Lifestyle has been routinely recognized as a leader in the delivery of innovative resident programs and hospitality services for all levels of care. Senior Lifestyle is well positioned for future growth due to the exceptional talent at all levels of the organization. These dedicated professionals are driven by the Senior Lifestyle Core Values and Mission of enriching our seniors’ lives today and tomorrow. To learn more please visit us at www.seniorlifestyle.com.
About Prestige Senior Living
Prestige Senior Living is a family of independent living, assisted living and memory care communities operated through a philosophy of caring that promotes happiness, health and longevity to empower residents to achieve the level of purposeful living that they desire. Prestige's award-winning senior lifestyle services are based on a core value system of respect, integrity, commitment and trust, which serves as the bedrock of the more than 30 Prestige Senior Living communities across the Western United States. For more information visit www.prestigecare.com.
Formation Capital acquired five senior housing facilities on December 31, 2012. The portfolio, comprised of assisted living and memory care units in Oregon, will be operated by Frontier Management. HFM represented the seller, a regional owner/operator.
"Adding five high-quality assisted living and memory care facilities is a great addition to Formation’s real estate portfolio," says Brian Beckwith, Chief Executive Officer of Formation Capital. "We are excited to partner with a quality provider like Frontier Management and look forward to working together in the future."
About Frontier Management
Frontier Management operates and manages quality senior housing communities throughout the United States with expertise in Retirement, Assisted Living, and Memory Care. At Frontier, we are united by our Mission and Values. We strive every day to demonstrate our commitment, compassion and caring to our residents at each and every one of our communities. Currently, Frontier manages more than 41 communities in 8 states, stretching from the Pacific Northwest to the Southeast. For more information, go to www.frontiermgmt.com.
Formation Capital acquired fourteen skilled nursing and assisted living facilities in Florida on December 6, 2012. The portfolio is triple-net leased to Opis Management Resources, a leading Florida provider of skilled nursing.
"We are excited to add facilities recognized for high quality of care, as evidenced by four centers that have been awarded Gold Seal Awards by the State of Florida,” commented Arnold Whitman, Co-Chairman of Formation Capital.
About Opis Management Resources
Opis Management Resources is dedicated to the highest standards of care for all those we serve – our customers, their families and each other. By listening to our customers, our caring and compassionate team members are continuously improving operations and creating a warm, respectful, dignified, ethical and safe environment for the elderly we serve. For more information, go to www.opismr.com.