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RECORD PRICES PAID FOR ASSISTED LIVING FACILITIES According to a new report published by Irving Levin Associates Inc., the average price paid for assisted living facilities hit record levels for the second year in a row in 1998.

The New Canaan, Conn.-based publisher's report, The Senior Care Acquisition Report, Fourth Edition, 1999, also reveals after a 4% decline in 1997 from a record-setting 1996, prices paid per nursing homes rose slightly in 1998.

"Despite the turmoil in the credit and stock markets for the senior care industry in 1998, there was no shortage of buyers willing to pay top dollar for the properties they wanted," says Stephen Monroe, a partner at Irving Levin Associates and editor of the report.

Assisted living per unit prices increased nearly 10% over 1997's record level to $76,300 per unit. "The increase in prices paid is indicative of what the market will pay for newer, higher quality properties, " Monroe says.

For three years in a row, the average price paid for nursing homes has been more than $40,000 per bed. "With all of the concerns about the new Prospective Payment System for Medicare reimbursement, combined with lower occupancy rates ad increased competition from assisted living facilities, we expected per bed prices to continue their decline after 1997's drop," Monroe says. "Instead, they rose by almost 2%."

The average price paid in 1998 was $41,300 per bed, compared with $40,500 per bed in 1997.

Also in 1998, there was a record number of senior care mergers and acquisitions, and the value of these transactions exceeded $8.8 billion. The continuing trend of consolidation in the senior care market is part of the overall consolidation trend nationally in health care.

The Senior Care Acquisition Report also contains statistics on the assisted living, retirement housing and nursing home merger and acquisition market, including prices per bed or unit, capitalization rates, income multipliers and regional statistics.

CAMBRIDGE REALTY CAPITAL LEADS HUD LENDERS A bulletin published by the U.S. Department of Housing and Urban Development reveals Cambridge Realty Capital Cos. led HUD 232 lenders for seniors housing and healthcare projects for the fifth consecutive year.

Cambridge closed $79 million in HUD loans for senior housing and health care projects during the government's 1998 fiscal year. Cambridge's lending total for all HUD projects, including multifamily commercial buildings, rose to $91 million to place Cambridge in the top 10 HUD originators.

"Throughout the year, HUD has been a pillar of stability and was especially well appreciated by borrowers during the funding crisis that created havoc in the financial markets in the third quarter of last year," said Cambridge Chairman and CEO Jeffrey Davis.

Cambridge has emerged as a leader in senior housing and health care financing during the 1990s with more than 140 completed transactions valued at $650 million since 1992. The company is currently processing and underwriting loans for an additional 50 facilities.

CLASSIC RESIDENCE BY HYATT GETS PIECE OF COVETED PARCEL Chicago-based Classic Residence by Hyatt acquired a 26.1-acre parcel that is part one of the most attractively located in-fill parcels in the Midwest - Glenview Naval Air Station (GNAS).

The 121-acre GNAS is being converted into a mixed-use development and is the largest redevelopment project in Illinois. Classic Residence by Hyatt bought a 26.1-acre parcel for $18.9 million and will develop a continuing care retirement community on the site. The facility will consist of a low-rise main building with 252 independent living residences ranging in size from 900 sq. ft. to 1,950 sq. ft.; 45 freestanding, 2,000 sq. ft. two-bedroom villas; and a health center, which will include 25 assisted living apartment units, 13 Alzheimer's/memory support suites and 38 skilled nursing suites.

GNAS, located in the heart of Chicago's North Shore, is being converted by the Village of Glenview to include single-family, multifamily and seniors housing; retail, entertainment and sports amenities; an office and industrial park; a new Metra train station and a U.S. Post Office.

CARUSO NAMED ALA'S MAN OF THE YEAR Alternative Living for the Aging named Rick Caruso its man of the year. ALA chose Caruso, president of Caruso Affiliated Holdings and developer of some of L.A.'s most successful open-air retail centers, because of his history of philanthropy and commitment to enriching the communities where he builds his centers. For example, prior to the opening of The Commons at Calabasas in 1998, Caruso pledged to underwrite the children's education program at the Calabasas Shul and contributed to the Mary Health of the Sick Catholic nursing program.

Caruso is a member of the Board of Directors of the National Institute of Trans-plantation and the California Medical Foun-dation. Caruso has also served on the Board of Commissioners of the City of Los Angeles Department of Water & Power for 14 years.

ALA is a non-profit organization that provides seniors with a variety of independent living alternatives.

WMF HUNTOON PAIGE CLOSES REFINANCE LOAN IN OCALA WMF Huntoon Paige Associates Ltd. closed a $5.4 million loan to refinance Marion House Care Center, a 120-bed, skilled nursing center in Ocala, Fla. The transaction is a 40-year, fully amortizing loan carrying an interest rate of 6.875% and originated in WMF Huntoon's Edison, N.J., office under FHA's Section 232/223(f) program.

Vienna, Va.-based WMF is the nation's largest originator of Fannie Mae- and FHA-insured multifamily and health care loans. The company currently has a servicing portfolio of more than $12 billion.

PACIFIC GULF PROPERTIES BUYS SITE FOR SENIORS COMMUNITY As part of its strategy to redevelop rental communities for active seniors, Newport Beach, Calif.-based Pacific Gulf Properties bought the first of four sites it has in escrow. American Housing Partners Inc. sold the 8.65-acre site for $5.4 million.

Construction on The Fountains at Anaheim Hills will begin in the second quarter of 1999 and should be completed by summer 2000. The Fountains will be located in a master-planned community known as The Festival. Centrally located recreation facilities also will be available in the three-story community.

Pacific Gulf Properties is a REIT that owns, manages and develops a portfolio of industrial properties targeting small- to mid-size tenants in selected high-growth western markets. The company also maintains a multifamily portfolio that includes eight rental communities comprised of nearly 1,500 units designed for active seniors.

ALS REVEALS EARNINGS, NAME CHANGE Brookfield, Wis.-based Alternative Living Services Inc., the nation's largest health care provider operating assisted living residences has reported record earning for the three-month period ending Dec. 31, 1998.

The company reports revenue of $76.5 million and net income of $6.3 million, or $0.27 per diluted share on 31.7 million weighted average common shares outstanding. This compares to revenues of $41.6 million and net income of $2.1 million, before merger-related charges of $10.4 million, or $0.11 per share on 19.5 million weighted average common shares outstanding for the comparable period in 1997.

Also, at quarter end, the company operated or managed 350 residences with a total resident capacity of 15,003. "[Last year] was another year of tremendous growth for the company," says Bill Lasky, ALS president and CEO. "With the largest portfolio of assisted living residences in the industry, the company is uniquely positioned for continued earnings growth through stabilization of maturing residences and the opportunity to provide a broader array of products and services to our private pay customers."

The company also announced plans to change its name to Alterra. "As we position the company for the next century, the name Alterra allows us to unify all of the company's expanding products and services, including its 365 operating locations," Lasky says. "This marketing strategy will leverage the company's leading national presence in the assisted living marketplace."

PHILADELPHIA COMMUNITY RESCUED FROM BANKRUPTCY Arizona-based Fountains Continuum Care Inc. will rescue from bankruptcy the Logan Square East luxury high-rise retirement community in Philadelphia.

The Fountains offered $26.6 million for the 486-unit community and agreed to assume $30.6 million in liabilities, including 100% of resident refund liabilities. The Fountains also agreed to spend approximately $12 million in capital improvements and repairs.

The Fountains' takeover marks the second time Logan Square East has been rescued from bankruptcy in its 15-year existence. Over the past 10 years, The Fountains has specialized in turning around distressed retirement communities through financial restructuring, capital infusion, strong business management and market innovation.

Closing is expected to be complete in June.

HSA FORMS SENIORS DIVISION Chicago-based Hiffman Shaffer Associates Inc. will now diversify to acquire, develop and own senior living facilities nationwide.

The firm retained Stephen Tinsley and Victor Cypher Jr., former principals of Walken-Tinsley Interests Inc., to head the new HSA Senior Living Division. Tinsley has participated in the development of more than 90 assisted living facilities in multiple states. Cypher brings more than 10 years of commercial real estate experience.

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