Hearthstone Assisted Living Becomes Hearthstone Senior Services Following Management Buyout and Sale of Real Estate Holdings
THE WOODLANDS, Texas, June 1, 2006 – Chief Executive Officer Tim Hekker and partners announced today the completion of a management buyout of Hearthstone Assisted Living, one of the nation’s largest providers of assisted living services with 32 assisted living communities in 10 states. Hekker and partners, Chief Financial Officer James Wang and Chief Operating Officer Laurence Daspit will acquire 100 percent ownership of Hearthstone’s operating assets. Terms of the deal were not disclosed.
At the same time, the parent company has changed its name to Hearthstone Senior Services to better reflect the company’s expanded role in the lives of its residents.
The announcement coincides with the completion of the sale of Hearthstone’s real estate holdings to Nationwide Health Properties, Inc. (NHP), a real estate investment trust that invests in senior housing and long-term care real estate throughout the United States. Hearthstone Senior Services has agreed to a long-term lease with NHP for all 32 Hearthstone and Carestone communities, ensuring that day-to-day operations are not affected. The size of the NHP transaction is $431 million.
“This is a great day for Hearthstone’s employees and residents.” said Tim Hekker, the CEO of Hearthstone who engineered the buyout. “Putting our residents first, exceeding their expectations, delivering exceptional care and fostering commitment and passion among our employees are the paradigm Hearthstone stands for. We believe our culture and people differentiate us.”
Demand for senior services is growing rapidly as the nation’s demographics change. According to the U.S. Census Bureau, the number of Americans 65 and older will rise from about 35 million in 2000 to over 53 million in 2020. In that same period, the number of Americans 85 and above is expected to double, hitting seven million by 2020 and double again to 14 million by 2040.
“The need for high-quality senior services is growing rapidly and these financial transactions give us the strength, stability and financial resources to satisfy that need,” said Hekker. “This transaction allows the Hearthstone team to continue to focus on what we do best – improving the quality of life for seniors.”
In addition to the initial $431 million transaction, the agreement with NHP also provides a commitment for future influx of capital to enable Hearthstone to continue to grow through community expansions, acquisitions and new development. The future capital infusion comes in the form of $15 million set aside to fund Hearthstone’s expansions of existing communities and an exclusive right to provide Hearthstone with the next $300 million for potential development or acquisitions.
With revenues in excess of $100 million and a net profit margin, before overhead, in excess of 40 percent in 2006, Hearthstone is a leader in the industry in terms of profitability.
This is a financial transaction. The day-to-day operations of each community as well as the regional and corporate infrastructure will not be affected.
About Hearthstone Senior Services
Based in The Woodlands, Texas, Hearthstone Senior Services operates 32 assisted living communities for older adults in Alabama, Arizona, Florida, Georgia, Michigan, New Mexico, Ohio, Oklahoma, Tennessee and Texas. More information is available at www.hscsal.com or by calling 866.424.6106.