A series of transactions announced Thursday will better position The Pennant Group’s senior living portfolio for success in the short and long term, the holding company said.
The Eagle, ID-based company said it plans to transfer the operations of five senior living communities in Arizona, California and Washington to affiliates of San Juan Capistrano, CA-based The Ensign Group, from which it spun off. The communities are co-located with skilled nursing facilities operated by affiliates of Ensign.
The transfer agreements require one of the transferors to place $6.5 million in escrow to cover post-closing capital expenditures and operating losses related to one of the communities, MarketScreener reported. The Pennant Group said it expects the transactions to be completed in separate closings in the first half of the year.
The Pennant Group also said it plans to lease the operations of a Class A senior living community in a “key market” via a triple net lease set to start in the second quarter.
“As we continue to build a strong operating foundation in our senior living segment, the combination of these transactions provides immediate benefits that will positively impact our 2022 segment bottom-line results while creating additional long-term upside opportunity through a high-quality asset in a market where we have deep home health and hospice presence,” Pennant CEO Danny Walker said in the announcement.
The Ensign agreements, he added, will allow Pennant to focus on strengthening its operations across a tighter geographic footprint.
“This is a win-win for Ensign and Pennant, but most importantly, our patients, residents and caregivers will all benefit from the operational efficiencies that can be better achieved when the skilled nursing and senior living resources can be combined to provide a multi-faceted range of services in the same location,” Ensign CEO Barry Port said in a statement. “We hope this shows the continued commitment we have to Pennant, and Pennant has to Ensign, as we continuously work together to achieve the best possible outcomes we can for those that we have been entrusted to serve.”
Upon closing of these transactions, Pennant said, its affiliates will operate 50 senior living communities across six states.
