<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
Date of Report (Date of earliest event reported): June 30, 1996
Commission file number 0-26980
ARV ASSISTED LIVING, INC.
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C>
CALIFORNIA 33-016098
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
245 FISCHER AVENUE, D-1
COSTA MESA, CA 92626
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE) (ZIP CODE)
</TABLE>
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (714) 751-7400
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
VILLA COLIMA (THE "FACILITY")
Consistent with its business plan strategy, ARV Assisted Living, Inc. (the
"Company") has acquired a majority interest in Villa San Gabriel Limited
Partnership (the "Partnership"). This Partnership operates Villa Colima, a
94-unit facility which provides full meal, maid, communal and assisted living
services for senior citizens. Beginning on July 1, 1995, the Company began
tendering for the Partnership units at a net cash price per unit of $715. The
Company made a final tender offer, which began on May 6, 1996 and was completed
on June 30, 1996, for $750 per unit. The Company paid a range of prices from
$715 to $750 with an average price per unit of $724. During the final tender
offer, approximately 702 units or 13.5% of all limited partnership units were
acquired. Therefore, when added to the previously tendered units, the Company
now owns 2,697 units or approximately 52% of the total limited partnership
units.
TERMS OF PURCHASE
Villa Colima's purchase price of approximately $1.95 million was fully financed
over the course of the year with cash on hand. The purchase price equates to
approximately $44,000 per facility unit.
OPERATION
Villa Colima's occupancy at June 30, 1996 was approximately 81.9%. While the
project is now 9 years old, the Facility has been well maintained and is not
currently in need of major upgrades or rehabilitation. However, the Company has
budgeted approximately $15,000 for certain cosmetic improvements.
THE FACILITY
Villa Colima is a 94-unit assisted living facility constructed in 1987 as a
senior residential care facility. The site is a 1.7 acre parcel containing one
two-story, 52,000 square foot building. Of its 94 units, 82 units are studios
and 12 are one bedroom units featuring a living room. Every unit features a
wet bar, bathroom and balcony or patio. On-site amenities include a beauty
salon, country store, a fireside lounge, game room, arts and crafts room,
library and the grounds which are enhanced by a spacious waterscaped courtyard.
The Company is confident that its experience in assisted living facilities and
its knowledge of the senior housing market, including the operation of thirty
seven other assisted living facilities will enable it to achieve operating
efficiencies while maintaining or improving the Facility's occupancy rates at
full market rent.
1
<PAGE> 3
LOCATION
Villa Colima is located in the City of Walnut, Los Angeles County, California,
30 miles east of Los Angeles near the community of Diamond Bar. The major
developments in the area include the Los Angeles Royal Vista Golf Course
immediately to the northeast. It is in close proximity to two strip mall
shopping centers, and within walking distance of a church.
MARKET DATA
Villa Colima's primary market area are the City of Walnut and the surrounding
communities of Diamond Bar, Rowland Heights, Hacienda Heights, La Puente, City
of Industry, Covina, West Covina and Whittier.
COMPETITION
Villa Colima's competition for the provision of senior assisted living services
within the greater Los Angeles area comes primarily from seven area facilities
which provide independent, assisted and alzheimer living. They include San
Dimas Retirement, Springhouse Brea, Bridgecreek Retirement, La Habra Villa, and
Meadows of La Habra. Two assisted living facilities operated by the Company,
Covina Villa, a 64-unit facility, and Rancho Park Villa, 163-unit facility, are
also located in the same county as Villa Colima. Each of the competitive
facilities range in age from six to 25 years old. Of its competitors for the
provision of independent and assisted living, Villa Colima is one of the newer
facilities.
SPECIAL RISKS
The presence of competitors in close proximity to Villa Colima including two
Company-operated facilities may hinder efforts to increase rents and raise
occupancies.
The success of the Facility depends to a large extent on increasing gross
revenues, holding or decreasing costs, and on the abilities of the on-site
management team which the Company has assembled.
Moreover, given that the Facility is not newly constructed, unforseen
circumstances could necessitate major renovation or more refurbishing than
originally planned.
ITEM 5. OTHER EVENTS.
REDEMPTION OF OUTSTANDING $15 MILLION 10% CONVERTIBLE SUBORDINATED NOTES DUE
1999
Beginning April 10, 1996, Convertible Noteholders were given the choice to
convert $15 Million 10% Convertible Subordinated Notes into shares of common
stock of the Company by June 30, 1996 or to have the Notes redeemed as of 5:00
p.m. Pacific Daylight Time on July 10, 1996.
2
<PAGE> 4
Converting holders of the Notes received one share of Common Stock for every
$12.16 in principal amount of Notes surrendered for conversion. For those
Notes converted to Common Stock, the Company issued restricted stock pursuant
to Rule 144 of the Securities Act of 1933. The redemption price paid for each
$1,000 principal amount of Notes was $1,067 plus accrued interest to that date.
Approximately 74% of the notes were converted to 900,662 shares of common stock
and 26% were redeemed by the Company for $4.2 million by July 10, 1996. The
redemption of the 26% will result in an extraordinary charge of approximately
$600,000 in the quarter ending June 30, 1996 and the 74% conversion will result
in an increase in shareholder equity by a net amount of $10.1 million.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
The Financial Statements and Pro Forma Financial Statements required for Villa
Colima by this Item 7 will be filed within 60 days of this Report.
3
<PAGE> 5
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ARV Assisted Living, Inc.
By: /s/ Graham P. Espley-Jones
-----------------------------------
Graham P. Espley-Jones
Chief Financial Officer
Date: July 12, 1996
4
