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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): July 2, 1998
Commission file number 0-26980
ARV ASSISTED LIVING, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 33-0160968
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(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
245 FISCHER AVENUE, D-1
COSTA MESA, CA 92626
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE) (ZIP CODE)
REGISTRANTS TELEPHONE NUMBER, INCLUDING AREA CODE: (714) 751-7400
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
PURCHASE AND SALE AGREEMENTS
As of February 12, 1998, ARV Assisted Living, Inc. ("ARV") entered into Purchase
and Sale Agreements with The Hillsdale Group, L.P., a California limited
partnership; 270 Center Associates, Limited Partnership, a California limited
partnership; and TH Group, Inc., a California corporation, to purchase interests
in thirteen (13) senior housing communities located in California, containing
approximately 1,900 units, for approximately $88 million. The closings are
expected to occur in phases beginning April 16, 1998 through July 1998.
As previously reported, on April 16, 1998, the purchases of two assisted living
communities (Golden Creek Inn, a 126-unit community located in Irvine,
California and Hillcrest Inn, a 138-unit community located in Thousand Oaks,
California), a general partnership interest (twenty percent (20%) general
partnership interest in WHW Associates, a California general partnership) and
the rights under four management agreements (management agreements acquired are
for assisted living communities as follows: Sterling Court, a 149-unit community
located in San Mateo, California; Palo Alto Commons, a 105-unit community
located in Palo Alto, California; San Carlos Retirement Center, an 85-unit
community located in San Carlos, California; and The Altenheim, a 161-unit
community located in Oakland, California) were completed.
On May 4, 1998, the Company's purchase of Rossmore House, a 157-unit assisted
living community located in Los Angeles, California was completed. On May 13,
1998, the Company's purchase of The Berkshire, a 84-unit assisted living
community located in Berkley, California was completed. On May 18, 1998, the
Company's purchase of the rights under a sublease agreement and related
documentation of a 202-unit assisted living community located in San Jose,
California was completed.
On July 2, 1998, the Company acquired the rights under a lease agreement and
related documentation for Hillsdale Manor Retirement Center and Convalescent
Hospital from The Hillsdale Group, L.P., an unrelated third party, pursuant to a
Purchase and Sale Agreement dated February 12, 1998, as amended. Hillsdale Manor
is located in San Mateo, California and is comprised of 119 assisted living
units and 69 skilled nursing beds.
On July 7, 1998, the Company's wholly-owned subsidiary, Encino Renovation, LLC,
a Delaware limited liability company, acquired Encino Hills Terrace from The
Hillsdale Group, L.P., an unrelated third party, indirectly through a
tax-deferred exchange, pursuant to a Purchase and Sale Agreement dated February
12, 1998, as amended. Encino Hills Terrace is an 95-unit assisted living
community located in Encino, California.
TERMS OF PURCHASE
The purchase prices of the assets acquired on July 2, 1998 and July 7, 1998 were
as follows: the rights under a lease agreement for Hillsdale Manor Retirement
Center and Convalescent Hospital - $5.325 million and the purchase of Encino
Hills Terrace - $8.0 million.
The Company believes that the purchase prices negotiated with the Seller reflect
the location, occupancy rates and the condition of the communities.
Additionally, the Company believes that the location of the acquired and managed
communities in relation to the Company's existing communities will provide
opportunities to achieve management efficiencies and operational economies of
scale.
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The Company is confident that its experience in assisted living communities and
its knowledge of the senior housing market, including the operation of fifty-two
other assisted living communities, will enable it to achieve operating
efficiencies while maintaining the occupancy rates at full market rent.
Management believes that the acquisition of these communities will allow the
Company to increase its competitive advantages in California, where 42 of its
now 63 assisted living communities currently operated or managed are located.
SPECIAL RISKS
The success of the communities depends to a large extent on increasing gross
revenues, holding or decreasing costs, and on the abilities of the on-site
management teams which the Company assembles. Additionally, the success of this
acquisition will depend in large part on the Company's ability to integrate the
existing management and staff into the Company's operations. To achieve
increased revenue and stable operating cost goals, policies used by the former
owners may need to be altered. This could result in short term resident
dissatisfaction and/or relocation. Given that the communities are not newly
constructed, unforeseen circumstances could necessitate major renovation or more
refurbishing than originally planned. At this time, management plans major
renovations for Rossmore House, The Berkshire and Encino Hills Terrace. The
relatively low vacancy rates enjoyed throughout the primary market may induce
other operators to create new, competitive facilities. Additionally, due to the
planned renovations of existing communities, the Company will experience an
attrition in resident occupancy and be subject to normal construction risks
which include, but are not limited to, availability of labor and materials,
delays in construction and cost overruns. Following completion of the
renovations, the Company will be subject to risks associated with lease-up.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements
Any financial statements and pro forma financial statements required
pursuant to Rule 3-05 of Regulation S-X with respect to the Registrants
acquisitions will be filed within 60 days of this report.
(b) Exhibits
Number Exhibit
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10.1 Purchase and Sale Agreement by and between 270
Center Associates, Limited Partnership and ARV
Assisted Living, Inc. dated as of February 12,
1998, incorporated by reference to Exhibit 10.1 to
the Company's 8-K filed with the Securities and
Exchange Commission on May 11, 1998.
10.2 Amendment to Purchase and Sale Agreement by and
between 270 Center Associated, Limited Partnership
and ARV Assisted Living, Inc. dated as of March 2,
1998, incorporated by reference to Exhibit 10.2 to
the Company's 8-K filed with the Securities and
Exchange Commission on May 11, 1998.
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Number Exhibit
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10.3 Second Amendment to Purchase and Sale Agreement by
and between 270 Center Associated, Limited
Partnership and ARV Assisted Living, Inc. dated as
of April 10, 1998, incorporated by reference to
Exhibit 10.3 to the Company's 8-K filed with the
Securities and Exchange Commission on May 11, 1998.
10.4 Purchase and Sale Agreement by and between TH
Group, Inc. and ARV Assisted Living, Inc. dated as
of February 12, 1998, incorporated by reference to
Exhibit 10.4 to the Company's 8-K filed with the
Securities and Exchange Commission on May 11, 1998.
10.5 Amendment to Purchase and Sale Agreement by and
between TH Group, Inc. and ARV Assisted Living,
Inc. dated as of March 2, 1998, incorporated by
reference to Exhibit 10.5 to the Company's 8-K
filed with the Securities and Exchange Commission
on May 11, 1998.
10.6 Second Amendment to Purchase and Sale Agreement by
and between TH Group, Inc. and ARV Assisted Living,
Inc. dated as of April 10, 1998, incorporated by
reference to Exhibit 10.6 to the Company's 8-K
filed with the Securities and Exchange Commission
on May 11, 1998.
10.7 Purchase and Sale Agreement by and between The
Hillsdale Group, LP and ARV Assisted Living, Inc.
dated as of February 12, 1998, incorporated by
reference to Exhibit 10.7 to the Company's 8-K
filed with the Securities and Exchange Commission
on May 11, 1998.
10.8 Amendment to Purchase and Sale Agreement by and
between The Hillsdale Group, LP and ARV Assisted
Living, Inc. dated as of March 2, 1998,
incorporated by reference to Exhibit 10.8 to the
Company's 8-K filed with the Securities and
Exchange Commission on May 11, 1998.
10.9 Second Amendment to Purchase and Sale Agreement by
and between The Hillsdale Group, LP and ARV
Assisted Living, Inc. dated as of April 6, 1998,
incorporated by reference to Exhibit 10.9 to the
Company's 8-K filed with the Securities and
Exchange Commission on May 11, 1998.
10.10 Letter Re: Assignment of right to take title of
Encino Hills Terrace dated June 30, 1998.
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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/ Sheila M. Muldoon
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Sheila M. Muldoon
Senior Vice President and General Counsel
(Duly authorized officer)
Date: July 17, 1998
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EXHIBIT 10.10
SENT VIA FACSIMILE AND U.S. MAIL
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June 30, 1998
Richard B. Stein
Chief Executive Officer
THE HILLSDALE GROUP, L.P.
1199 Howard Avenue
Burlingame, CA 94010
RE: ENCINO HILLS
Dear Dick,
This will confirm that ARV Assisted Living, Inc., a Delaware corporation, has
assigned its right to take title to that certain property located at 16025
Ventura Blvd., Encino, CA 91436 to Encino Renovation, LLC, a Delaware limited
liability company. ARV shall remain responsible for performance under that
certain Purchase and Sale Agreement dated February 12, 1998, as amended,
concerning the Encino Hills property. By executing this agreement, Encino
Renovation, LLC acknowledges such assignment.
Very truly yours,
ARV ASSISTED LIVING, INC.,
a Delaware corporation
By: /s/ Sheila M. Muldoon
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Sheila M. Muldoon
Senior Vice President and General Counsel
Acknowledgment of Assignment:
ENCINO RENOVATION, LLC,
a Delaware limited liability company
By: ARV Assisted Living, Inc.,
a Delaware corporation, Sole Member
By: /s/ Howard G. Phanstiel
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Howard G. Phanstiel
Chief Executive Officer
cc: Bruce Maximov, Esq.
