Marriott sells 14 senior living communities to Dallas firm

By Meredith Bonner, ALBR Assistant Managing Editor

Marriott International (Washington) has decided to sell a portion of its signature assisted living facilities, but the company says it will continue to operate the facilities with a third party.

The company’s Marriott Senior Living Services (MSLS) unit has sold 14 of its Brighton Gardens facilities for $194 million in cash to Wolverine Equities (Dallas) and its affiliates. MSLS says it will operate the facilities under long-term management agreements with an unidentified third party, which is leasing the communities from Wolverine.

Paul Johnson, MSLS president, says the sale "reaffirms Marriott’s strategy to sell company-developed assisted living communities while retaining long-term management agreements."

The 14 communities are in Tampa, FL; Dunwoody, GA; Wheaton and St. Charles, IL; Kansas City, KS; Columbia and Bethesda, MD; Northville, MI; Omaha, NE; Florham Park and West Orange, NJ; Greensboro, NC; and Cleveland and Dayton, OH.

Marriott International has provided credit support to Wolverine to cover debt service shortfalls and certain other expenditures, the company says. Recovery by Marriott of any such credit support fundings is guaranteed by an unaffiliated third party.

Wolverine is an investment affiliate of Staubach Company (Dallas) and provides equity for domestic and international long-term lease financing to high-credit tenants, according to the Baltimore Sun.

"This, for us, is primarily viewed as a structured investment in a long-term financing," says Brant Bryan, president of Staubach and vice president of Wolverine Equities. "Marriott’s good name, reputation, and ability is central to this transaction and, to us, is as important as the particulars of the real estate," Bryan tells the Sun.

Wolverine has done $2 billion of this type of financing in the past three years, Bryan says.

Marriott says it plans to open its 150th senior living community this year. The company canceled some of its senior living projects recently after a glut of facilities made it difficult to fill its facilities. The company announced in November that would cancel plans for 30 to 35 assisted living projects. As a result of its plan, the company took a charge in 4Q99 of 5 cents per share – about $20 million pre tax – which included the write-offs of preopening expenses and development sites for the canceled properties.

Marriott’s MSLS subsidiary reported a 24% increase in sales in 1Q00 ended March 24. Occupancy at the division’s communities rose to 87% in 1Q00, the company says.