City of Big Shoulders Is Tops for Seniors Housing Development, But Will that Weigh it Down?
	Private Equity to the Rescue at Sunwest?
	Ensign Group Expands Portfolio of Skilled Nursing Facilities in Western States

Forget about the failed Olympic bid or another disappointing season for the Cubs. Chicago is second to none in seniors housing. In fact, the Chicago area heads the list of big metro markets with the most new units under construction.

Even more product is poised to hit the market as developers move ahead with plans for a handful of big projects. Although the construction wave raises concerns about a potential supply glut, sources say a recent upswing in leasing activity could help absorb some of that space after several years of rising vacancies.

“We are always concerned about overbuilding,” says Thilo Best, chairman and CEO at Horizon Bay Retirement Living, which manages three mostly independent living buildings in the Chicago area. “But Chicago's a big market.”

The yearlong drought of big seniors housing deals may be about to end as the private equity giant Blackstone Real Estate Advisors makes a play for the bulk of the struggling Sunwest Management portfolio. Industry sources say the purchase price for about 150 of Sunwest's assisted living buildings could top $1 billion.

The deal could close by the end of the year, sources add, though several sizable hurdles still stand in the way.

“Sunwest is a tale of woe,” says Robert Mains, research analyst at Morgan Keegan in Saratoga Springs, N.Y. But, he adds, Blackstone has a chance to turn the troubled company around. "Blackstone is buying at a time when assisted living [occupancy] is on the upswing."

The Ensign Group, a Mission Viejo, Calif.-based owner and operator of nursing homes principally in the western United States, has embarked on a buying spree. In early October, the publicly traded company (Nasdaq: ENSG) acquired three skilled nursing care facilities in Utah.

The facilities include Castle Country Care Center, an 80-bed skilled nursing facility in Price; South Valley Care Center, a 116-bed skilled nursing facility in the Salt Lake City suburb of West Jordan; and Rock Canyon Rehab & Care Center, a 200-bed skilled nursing facility in Provo. The facilities were purchased with a combination of cash and seller financing.

"These strategic acquisitions offer tremendous potential operating synergies for Ensign's existing operational base in Utah," stated Derek Gasser of Ensign's Utah-based Milestone Healthcare subsidiary in a press release. The physical plants are in superior condition, and the locations provide an excellent fit with Ensign's existing operations in Utah, emphasized Gasser.