We said almost two years ago that the best way for funeral home and cemetery operator StoneMor Partners L.P. to right their ship was to divest themselves of some properties and use the cash proceeds to pay down debt so that they can get to a position where they are operating in a financial positive manner.
Yesterday they made an official announcement of what many of us expected to be coming. StoneMor Partners L.P. announced the agreement to sell the Oakmont Memorial Park and Mortuary in Northern California to Carriage Services of Houston, Texas. Carriage Chairman Mel Payne had intimated that a purchase in California from StoneMor was in the works last month in his quarterly earnings conference call statements.
This release from StoneMor Partners indicates that the Oakmont Memorial Park and Mortuary was sold for a price of $33 million and is expected to close in January 2020. Joe Redling, StoneMor’s President and CEO was quoted in the statement, “The sale of Oakmont is a significant achievement in accordance with our previously announced divestiture strategy. It allows us to divest assets at attractive multiples, reduce debt levels and improve the cash flow and liquidity profile of the business.” Redling also pointed out in the release that StoneMor expects to complete more transactions within their divestiture strategy in the 1st quarter of 2020.
Funeral Director Daily take: While we can’t offer any opinion on the value of the property for the $33 million price. In this release from Carriage Services, Chairman Mel Payne makes this comment, “. . . . .(the property) is expected to generate high returns on the premium price we are paying for what our people describe as an A+++ property.”
That statement seems to indicate to us that what we mentioned the other day about Carriage Services may be coming true. That is. . that they are now stepping up and willing to pay prices for larger properties than they once were reluctant to acquire. From this map, you can see that Carriage Services has many properties in Northern California so the purchase of Oakmont probably folds in real well with their cluster of operations there and may have been worth more to them than it would be another company.