Constellation down to utilities

Sale of 15 centers is part of strategy that involves renewed focus on energy

October 29, 2002|By Andrea K. Walker | Andrea K. Walker,SUN STAFF

Constellation Energy Group said yesterday that with the recent sale of its interest in senior housing, the company has divested almost all divisions of its business that aren't related to utilities.

Constellation Health Services, an affiliate of the Baltimore utility company, sold 15 assisted and independent living centers to two Newton, Mass., companies for $77.2 million.

Under the agreement, Five Star Quality Care Inc. and Senior Housing Properties Trust paid Constellation partly in cash and took over the mortgages of some facilities in other cases. The facilities are in Maryland, Virginia, North Carolina and Connecticut.

Constellation officials said the deal, announced Friday, was part of a more conservative strategy the company took after it abandoned plans last year to split into two.

The 186-year-old utility is now focusing on increasing profits, cutting expenses and selling off any part of the business that doesn't deal with energy. It is also putting most of its resources in North America.

"It's all in getting back to our strategy of monetizing noncore assets and basically focusing on our core energy business," Constellation spokeswoman Sharon Sasada said yesterday.

Sasada said Constellation will announce in an earnings conference call Thursday that it has nearly reached its goal of selling off $700 million in business not related to energy by the end of the year.

"We're well on our way to meeting our goal," she said.

Constellation announced in March that it had sold its 41.5 percent stake in Corporate Office Properties Trust. Constellation Real Estate Inc, a division of Constellation, was COPT's largest shareholder.

In November, the utility sold its Guatemalan power plant operations to an affiliate of Duke Energy International. Under this deal, Constellation took a fourth-quarter write-down of about $28 million after taxes.

Analysts said many energy companies are selling parts of their business to raise cash.

"What Constellation is doing is in line with 99 percent of the market now," said John Sodergreen, publisher of the Scudder Publishing Group, an Annapolis company that produces five energy-industry newsletters. "Basically, companies are selling anything to bring in cash."

Shares of Constellation closed yesterday at $25.60, up 66 cents.

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