Skilled nursing landlord Sabra Healthcare has settled its legal dispute with embattled tenant Senior Care Centers, which filed for bankruptcy in December.
The settlement comes following the approval of a Texas bankruptcy court judge last week, Sabra announced Friday. Under the terms of the agreement, Dallas-based Senior Care Centers — once the largest skilled nursing operator in Texas — must make payments of $9.5 million to its landlord.
Irvine, CA-based Sabra is selling 28 facilities occupied by Senior Care Centers for $282.5 million. About half of the settlement, at $5 million, is payable with the sale and transition of those properties, expected to close today, April 1. The other $4.5 million, meanwhile, must be paid on or before July 1, Sabra said. Sabra noted that it will recognize $6.2 million of post-petition rent.
The real estate investment trust had sued its once-largest tenant in December, worried that Senior Care’s bankruptcy proceeding would jeopardize a sale of those Texas properties. But Sabra announced in February that it was relenting in the legal battle, in exchange for receiving unpaid rent and their assistance in facilitating an orderly transfer of the properties.
Senior Care Centers first filed for Chapter 11 December 4, hampered by escalating lease costs and lagging reimbursement. At the time of the filing, SCC owed Sabra more than $35 million in unpaid rent and other expenses. Leaders from another California-based landlord, LTC Properties said in March they doubted Senior Care Centers would be able to emerge from bankruptcy as a viable entity.