Quality Care Properties has begun the process of appointing an independent receiver to oversee its skilled nursing and assisted living facilities currently operated by HCR ManorCare, the real estate investment trust announced Thursday.
Talk of a possible receivership began to swirl last month, after ManorCare failed to pay rents owed to QCP. Earlier this summer ManorCare also lost one of its major investors, private equity and investment firm Carlyle Group.
QCP said in a statement that it believed a fully independent receiver, which ManorCare consented to in its lease, would be the “best way to preserve the value of the facilities during the transition to new operators.” The company filed the complaint to kickstart the receivership last week in California state court.
“HCR ManorCare has refused QCP’s requests to appoint fully independent directors and officers to oversee the skilled nursing and assisted living/memory care businesses at facilities owned by QCP,” the REIT said in a statement. “Instead, the facilities remain under the control of the incumbent HCR ManorCare senior executive team and board of directors, who QCP believes are burdened by irreconcilable potential or actual conflicts of interest.”
Despite the turmoil between the two companies — an internal memo sent to ManorCare staff on Friday said the provider is disappointed with the development and plans to fight it “vigorously” — those working or living in ManorCare facilities are unlikely to see any dramatic differences now that receivership has been triggered, Tom Ealey, M.Acc., a business professor at Michigan’s Alma College, told McKnight’s.
“Essentially, what you’re doing is freezing everything in place,” Ealey said. “Obviously the facility staff will stay in place, just to keep all the wheels turning … making sure the residents are taken care of while somebody shops the deal out.”
How long the proceedings will last is anyone’s guess, Ealey said.
“[QCP] may have been shopping [ManorCare] before they pulled the trigger on receivership, in which case it could go very quickly,” Ealey said. “Considering where long-term care is at right now it could go the other way, and nobody wants to buy it.”
QCP said in its statement that it “believes that there is significant interest from quality operators in owning and/or operating the facilities going forward,” and that similar receiverships have been utilized to transition other nursing home operators.