LTC Properties announced late Tuesday it has agreed to pay Senior Care Centers and Abri Health Services $3.25 million in exchange for their help in transitioning 11 skilled nursing facilities to a new operator.
The agreement puts LTC Properties back in control of a valuable portion of its portfolio. By striking the bankruptcy deal, the real estate investment trust resolves ongoing challenges with a long-troubled lessee.
“With this settlement with the bankrupt lessee behind us, we look forward to growing our association with HMG Healthcare and having these properties leased to an operator of our choice,” Wendy Simpson, LTC’s chairman and CEO, said in a press release. “We have had a long-standing relationship with the principals of HMG for over a decade and their involvement in reaching the settlement was instrumental.”
HMG, a skilled nursing and rehab specialist, is expected to take over operations on or about Oct. 1. The 11 properties will be leased to HMG under a one-year master lease with rent based on cash flows, and payment subject to a deferral of up to six months.
LTC said it intended to add the properties to a master lease currently existing between LTC and HMG after establishing a stabilized rent rate during the initial lease period. LTC also agreed to provide HMG a secured working capital loan.
Senior Care Centers once operated more than 100 nursing homes in Texas and Louisiana and has been in and out of bankruptcy proceedings since 2018. Early this year, it became a fully-owned entity of Abri Health Services, which in turn filed for Chapter 11 bankruptcy protection on April 16.
In March, LTC Properties had sent a notice of default to Abri Health Services/Senior Care Centers for nonpayment of rent and additional charges owed under its master lease, according to the U.S. Securities and Exchange Commission.
LTC announced at the time that it intended to transition the 11 affected properties from ABRI/Senior Care to Texas-based HMG Healthcare by the end of the second quarter.
HMG’s facilities are concentrated in Texas and Kansas, with this transaction bringing its total to 40 seniors housing and skilled nursing properties.
“We are excited to be taking over operations at these skilled nursing centers, allowing us to bring our premier healthcare services to an increased number of patients throughout Texas, while expanding our successful and long-standing relationship with LTC,” said Principal Laurence Daspit.
