Quality Care Properties (NYSE: QCP) on Thursday reached out to HCR ManorCare’s lenders with a request for funding as it considers an equity takeover of its primary skilled nursing tenant.
The Bethesda, Md.-based real estate investment trust (REIT) has disclosed that it is in talks with numerous stakeholders as it mulls acquiring ownership of the Toledo, Ohio-based HCR ManorCare, one of the largest skilled nursing operators in the country. HCR ManorCare is currently owned by the Carlyle Group, a private-equity giant.
Now, QCP has provided supplemental information to ManorCare lenders and indicated a desire for up to $500 million in funding for a potential equity takeover. The presentation with this information was furnished to “certain lenders” of ManorCare, according to an 8-K filed today.
The overture marks the latest step in the dance between QCP and HCR ManorCare, which fell $17 million short on its June rent despite a forbearance agreement designed to help the provider pay its bills. HCR ManorCare blamed growing pressure from its lenders, along with weak profit projections for its QCP-owned properties, the REIT said in a separate 8-K filed on Monday.
Both parties are in the process of negotiating an out-of-court lease restructuring plan that would help to ease growing doubts about HCR ManorCare’s future as a going concern, but QCP has said that it’s still considering “all alternatives” — which would include its equity takeover of HCR ManorCare, a move that could result in QCP losing its REIT status.
“In order to consider an acquisition alternative, QCP is interested in discussing related financing matters with HCRMC lenders,” the company wrote in its presentation, adding that there’s no guarantee that an out-of-court restructuring settlement could be reached or executed.
QCP extended an offer to lenders to share on a restricted basis more information about the ongoing discussions, saying it wants to “work with lender advisors to make progress toward a deal they can recommend.” The forbearance agreement between QCP and ManorCare expires July 5, but QCP indicated that it would like to have a commitment in place from lenders by June 15.
Written by Alex Spanko