ManorCare Misses Latest Rent Payment to QCP

Skilled nursing operator HCR ManorCare, Inc. missed another rent payment, the latest milestone in a long-developing conflict with its landlord, Quality Care Properties, Inc. (NYSE: QCP).

QCP, the real estate investment trust (REIT) that serves as ManorCare’s primary landlord, announced Wednesday that the provider had missed its July 3 rent deadline as attempts to restructure the companies’ relationship out of court have yet to yield fruit.

QCP was reportedly close to a full equity takeover of the Toledo, Ohio-based ManorCare in June, when the operator’s longtime private-equity owner, The Carlyle Group, signaled its intentions to walk away from the troubled SNF chain. But no further news about a deal emerged until Wednesday, when the Bethesda, Md.-based QCP filed an 8-K announcing ManorCare’s failure to pay.

“The parties have been unable to reach agreement on terms of an out-of-court acquisition,” QCP reported in its 8-K, though it also indicated that the companies are continuing to discuss “restructuring alternatives.”

“QCP believes it is essential that any restructuring provide the QCP-owned facilities and their experienced and committed employees with the liquidity, resources, capital investment, and other support necessary to ensure the long-term continuity of excellent patient and resident care,” the REIT said in the filing.

ManorCare’s struggles date back years, with former landlord and “big three” REIT HCP Inc. (NYSE: HCP) spinning off its SNF portfolio into QCP last year. ManorCare now accounts for about 94% of QCP’s total annual revenues.

Earlier in 2017, the two parties entered into a forbearance agreement that was supposed to help ManorCare make its payments, but the SNF operator fell behind on its June rent amid pressure from its lenders and declining profit projections. In a public overture to lenders and other stakeholders, QCP initially gave a deadline of June 15 to secure funding for an equity takeover, a date that came and went without an announcement. The forbearance agreement between the two parties expires Wednesday.

ManorCare, QCP, and Carlyle did not return requests for comment by press time.

Written by Alex Spanko

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