QCP Extends ManorCare Receivership Deadline into 2018
Troubled nursing home operator HCR ManorCare got an early Christmas present from its primary landlord Monday morning: another month and a half to respond to a receivership claim.
Quality Care Properties, Inc. (NYSE: QCP) pushed back ManorCare’s deadline to January 15, the fourth such extension since the real estate investment trust (REIT) initially filed a receivership complaint in August. The move will “allow for negotiations regarding a potential comprehensive restructuring of the economic relationships between the parties,” according to a QCP release announcing the delay.
The REIT wants a court to appoint an independent third party to run ManorCare’s operations after a rocky year that saw the provider miss multiple rent payments and eventually fall into default. The Toledo, Ohio-based ManorCare remains in default despite the extended deadline, QCP noted.
In its initial receivership filing, the Bethesda, Md.-based QCP claimed that ManorCare’s existing management team was too “burdened” by conflicts of interest to oversee the chain; ManorCare responded by calling the charges an “insult” in an internal memo to employees. QCP also hinted at a “regionalization strategy” with an emphasis on local investment and management.
The ongoing battle caps off a tumultuous first full year for QCP, which was spun out of HCP, Inc. (NYSE: HCP) in November 2016. The move was designed to slash HCP’s skilled nursing concentration by creating a “pure play” SNF REIT focused primarily on ManorCare.
The deadline extension was the most recent bit of good news for ManorCare, which also saw a looming Department of Justice fraud case thrown out in November. A federal judge nixed the testimony of the government’s star witness, calling it “nonsense”; officials then moved to dismiss the case entirely. ManorCare had been accused of providing medically unnecessary therapy services, then billing Medicare and Tricare.
QCP’s stock remained largely flat in early trading Monday, dipping by a quarter of a percentage point by noon Eastern time.
Written by Alex Spanko