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.

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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.

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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

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