A non-profit health system and a major real estate investment trust (REIT) are reportedly teaming up to buy Quality Care Properties (NYSE: QCP) for $2 billion.
The ProMedica hospital system and Welltower, Inc. (NYSE: WELL) have already made that offer, according to sources that spoke to the Reuters news service — which would value QCP at about $20 per share.
QCP is currently in the process of taking over troubled skilled nursing tenant HCR ManorCare, which entered Chapter 11 bankruptcy protection in March after defaulting on its lease obligations last year. The Bethesda, Md.-based QCP will lose its status as a REIT as part of the deal, which a federal bankruptcy judge formally approved earlier this month.
ProMedica and Welltower are based in Toledo, Ohio, as was HCR ManorCare.
ProMedica has 13 hospitals across northwest Ohio and southern Michigan, and also offers its own health plan, Paramount, to 344,000 enrollees. The non-profit has 17,900 employees, according to its website.
Welltower specializes in senior housing and care, with a portfolio that includes post-acute rehab centers and outpatient facilities. Welltower currently derives about 10% of its net operating income from skilled nursing and post-acute facilities; in 2017, the REIT pulled in consolidated net operating income of $2.2 billion.
The REIT currently owns 82 long-term and post-acute care properties operated by Genesis HealthCare (NYSE: GEN), another troubled skilled nursing provider that recently landed a $555 million credit facility with Welltower’s assistance.
Welltower CEO Tom DeRosa defended his company’s decision to stick with Genesis, and not pursue a more aggressive plan to reduce its exposure to the operator, on the company’s fourth-quarter 2017 earnings call back in February.
“The public markets were screaming at us to have taken a different approach with Genesis. I think we took the right approach,” DeRosa said. “We did the responsible thing for Genesis and our shareholders, and I think that will prove out versus other roads we could have gone down.”
The skilled nursing industry “will get reinvented, and as a health care REIT, we want the option to deploy capital in good structures around high-quality real estate,” DeRosa said in comments at the Citi 2018 Global Property CEO Conference in March.
The sources who spoke to Reuters emphasized that talks among Welltower, ProMedica, and QCP remain ongoing, and also noted that “there is no certainty that a deal will be reached.”
QCP, ProMedica, and Welltower did not respond to requests for comment as of press time.
Written by Alex Spanko