Sabra Health Care REIT (Nasdaq: SBRA) on Wednesday announced the sale of 13 more skilled nursing facilities operated by Genesis Healthcare (NYSE: GEN), leaving just three more to sell before the real estate investment trust (REIT) completes its long-planned divestiture of Genesis assets.
Four of the Genesis-leased facilities sold last week for $38.6 million, with an additional nine set to be sold this week for $37.1 million, the Irvine, Calif.-based REIT reported in a statement issued Wednesday evening.
Sabra also has agreements to sell three more Genesis-operated SNFs for $33.2 million, though those deals require approval from the Department of Housing and Urban Development; Sabra expects the sales to close in the first quarter of 2019.
The last-minute wave of 2018 deals for the REIT marks another milestone in the company’s so-called “Genesis Exodus,” its plan to almost entirely rid its portfolio of properties operated by the Kennett Square, Pa.-based skilled nursing giant. Sabra CEO Rick Matros has been publicly critical of Genesis, which has seen sizable losses in recent quarters.
“The company has to be restructured. The current business model does not work,” Matros said of Genesis on the REIT’s fourth-quarter 2017 earnings call back in February. “In fact, you could never run a company that size in the skilled nursing space, ever — even in a much simpler time.”
Sabra still plans to retain eight facilities operated by Genesis after the “exodus” finally wraps, with total annual cash rents of $10.4 million. The REIT will also continue to receive residual rents from the sold properties for more than four years, under an agreement between Sabra and Genesis, with annual income of an additional $10.4 million.
The Genesis news came in conjunction with an announcement that Sabra had reached a deal to terminate its lease with Holiday Retirement, a senior housing operator with 21 communities in the REIT’s portfolio; Matros also hinted that the sale of properties operated by Senior Care Centers, which entered Chapter 11 bankruptcy protection earlier this month, has moved closer to completion.
“With resolution on Holiday, the near completion of [the] Genesis Exodus and continued progress on the sale of the Senior Care Centers facilities, we look forward to a 2019 with the ‘noise’ behind us and a solid platform of operating partners to grow from,” Matros said in a statement.
Written by Alex Spanko