Sabra Health Care REIT (Nasdaq: SBRA) late Sunday night announced that it would retain 10 Senior Care Centers-operated properties it had previously agreed to sell amid the skilled nursing provider’s bankruptcy proceedings.
Just two days after the Dallas-based Senior Care Centers entered Chapter 11 bankruptcy protection in early December, landlord Sabra announced that it had entered into a formal agreement to sell off all 38 SCC-operated buildings in its portfolio for $385 million. A source with knowledge of the deal identified the buyer at the time as BlueMountain, a New York City-based alternative asset management firm that in 2017 bought all of Kindred Healthcare’s skilled nursing facilities for $700 million.
But that figure has been slashed to 28 buildings for a sale price of $282.5 million, the Irvine, Calif.-based real estate investment trust (REIT) revealed on Sunday. Sabra will lease the remaining 10 to “one or more new operators,” estimating the retained buildings’ value at $95 million to $105 million.
Both the sale of the 28 facilities and the operational transfer of the remaining 10 will be completed by April 1, according to Sabra.
“The revised terms of the Senior Care Centers Facilities sale represent a good outcome for Sabra,” CEO Rick Matros said in a statement. “Upon completion, we will have achieved each of our stated objectives in connection with this transaction by wrapping up our association with a troubled operator and reducing our geographic concentration in a challenging state, with the ability now to reduce earnings dilution through re-tenanting of the retained properties with desired operating partners.”
The deal comes as the buyers had some issues finding tenants for all 38 facilities, Matros told SNN in an e-mail, while Sabra fielded interest from providers about some of the assets in the group.
Sabra in late December had filed a lawsuit against Senior Care Centers, claiming that the operator didn’t respond to a lease-termination notice while also falsely asserting that the REIT had withdrawn its attempts to force SCC out of the buildings. The two parties mutually agreed last week to extend the deadline for SCC to respond to the suit into February, and Matros told SNN that the new deal should resolve the issue completely.
Genesis Exodus update
Sabra also provided an update on its ongoing “Genesis Exodus,” the term Matros has used to describe the REIT’s near-total divestiture of SNFs operated by Genesis Healthcare, Inc. (NYSE: GEN).
The company reached an agreement to sell the final three Genesis properties slated for disposition, Sabra announced Sunday, for a total price of $33.2 million. The REIT will continue to receive residual annual rent of $10.4 million from the operator for a little more than four years after the sale is complete.
Sabra will also still own eight Genesis-operated facilities once the “exodus” has concluded, bringing the REIT an additional $10.4 million in annual rents.
The last three properties hung around in Sabra’s portfolio longer than expected due to the prolonged government shutdown, which finally concluded late last week; because the transaction was contingent on the receipt of certain Department of Housing and Urban Development-insured loans, the REIT was unable to complete the transaction as quickly as presumed.
Prior to Sunday’s announcement, the last major wave of Genesis sell-offs came in late December, when Sabra offloaded 13 properties for a total sale price of $75.7 million.