Invesque Inc. (TSE: IVQ.U) on Thursday indicated that talks to finalize the details of a transaction to cut its exposure to Symphony Care Network, its largest skilled nursing operator tenant, continue — while recognizing no revenue from Bridgemoor Transitional Care.
In the third quarter of 2020, Invesque reported that it was taking steps to reduce its Symphony portfolio, with plans to either sell or transition operations at half of the operator’s 16 buildings under Invesque’s control.
The Carmel, Ind.-based real estate investment firm at the time indicated that it had signed a non-binding memorandum of understanding with Symphony for the transaction.
On Thursday, Invesque chairman and CEO Scott White said that the deal “is progressing as we work through the details.”
“There’s still some wood to chop between now and closing,” White said on the call. “We’re optimistic that our team and Symphony will continue to work towards a mutually beneficial solution that sets all parties up for success over the long term.”
While Invesque believes the transaction will have a negative effect on the firm’s adjusted funds from operations (AFFO), it will be positive in terms of concentration risk; White said he believed the company would be in a position to provide more information soon.
Portfolio management will be a key area of focus, chief financial officer Scott Higgs said.
“We’re excited about the new potential framework with Symphony and we look forward to continuing our long standing relationship with their team,” he said on the call. “Although, we expect short-term reduction in rental income received under the new structure in 2021, we anticipate the rental revenue will stabilize in 2022.”
For Bridgemoor Transitional Care, stress is ongoing; in the third quarter, it contributed no revenue, and in the fourth quarter, Invesque again did not recognize revenue from the operator, which primarily serves patients immediately after a hospital stay — and was battered by the suspension of non-emergency procedures in acute care at different points over the course of 2020. Bridgemoor has four locations in the state of Texas.
“The pandemic and national weather disasters have significantly disrupted hospital operations in Texas,” Invesque chief investment officer Adlai Chester said on the call. “As a result, Bridgemoor’s operations have suffered far more than others in our portfolio, as they’re sitting in the proverbial eye of the storm in many respects.”
Invesque has previously reserved against the full amount of its working capital loan to Bridgemoor and will “continue to explore all options” for the portfolio. According to Invesque’s year-end financial statement for 2020, the loan receivable to Bridgemoor Transitional Care Operations, LLC was $1.87 million as of December 31, 2020, issued June 5, 2019. It has a maturity date of June 5, 2035.
Invesque reported $54.38 million in revenue for the fourth quarter ending December 31, 2020, and a net loss of $36.31 million in the same time period. For the full 2020 year, it reported revenue of $217.39 million and a net loss of $184 million.