LTC Properties (NYSE: LTC) late Thursday announced that it will transition 11 skilled nursing facilities currently controlled by Abri Health Services/Senior Care Centers to a new operator after sending a notice of default over non-payment of March rent.
The Texas-based HMG Healthcare will assume operation of the 1,400-bed portfolio sometime in the second quarter of 2021, according to the Westlake Village, Calif.-based LTC.
“HMG has been a partner of the company since 2019, operating two properties for the company, which has more than a decade-long relationship with HMG’s principals,” the real estate investment trust (REIT) said in a Thursday disclosure. “Subsequent to the transition, HMG will operate 13 Texas properties for the company.”
Abri/Senior Care Centers owes a minimum monthly rent of $1.2 million to LTC, according to the REIT, with the default notice sent this past Monday.
“The company has submitted draws under the lessee’s letters of credit posted as security for the lessee’s performance under the master lease, and will apply proceeds received to the lessee’s obligations under the master lease and the company’s damages,” LTC wrote.
The REIT ended up filing a lawsuit against Senior Care Centers in May 2020 over a proposed ownership change.
Abri, the new name for Senior Care Centers, earlier this week announced its intention to walk away from 10 LTC-owned facilities that had “previously been the subject of a dispute.” The announcement included the disclosure that the current management group had assumed ownership of the chain, which now operates 22 facilities across Texas — with plans to grow as both an owner and operator of more nursing facilities, according to chief financial officer Anthony Arnaudy.
“We are confident the future of our business will be as both an owner and operator,” Arnaudy said in a statement. “This approach will ensure ever-improving care for our residents while providing greater opportunity and flexibility for our investors.”
Senior Care Centers had been LTC’s second-largest tenant, accounting for 9.6% of net operating income, according to a brief analysis of the transaction from BMO Capital Markets.
“Given the amount of government support and prospects for a recovery, we were surprised by the timing of Senior Care’s default,” BMO observed in its note.