Ignite Enters Texas as Operator of 4 SNFs Acquired by LTC Properties for $52M

Park Ridge, Ill.-based Ignite Medical Resorts is entering Texas for the first time as the operator of four skilled nursing facilities acquired by LTC Properties (NYSE: LTC) in a $52 million deal. 

“We’re looking for strategic growth that fits our vision. For this project, it was for facilities in four major metro areas, all close to large hospitals,” Ignite CEO and Co-Founder Tim Fields told Skilled Nursing News.

The properties encompass 339 beds and formerly were operated by Bridgemoor Transitional Care and held in a joint venture with Invesque (TSX: IVQ).

​​The transaction was part of Invesque’s “continued strategic initiative” to streamline and strengthen its portfolio via disposition. The company announced three separate sales transactions totalling $75 million that occurred in late March and early April.

“This flurry of transaction activity is a continuation of our established strategy of reducing our investment concentration in skilled nursing and strengthening our balance sheet,” Scott White, CEO of the company, said in the news release announcing the deal.

The gross sale price of approximately $52 million generated proceeds which were used to fully satisfy the debt secured by the four facilities and the remaining proceeds will be distributed to the joint venture owners, according to the Invesque news release.

“All the buildings and physical plants are brand new,” Fields said. “For us it was very attractive in that it was multiple buildings in a new state with great physical plants and great location in major metro markets.”

He added that each of the buildings fit into Ignite’s medical resort model with private rooms and all the amenities of a “boutique hotel” as he wants to be the best short-term rehab provider in the market.

Texas continues to see flurry of SNF market activity

Fields described the four former Bridgemoor facilities as a “natural fit” for Ignite, which now has locations running down the center of the United States.

Ignite’s SNF footprint has reached 14 facilities across six states with one facility in Illinois, one in Wisconsin, five in the Kansas City Metro area and more spread around the center of the country.

Texas has seen a lot of activity in the SNF space in the last year.

Utah-based Eduro Healthcare has acquired nine buildings in Texas in just under a year, including two skilled nursing facilities added in January.

The Ensign Group (NASDAQ: ENSG) also announced it acquired the real estate and operations of The Waterton Healthcare and Rehabilitation last month, a 74-bed skilled nursing facility in Tyler, Texas.

While Fields obviously sees the attractiveness of growing in the state, the Ignite business model is different from a traditional skilled nursing facility in that they run 100% on skilled rehab and short stay patients.

“These buildings are not licensed for Medicaid,” Fields said.

When he looks to expansion it tends to be very “market specific” and more focused on the availability of hospital partnerships.

“[We ask] is the market deep enough from a hospital perspective and is the market deep enough from a staff perspective that we feel we can get the right people to make the building successful,” Fields said.

He said Ignite has another acquisition planned over the summer in Texas, giving the company five in the state.

The facilities in Fort Worth, Round Rock, San Antonio and Webster are between two to four

years old featuring amenities, décor and private rooms. Ignite will look to add clinical and therapeutic technological advancements, robotics equipment and more.

In conjunction with the transaction, former Bridgemoor President Mark Fritz is joining Ignite as chief strategy officer.

Ignite will operate the facilities under a 10-year lease with LTC, with two 5-year renewal options and a purchase option beginning at the end of the fifth lease year through the end of the seventh lease year. LTC expects rent for the properties to total about $1 million for the third and fourth quarters of 2022 and about $4.3 million in 2023.

Rent increases of between 2% and 4% will begin on the third anniversary of the lease and will be pegged to Medicare reimbursement rates.

“Our successful partnership with Ignite has been mutually beneficial, and we are excited to expand our relationship with them through the purchase of these four newer assets that reduce the average age of LTC’s portfolio,” LTC Chairman and CEO Wendy Simpson said in a press release. “Ignite is known throughout the industry for its premier centers that focus heavily on successful clinical outcomes, coupled with top-notch hospitality and patient care.”

Correction: Ignite Medical Resorts is headquartered in Park Ridge, Ill. SNN regrets this error.