LTC Properties (NYSE: LTC) and PruittHealth are entering into a joint venture to purchase three Florida nursing homes for $62 million.
This marks the first time that the real estate investment trust (REIT) and nursing home operator are working together, both companies shared Monday.
The three facilities were constructed between 2018 and 2021 with a combined licensed bed count of 299 – primarily offering private rooms.
Westlake Village, Calif.-based LTC will be majority owner with its $62 million contribution to the joint venture, according to the company.
“This was us being flexible and listening to our operator and meeting their needs, meeting them where they were, what they wanted to accomplish from the transaction,” LTC CFO Pam Kessler told Skilled Nursing News. “It’s a big credit to our business development team and the relationship that they’ve built with the principals there at Pruitt[Health].”
The three properties will be operated by a PruittHealth affiliate under a 10-year master lease, with two five-year renewal options. LTC anticipates net rent of about $777,000 during the second half of 2022 and $4.6 million during 2023.
LTC Properties CEO Wendy Simpson said PruittHealth is “exactly the type of operator with whom we want to grow,” citing the Norcross, Ga. operator’s more than 50 years of expertise and large footprint in the southeastern United States.
While both parties decided on a JV for this transaction, Kessler told SNN they want to stay flexible with whatever type of transaction would work well for PruittHealth.
“It might be a joint venture similar to this, it might be an add on to this joint venture or it could be something different, it could be preferred equity or mezzanine debt,” added Kessler. “It’s just really dependent on what the operator needs; we we pride ourselves in being creative and flexible with our financing structures.”
The investment also provides LTC with newly built nursing homes, Simpson said in a statement.
LTC has been focused on newer post-acute skilled nursing home properties, Kessler said, because as the industry expands, that’s the side of the business that will be growing the fastest as the government looks to the lowest cost provider for quality care.
“Patient acuity has been going up in skilled nursing for years now. The newer properties are purpose built for higher acuity, attracting the higher acuity patients. That’s where we see our part of the business growing,” added Kessler.
PruittHealth, meanwhile, must continue to find innovative solutions to deliver “seamless and superior post-acute care” in the face of inflation and increased wages, CEO Neil Pruitt Jr. said in a statement.
Its joint venture with LTC is a way to be innovative, he added. PruittHealth has been an operator since 1969 and since developed a vast network of health care services for patients, according to Pruitt.
Including the Florida transaction, LTC has invested more than $170 million year-to-date and remains focused on identifying new financing vehicle opportunities for its operators, including accretive triple net lease structures and structured finance products like unitranche loans, mezzanine loans and preferred equity investments.
Prior to the PruittHealth JV, LTC inked a $52 million deal to acquire four SNFs in Texas, this time with Park Ridge, Ill.-based Ignite Medical Resorts as the operator.
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