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Quality Care warns of receivership for big U.S. nursing home chain
July 21, 2017 / 8:48 PM / 5 months ago

Quality Care warns of receivership for big U.S. nursing home chain

CHICAGO (Reuters) - U.S. healthcare landlord Quality Care Properties Inc (QCP.N) said on Friday that it can seek receivership for the country’s second-largest nursing home chain, HCR ManorCare, after it failed to make a $79.6 million payment for current and past rent.

In a statement, Quality Care said it had delivered a notice of default to HCR ManorCare, its main tenant, regarding the missed payment, which Quality Care said triggers immediate payment of $265 million in additional overdue rent.

HCR ManorCare spokeswoman Julie Beckert declined to comment on the threat of receivership.

U.S. nursing homes have struggled to reconcile a tumultuous, low-margin business with declining reimbursements and increasing costs for medical supplies, insurance, aging buildings and litigation.

To protect their investments, lenders and landlords of distressed healthcare operators can ask the courts to appoint a receiver to take control of the business in the event of a default.

In the case of Toledo, Ohio-based HCR ManorCare, Quality Care said the default allows it “to terminate the master lease, appoint receivers or exercise other remedies with respect to any and all leased properties.”

Quality Care, one of the largest U.S. healthcare landlords, last month said it was seeking up to $500 million to acquire HCR ManorCare. On Friday it said it remains in talks with the skilled nursing home operator about the default and other matters.

    HCR ManorCare -- which also operates assisted living facilities, memory care communities, outpatient rehabilitation clinics and home health care agencies across the country -- confirmed ongoing discussions with its landlord.

    In addition, HCR ManorCare received a $550 million loan from Centerbridge Partners this week to repay an existing term loan and outstanding loans, Beckert told Reuters in an e-mail.

    Quality Care Properties was spun off from HCP Inc (HCP.N), a large healthcare real estate investment trust, in 2016 as HCR ManorCare was in decline.

    Private equity firm Carlyle Group bought HCR ManorCare in a 2007 leveraged buyout for $6.3 billion and sold the properties to HCP for $6.1 billion in 2010.

    Reporting by Tracy Rucinski; Editing by Tom Hals and Leslie Adler

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