Seniors Housing Operator HCR ManorCare to File for Bankruptcy Following $385M Rent Delinquency
BETHESDA, MD. — HCR ManorCare, an Ohio-based seniors housing operator, will file for Chapter 11 bankruptcy protection and transfer its management operations to its landlord, Quality Care Properties (NYSE: QCP).
HCR ManorCare, which currently manages about 320 seniors housing properties, is the second-largest skilled nursing operator in the country. The company’s management contracts also span the assisted living, hospice and home care sectors.
The move follows HCR’s declaration of approximately $385 million in delinquent rent payments. Reuters reports that the company’s total debt is roughly $7.1 billion and that QCP will put its own management teams in place at properties previously managed by HCR.
Under the terms of the agreement, HCR’s operating subsidiaries will not file for Chapter 11 bankruptcy protection. The parent company’s name and brand will also remain in place, but as a wholly owned subsidiary of QCP.
QCP itself is a spin-off of healthcare REIT HCP (NYSE: HCP), which created the company specifically to remove HCR ManorCare’s 320 properties from its portfolio. QCP and HCR have been in negotiations for months regarding hundreds of millions in unpaid rent. In addition, QCP will give up its REIT designation, as it will now both own and operate its properties.
“This agreement facilitates a consensual resolution that provides stability and flexibility for the business,” says Mark Ordan, QCP’s CEO. “We see this as the best available opportunity to improve a challenging situation.”
“We considered every possible option and determined that entering this agreement to take direct ownership of our tenant best positions QCP to reposition the business to realize the potential of its properties for QCP shareholders,” continues Ordan.
QCP’s stock price closed at $16.26 per share on Friday, March 2, down from $19.15 per share a year ago.
— Jeff Shaw and Taylor Williams