The settlement agreement between Sabra Health Care REIT and Senior Care Centers originally inked in February has been approved in bankruptcy court, Sabra announced Friday.
The Irvine, CA-based real estate investment trust said it “entered into agreements to sell 28 facilities owned by Sabra and currently operated by Senior Care Centers for $282.5 million and to discharge our claims against Senior Care Centers in exchange for certain settlement payments from Senior Care Centers as well as their assistance in facilitating an orderly transfer of the Senior Care Centers Sale Facilities to the proposed buyer’s designated operators.”
The settlement agreement, among other things, provides for $9.5 million in payments to Sabra, $5 million of which will be payable when the sales of the properties close on Monday, Sabra said.
The remaining $4.5 million will be paid on or before July 1.
In connection with the settlement payments, Sabra said it will recognize $6.2 million of post-petition rent.
Sabra previously said it had issued notices of default and lease termination due to nonpayment of rent under the terms of Senior Care Centers’ master leases during the third quarter of 2018. Deposits were “fully exhausted” to pay contractual rents, and Senior Care was operating the communities on a month-to-month basis, the REIT said at the time.
Senior Care Centers, the biggest single operator in the Sabra portfolio, filed for bankruptcy in December, citing cuts in reimbursement and payments from private insurers, “burdensome” debt and “ballooning” rent payments.
The REIT subsequently sued the company in bankruptcy court, asking a judge to order Senior Care Centers to surrender two senior living communities and 36 skilled nursing facilities because their lease status was jeopardizing Sabra’s sale of the properties. The REIT later dropped the lawsuit in favor of a settlement.
Senior Care Centers also is represented in Westlake Village, CA-based LTC Properties’ portfolio via 11 skilled nursing facilities. During the REIT’s fourth-quarter earnings call in March, LTC Chairman, President and CEO Wendy Simpson said the REIT was “proactively negotiating a potential new master lease with a different Texas-based operator familiar with these assets.”