Murfreesboro, TN-based National Health Investors said Monday that it is working toward a potential out-of-court settlement to resolve its lawsuit against Toledo, OH-based Welltower and some of its subsidiaries over past-due contractual rents.
As previously reported, NHI sued Welltower and some of its subsidiaries in December in the Delaware Court of Chancery, claiming at the time that the companies owed NHI more than $14.1 million in back rent related to Holiday Retirement properties.
NHI said at the time that Welltower had made no contractual rental payments due under the master lease for the Holiday communities since NHI had acquired them in July. Total unpaid rent exceeded $16 million as of late January, the REIT said. NHI continues to hold an $8.8 million security deposit, which it said it anticipates applying to past due rent in the first quarter.
NHI has been looking to “expeditiously”’ resolve the lawsuit and move the remaining Holiday communities to new operators, the real estate investment trust announced in a January business update. The REIT announced Monday that a hearing in the lawsuit that was scheduled to occur in the Delaware Court of Chancery on Feb. 25 was “removed from the court’s calendar as the parties are currently working toward a potential settlement of the dispute.”
The move to out-of-court discussion comes as NHI is working to optimize its portfolio. Less than a year ago, NHI announced that it would be pruning underperforming assets, transitioning properties to new tenants and restructuring leases to move into a stronger financial position, CEO and President Eric Mendelsohn said last week on an earnings call. He said that the REIT had sold 23 properties through January, for net proceeds of approximately $244 million, including 19 underperforming senior housing properties that sold for a collective $195 million.