Welltower is largely ending its operating relationship with skilled nursing operator Genesis HealthCare, the real estate investment trust announced late Tuesday.
Welltower plans to terminate leases with Genesis for 51 properties and transition operations to leading regional skilled nursing operators, including ProMedica. The REIT will provide Genesis with an $86 million lease termination fee upon the successful transition of all properties. The real estate transactions total $880 million in value, or about $144,000 per bed, according to Welltower.
“The quality of the company’s portfolio and long-term growth prospects will be significantly enhanced following the transition of assets to regional operators and through the future deployment of proceeds received through these transactions,” Shankh Mitra, Welltower’s CEO, said in a statement.
The firm expects to generate proceeds of $745 million and annualized earnings dilution of 5 cents per share after the reinvestment of proceeds at an assumed 6% yield.
The REIT on Tuesday also announced two transactions involving the firm’s joint venture with ProMedica, including that it is divesting a 25-property portfolio of “non-strategic” skilled nursing buildings for $265 million. The facilities were acquired two-and-a-half years ago when the Welltower/ProMedica partnership was formed in 2018. The facilities are in eight states and are an average of 41 years old.
Second, nine PowerBack rehabilitation facilities, operated by Genesis, will be contributed into Welltower’s joint venture with ProMedica and master leased to ProMedica. The properties mostly are purpose-built, state-of-the-art rehabilitation facilities, and reimbursements are received primarily from Medicare and commercial insurance providers, Welltower said.
The PowerBack facilities are intended to enhance ProMedica’s post-acute capabilities by enabling the health system to further strengthen its ability to work with referral sources and provide the care needed by patients and their families in these markets according to ProMedica. They will be rebranded under the ProMedica Senior Care name, a brand launched by the firm in October.
“ProMedica has the unique opportunity to improve its senior care portfolio through these two important transactions,” said Randy Oostra, ProMedica president and CEO. “The transactions are a testament to the strong partnership we have formed with Welltower and our shared focus on innovation and quality patient care. Moreover, the transactions announced today with Welltower follow other recently announced partnerships that collectively allow ProMedica to strengthen its position in strategic markets. Most importantly, we will be able to expand the high-quality care our communities have come to expect from us.”
This article appeared in the McKnight’s Business Daily, a joint effort of McKnight’s Senior Living and McKnight’s Long-Term Care News.