Toldeo, OH-based Welltower stock dropped by 6% to 8% Wednesday after Hindenburg Research released a report calling a joint venture partnership between the real estate investment trust and New York-based provider Integra Health a “sham” and a “shell game.”
“On this news Welltower’s shares fell sharply in value thereby damaging investors,” the Portnoy Law Firm noted. Portnoy has advised the REIT’s investors that its firm has initiated an investigation into possible securities fraud and may file a class action lawsuit on behalf of investors, the company announced Wednesday.
In November, Welltower announced plans to move 147 skilled nursing facilities operated by Toledo, OH-based ProMedica Senior Care into a joint venture between Welltower and Integra Health. At the time, Welltower CEO and Chief Investment Officer Shankh Mitra touted “Integra’s focused asset management and vast network of strong regional providers.”
Authors of Hindenburg’s report, however, said they believe that the announced partnership “is little more than a sham designed to obfuscate weakness in the portfolio.”
“Despite the high praise from Welltower’s management and claims of being well-experienced in skilled nursing, Integra seems to barely exist,” the report continues. “Far from having a long operating history, Integra’s entity was registered six months ago, according to Delaware corporate records.”
The short report also states that no evidence exists that Integra’s 29-year-old CEO, David Gefner, has managed SNFs or other healthcare facilities. Gefner is the founder of a private equity firm called Perigrove. A LinkedIn profile under Gefner’s name says that he has worked for Integra for a year.
The Hindenburg report also said that the firm could find no evidence of Perigrove’s claim to have raised $3 billion from investors for various real estate projects, and that Perigrove is not registered with the Securities and Exchange Commission as an adviser. Hindenburg researchers said they found Perigrove’s offices “next to an auto parts store in a worn-down building in a strip mall” rather than at the prominent Manhattan address touted by the company.
The partnership, according to the report, shows signs of “red flags” reminiscent of a 2021 restructuring with “troubled” long-term care provider Genesis Healthcare.
While Welltower didn’t respond to a request from McKnight’s for comment Thursday, ProMedica released a statement clarifying Integra’s expected role with the facilities.
“We are aware that false information about the transaction involving ProMedica’s senior care facilities has been circulating due to an investor opinion piece referenced as a research report,” the statement said. “That opinion piece contains many inaccuracies — the most obvious of which is the fact that Integra is not the proposed operator in this transaction.”
