Dallas-based operator Capital Senior Living and Irvine, CA-based real estate investment trust Healthpeak Properties (formerly HCP Inc.) are ending their relationship, Capital said Tuesday in announcing a new binding agreement.
“This mutually beneficial agreement between Capital Senior Living and Healthpeak accelerates the strategic priorities of both companies,” said Kimberly S. Lody, president and CEO of the Dallas-based operator.
A master lease agreement scheduled to mature in April 2026, involving six of the 15 Capital communities that were in Healthpeak’s portfolio as of October, has been terminated early and was converted to an interim management agreement while Healthpeak markets the properties for sale, according to Capital.
The early termination of the master lease agreement involving the other nine communities had been announced in October during Healthpeak’s third-quarter earnings call. That agreement originally was due to mature this October.
On the October call, REIT officials said that their plans were that three of the nine properties would be managed by Atria Senior Living, one would be managed by Discovery Senior Living and the other five would be sold to third parties. In a Tuesday filing with the Securities and Exchange Commission, however, Healthpeak said that management of one of the communities had been transitioned to Discovery and that the other eight will be sold.
“The early termination of both of our master leases with Healthpeak immediately reduces our lease exposure and improves our consolidated cash flow and liquidity,” Lody said. “We appreciate the partnership we have had with Healthpeak and look forward to smooth and efficient sales of these communities.”
As part of the agreement, Capital will release approximately $1.9 million of security deposits held by Healthpeak.
After all of the communities are sold, the company expects its cash position to improve by approximately $6 million annually, and its lease liabilities will be reduced by approximately $33 million.
Capital was the 10th largest senior living operator on the 2019 AHSA 50 list published by the American Seniors Housing Association. As of Sept. 30, according to an SEC filing, the company operated 128 senior housing communities (82 owned and 46 leased) in 23 states, with a total capacity for approximately 16,400 residents.