LTC Properties has completed the transition of all of its Thrive Senior Living communities to other operators, executives said Friday on the Westlake Village, CA-based real estate investment trust’s second-quarter earnings call.
The move comes as the operator looks to diversity its asset and operator base, LTC Chairman, President and CEO Wendy Simpson said.
LTC previously announced that it moved two Thrive communities to Trilogy Management Services and one to Veritas on June 1, and that it was moving two additional communities to Veritas on July 1. The last Thrive community in the LTC portfolio, in Jacksonville, FL, moved to Affinity Senior Living on Aug. 1.
The Jacksonville property, a 60-unit memory care community, was “multichallenged” under Thrive, Simpson said. LTC had intended to sell Thrive Memory Care at Deerwood, but the REIT decided to keep the property in the portfolio, she added, because “the prices we were getting were not indicative of the value of the property” and because the Jacksonville market looks promising.
“We decided that for our future portfolio, it made much more sense for us to keep it and get the right operator in there,” Simpson said, adding that Affinity is “very excited about having that property.”
LTC gave Affinity a year of free rent under a new 10-year lease, LTC Executive Vice President and Chief Investment Officer Clint Malin said. Rent will increase to $450,000 in the second year and to $600,000 in year three and thereafter, he said.
REIT executives provided updates on other operators in the LTC portfolio, too:
- Senior Care Centers continues to work through the bankruptcy process since filing in December, Simpson said. “Senior Care Centers recently filed a motion to assume the LTC lease, and we filed an objection shortly thereafter,” she said. “In the interim, Senior Care Centers remains current on their 2019 rent and escrow amounts.” The motion to assume is scheduled to be heard in court on Aug. 30, Malin said. LTC would like to transition the Senior Care Centers communities in its portfolio to another operator if the court approves, he said.
- Preferred Care operates 23 properties for LTC, Simpson said, but the REIT is in “active negotiations for all of these properties.” The negotiations include sales and leases, she said, and “it’s possible that we will sell some or all of the Preferred Care portfolio prior to year-end.”
- Anthem Memory Care “operations continue to improve, and they are meeting our increased rent expectations as reflected in our 2019 guidance.” Simpson said. As a result of Anthem’s default under its master lease in 2017, LTC said in supplemental information released in conjunction with the call, the company is paying partial annual cash rent of $7.5 million throughout Dec. 31. “We receive regular financial performance updates from Anthem and continue to monitor Anthem’s performance obligations under the master lease agreement,” LTC said.
“We are continuing to successfully execute our plan and are confident that the current portfolio challenges under our control will be fully resolved by the end of this year or early next year,” Simpson said. “At the same time, we have been working toward building a more diversified asset and operator base and positioning LTC to deliver long-term and sustained growth.”
About the REIT’s pipeline, Malin said, “We are seeing a few select opportunities, from a price point, on the private-pay side that we are opportunistic about that we can convert to transactions. But it’s trying to find needles in the haystack that are priced appropriately, and that has been a challenge.”
LTC, he said, has two signed purchase agreements totaling approximately $38 million, one for a new 90-bed skilled nursing center operated in the Kansas City market by Ignite Medical Resorts, a new operator for the REIT, and the other to acquire land and development of a new 90-bed skilled nursing center, also to be operated by Ignite in the same market.
“We are reviewing other opportunities as well, spanning acquisition in real estate joint ventures, primarily in the assisted living and memory care space with operators new to LTC,” Malin said.
For more on the call, see the article in sister publication McKnight’s Long-Term Care News.