LTC Properties issued a notice of default to Thrive Senior Living on April 5, as well as a demand for payment of $2.6 million, the Westlake Village, CA-based real estate investment trust’s chairman, CEO and president, Wendy Simpson, said Friday.
The REIT is looking to move the six Thrive communities in its portfolio to other operators, she said.
“During the first quarter, Thrive paid $1.4 million of deferred rent and $740,000 of past-due rent that was accrued and outstanding as of Dec. 31, 2018,” LTC Executive Vice President, Chief Financial Officer and Secretary Pam Kessler said during the REIT’s first-quarter earnings call. “Additionally, they paid property tax impounds for the first quarter but have not paid rent to date in 2019.”
The $2.6 million payment, Simpson said, represents past due rent through April.
When asked why the company hasn’t paid 2019 rent, Clint Malin, executive vice president and chief investment officer, said, “It’s a function of cash flow at the communities.”
“We are continuing to evaluate all options related to the Thrive portfolio and recently engaged a broker to market our Jacksonville, FL, building,” Simpson said. That community is Thrive Memory Care at Deerwood. “We have entered into letters of intent with two strong regional operating partner candidates for the other five properties.”
Thrive operates a total of 20 communities, according to its website.
Simpson said LTC continues to build a pipeline and evaluate opportunities — mostly private-pay assets, Malin added — but that “closing transactions has been slower than we would like, as a pricing disconnect remains between buyers and sellers.”
“As long as private equity continues to pour money into the marketplace at what we believe are unreasonable valuation and risk, this discount is likely to continue,” she added.
The REIT also provided updates on other operators in its portfolio.
Senior Care Centers. Senior Care Centers, which filed for bankruptcy in December, has been given an extension through July 2 to affirm their leases, Simpson said. The court also approved the transfer of several properties owned by other landlords, she added. Senior Care was operating 11 skilled nursing facilities for LTC. “Should we get our properties back, we are prepared to quickly transition them to a different operator,” Simpson said. The company is current on rent and has made some improvements to its properties during the bankruptcy process, she added.
Preferred Care. Preferred Care operates 23 properties for LTC and wants to reduce that number, so LTC is marketing most of the properties, Simpson said. “The remaining properties continue to be operated by an affiliate of Preferred Care, re-leased to another operator, marketed for sale or a combination of these options,” she said.
Anthem Memory Care. Anthem Memory Care has paid monthly rent and escrows to date in 2019, Simpson said. On LTC’s fourth-quarter earnings call in March, the CEO had said that Anthem had “turned the corner.” In 2017, the REIT had issued a default notice on a master lease covering 11 memory care communities operated by Anthem.
Frontier Management / Generations. LTC has moved two senior living communities in Clovis, CA, from Frontier Management to Portland, OR-based regional operator Generations, which operates five communities in four states. The transitioned communities have a total of 180 independent living, assisted living and memory care units. “The new master lease has a 10-year term with an annual initial cash rent of $2.9 million, which is the same as the rent we were collecting from Frontier,” Malin said. “The master lease rents are fixed for five years and include certain credit enhancements. The agreement also includes a purchase option for Generations, which can be exercised beginning in 2024.”
Fields Senior Living. Fields Senior Living, which began operating two former Brookdale Senior Living communities, in Bakersfield and Vacaville, CA, for LTC in May, also will operate a community under development, Malin said. Weatherly Court, a 78-unit assisted living and memory care community in Medford, OR, is expected to open in the fall on an existing campus that already includes 89-unit independent living building operated by Fields.
Village Park Senior Living. Village Park Senior Living, a new operating partner for LTC, will operate a nine-acre campus in the Buckhead area of Atlanta when it opens in 2020, Malin said. The community, named Corso Atlanta, will include 21 independent living cottages, 82 independent living units, 75 assisted living units and 26 memory care units.