COO Mike Beal said.
Dallas-based Senior Care Centers LLC has filed for bankruptcy, the company announced Tuesday, citing cuts in reimbursement and payments from private insurers, “burdensome” debt and “ballooning” rent payments.
“This plan allows us to address certain financial issues while continuing to provide the critical care and support on which our residents rely while we work to transition certain communities to new operators,” Chief Operating Officer Michael Beal said in the announcement.
The company operates more than 100 facilities in Texas and Louisiana that serve a total of almost 10,000 patients and residents and employ approximately 11,000 people. In addition to skilled nursing and short-term care buildings, the company offers memory care at 24 locations, assisted living at 10 stand-alone or combination sites, and independent living at two continuing care retirement communities, according to its website.
Senior Care Centers said it expects all facilities to continue to operate without interruption. It also expects to continue to pay vendors and employees during the bankruptcy process.
“All of the actions we are announcing today have one clear and overriding goal – to ensure every single one of our patients and residents continue to receive safe and comfortable care now and in the future,” Beal said.
REITs divesting, monitoring
Sabra Health Care REIT announced in November that it was selling the 36 skilled nursing facilities and two senior living communities operated by Senior Care Centers in its portfolio. The real estate investment trust expects the sale to be complete early next year.
During the third quarter, Senior Care Centers defaulted on its Sabra leases and had been operating on a month-to-month basis, Sabra executives said.
“This is something that we would have preferred to avoid, and we expended a lot of effort to give Senior Care Centers and the board as many opportunities as possible to get to a different place,” Sabra Chairman and CEO Rick Matros said on an earnings call. “Despite best efforts, they weren’t able to do that.”
Among the benefits of divesting the properties, Matros said, is reducing the REIT’s exposure to skilled nursing, especially in Texas, where several markets have an oversupply of beds.
LTC Properties executives also previously said they were monitoring the Senior Care Centers communities in the REIT’s portfolio in light of the Sabra announcement. The company was not in default with LTC at the time of the trust’s third-quarter earnings call in November.
“We’ve also reached out to some of our other Texas operators,” LTC Properties CEO Wendy Simpson said at the time. “Since this has become public information, we’ve talked to them about their interest in these properties, should they have any.”
Update, Dec.5:
Senior Care Centers leases 11 skilled nursing facilities in Texas under a master lease from LTC Properties, the REIT said Wednesday. Annualized rental revenue from the company is approximately $15.8 million ($14.2 million on a cash basis), which represents 9.7% of LTC’s annualized revenue as of Sept. 30, the REIT said.
“As of this filing, LTC has not received rent for December,” LTC said. “As security under the lease, LTC holds a letter of credit in the amount of approximately $2 million, maintenance and repair escrows of approximately $2.2 million and property tax escrows of approximately $1.8 million. LTC had previously requested a consensual termination of the lease and now has strongly urged Senior Care to reject LTC’s lease in bankruptcy. LTC is currently discussing these properties with another Texas operator under similar terms as the Senior Care lease.”
Updated Dec. 5 to include information from LTC Properties.
