ProMedica, Welltower reach deal to purchase HCR ManorCare
Acquiring HCR ManorCare Inc. in a
"It seemed completely logical to us,"
VIDEO:
The complex deal, in which
ManorCare, currently in Chapter 11 bankruptcy, operates nearly 500 assisted living, skilled nursing, and home-health and hospice centers. Its bankruptcy was planned so that it would become the property of
Under the new deal,
ManorCare chose bankruptcy after failing to meet monthly rent obligations of about
A new 15-year lease will charge less than half of what ManorCare had been paying, yet still allow
The deal is expected to close late in the third quarter.
Acquiring ManorCare has been a ongoing quest for
The deal gives
Discussions to acquire ManorCare occurred even before it defaulted on its rent to Quality Care last June,
When former ManorCare CEO
But the partnership remained persistent and eventually the deal came to fruition.
The current ManorCare management team headed by CEO
"I think this is a great day for our company and a great day for
"What's really exciting here is you've got two really great organizations that have been partnering."
"And that means job security for our people and the opportunity to create more jobs going forward," he said. "...I think this is about as good as it gets for our employees quite honestly."
In a conference call with
"You've heard me discuss our strategy of aligning
The
"I think this is a very compelling opportunity for both
"You have to think about these very well-located buildings that they will have a joint venture interest in and that they are investing in. They see them as alternate sites to deliver care. I've said this for now a couple of years. Skilled nursing has to be reinvented. The real estate is very good quality real estate and this real estate is in compelling markets where
Quality Care as of the end of 2017 owned 320 facilities -- 292 under the ManorCare banner -- across 29 states, according to
As part of ManorCare bankruptcy proceedings,Quality Care announced plans to sell 74 noncore skilled-nursing or senior-housing ManorCare facilities with the proceeds going to pay off debt.
With
"They would just start to sell off parts of it, and what would be left? ... So you need to think of that and you just don't know what would happen,"
"Even if we were to sell assets to reduce our debt, that would not of course change the directory and health of our core business," he said, adding it would have been very difficult for his firm to take over and operate ManorCare the way it needed to be run.
"The fact is it would have been a 10 person REIT taking over a 40,000-plus person operating platform. To make it viable we were looking to possibly substantially change the platform and its operating footprint to change the operations and address its decline," he said.
"Together
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