Conversations by Quality Care Characteristic (NYSE: QCP) to take control of troubled experienced nursing center operator HCR ManorCare Inc. have reached an impasse, according to a brand-new filing with federal securities regulators.
Quality Care Characteristic (NYSE: QCP )submitted an update with the & Securities & Exchange Commission stating that “celebrations have actually been unable to reach contract on terms of an out-of-court acquisition.”
Last month, Quality Care Characteristic announced it remained in discussions with HCR ManorCare– its primary renter– about HCR ManorCare’s default under its master lease. Quality Care was looking for a dedication from HRC ManorCare’s loan providers for acquisition financing of up to $500 million to be used to refinance HRC’s current financial obligation and supply working capital. Such a move could have triggered QCP to lose its REIT status.
Quality Care Residence also reported this week that since the close of company on July 3, 2017, HCR cannot make minimum rent payments for the month of July.
QCP stated personal discussions about restructuring options are continuing.
“QCP believes it is necessary that any restructuring offer the QCP-owned centers and their experienced and committed workers with the liquidity, resources, capital expense and other support needed to make sure the long-lasting connection of exceptional client and resident care,” the REIT reported.
HCR ManorCare is the occupant and operator of substantially all QCP’s residential or commercial properties which represents 94% of the REIT’s overall earnings.
Quality Care Characteristic was formed in 2016 when HCP Inc. (NYSE: HCP) spun off HCR ManorCare and other health care-related residential or commercial properties. While freeing itself from ManorCare made it possible for HCP to concentrate on higher-growth opportunities in its varied healthcare realty portfolio, it saddled Quality Care Characteristics with the prospect of a difficult turn-around situation.
As of March 31, Quality Care’s holdings consisted of 257 post-acute/skilled nursing residential or commercial properties, 61 memory care/assisted living properties, one surgical healthcare facility and one medical office building across 29 states. HCR Manor Care leases 292 of the 320 homes.
HCR ManorCare runs more than 500 knowledgeable nursing and rehab centers, memory care communities, helped living centers, outpatient rehab centers, and hospice and home health care firms across the country under the names of Heartland, ManorCare Health Services and Arden Courts.
Following Quality Care Properties’ announcement last month, score company Moody’s Investors Service reduced QCP’s and exposed the potential for more downgrade
The rankings downgrade shows Moody’s view that continued interruptions in capital from HCR will lead to product degeneration in QCP’s operating revenues and liquidity in the next 12-18 months.
The ongoing rankings review will concentrate on QCP’s ultimate tactical instructions, its ability to reach an out-of-court lease restructuring with HCR and the impact of the restructuring on QCP’s cash flows and HCR’s EBITDAR coverage.