Two Blueprint Healthcare Real Estate Advisors teams helped a couple of institutional owners divest or find new tenants for their senior care assets. Michael Segal and Gideon Orion first represented a REIT in the re-leasing of its 143-bed skilled nursing facility in San Antonio, Texas. Built in 1967 about 15 minutes north of downtown, the facility maintained a four-star rating from CMS, the highest in the area. Despite three regional hospitals within 10 miles of the facility and its enrollment in the state’s QIPP managed Medicaid program, the SNF struggled with census.
Part of a larger portfolio owned by the REIT and operated under a master lease structure with the existing tenant, the facility’s operations were transitioned to a growing provider with a presence in the Houston area under a modified lease arrangement with the REIT. The new operator should (hopefully) be able to improve census and cash flow by taking advantage of the facility’s year three QIPP enrollment.
Then, Messrs. Segal and Orion were joined by Steve Thomes, Ben Firestone and Christopher Hyldahl to sell two skilled nursing facilities located about 30 minutes apart in Leominster and Gardner, Massachusetts. Both were purchased as part of Lindsay Goldberg’s and Omega Healthcare Investors’ 2016 acquisition of 64 Welltower properties that were operated by Genesis HealthCare.
As part of that $1.1 billion deal, Lindsay Goldberg owned 85% of the portfolio and Omega had a 15% share, worth about $50 million. They were all then leased to Genesis under a 15-year master lease with initial annual rent of $103.9 million, with annual escalators of 1% after year one, 1.5% after year two and 2% thereafter. We imagine those escalators started to bite after a few years, and especially in 2020.
The facilities in question are licensed for 106 beds (Leominster) and 96 beds (Gardner) and were built in 1960 and 1971, respectively. They were well maintained and boasted four- and five-star ratings from CMS, but ownership and Genesis decided to strategically exit the assets. Blueprint identified an in-state ownership group and its operating partner with a desire to expand in that part of the state as the acquirer. The deal was structured before the onset of COVID-19 and finally closed upon receipt of licensure and change of ownership approval.