LTC Properties sent a notice of default to Senior Care Centers (SCC) and ABRI Health Services after they failed to pay the March rent due as well as additional charges under the master lease. LTC will make draws under SCC’s letter of credit to cover the payments, which are a minimum of $1.2 million per month. The lease covers 11 skilled nursing facilities in Texas with approximately 1,400 beds operated by SCC.
Many of SCC’s properties have already been transferred to other operators, and it appears as if these 11 will be added to the total. LTC Properties expects to transition these 11 to Texas-based HMG Healthcare by the end of the second quarter. HMG currently operates 29 skilled nursing, independent living and assisted living communities, primarily in Texas. When the transition is complete, HMG will operate 13 properties in Texas for LTC Properties, and it will operate 40 properties in total.
HMG Healthcare has been a tenant with LTC Properties since 2019, operating two properties in Texas, and the principals of HMG have had a working relationship with the REIT for about 10 years. SCC’s troubles began before the pandemic, but we are sure the last 12 months have just made it even more difficult to meet its financial obligations.