On April 16, both Senior Care Centers and Abri Health Services filed for Chapter 11 bankruptcy protection. This is the second time in a little more than two years that Senior Care has filed for BK. In March 2020, Senior Care debtors emerged from bankruptcy (great timing), and as part of the reorganization, Abri Health was formed as the parent company of the Senior Care debtors and became a co-tenant and co-obligor with Senior Care under LTC Properties’ master lease.
The master lease includes 11 skilled nursing facilities in Texas with approximately 1,400 beds. LTC’s annualized revenue from the leases is about $15.0 million, representing 9.6% of LTC’s annualized cash revenue as of December 31, 2020. Unfortunately, LTC has not received rent since February. Minimum monthly rent is $1.2 million.
A notice of default was sent in March, followed by a notice of termination to be effective April 17. By the time of this second bankruptcy filing, LTC was already in the process of transitioning the portfolio to Texas-based HMG Healthcare. We say, good riddance.
Another LTC operator, Senior Lifestyle Corporation, has not paid any of its rent due in 2021, which is not a surprise. LTC has been in the process of transitioning the portfolio, and 11 of the 23 communities have been transitioned, and four additional properties are expected to be transitioned by the end of the second quarter. Three others should be sold by the end of the second quarter and one has been closed and will be sold for an alternative use. We will see what happens to the remaining properties.
This is a sorry state of affairs for Senior Lifestyle. For LTC Properties, it will do some good to get new operators in their stable of providers and look beyond the current pandemic problems.
