As part of its corporate Chapter 11 bankruptcy restructuring, Petersen Health Care has now sold 76 senior care properties in Illinois, Missouri and Iowa. Originally, Cascade Capital Partners was the stalking horse bidder for the majority of Petersen’s 90+ properties, when a federal bankruptcy court approved a $116 million sale this summer. Other bidders for the remaining properties were approved at the same time, such as Bank of Farmington and Hickory Point Bank & Trust.
However, now the largest group of properties, 46 of them, have sold to CareTrust REIT for a total investment of approximately $97 million (including transaction costs), or $25,000 per bed. CareTrust also announced that a skilled nursing investor and operator is entering into a triple-net master lease agreement on the portfolio and will sublease the portfolio to several licensed subtenants. However, the master tenant also has purchase options on each subgrouping, mostly opening in years four and five of the lease. The exercise of such options could trigger additional rent payments to CareTrust, up to an aggregate, annual 12.5% yield on the amount that CareTrust invested.
Of the 46 properties that CareTrust REIT acquired, seven are skilled nursing/assisted living campuses, and seven are assisted living communities, all combining for 3,820 beds/units. More than $8 million in capital improvements (included in the previously mentioned total investment) are expected across the portfolio, with perhaps more investment after that.
Two Medicaid Waiver supportive living facilities in Sullivan and Canton, Illinois, were also purchased for $13.25 million by HP Developers, a Midwest developer. The remaining assets were purchased by various parties including two credit bids by the property lenders. It is not known whether Cascade Capital Partners was one of the ultimate buyers.
All together, the 76 assets feature 5,040 beds and units, including 3,237 SNF beds, 1,262 intermediate care facility beds, 101 SLF units, 54 memory care beds, 284 assisted living units and 102 independent living units. Most of the properties were built between 50 and 60 years ago, and they were around 60% occupied. They sold for approximately $118 million. Bankruptcy documents show that Walker & Dunlop’s Mark Myers and Nick Hall represented the debtors in the sale, while David Campbell of Getzler Henrich, the Chief Restructuring Officer for Petersen, acted as the workout consultant for Petersen.
