Kindred Healthcare (NYSE: KND) has found a buyer for its skilled nursing portfolio, and its major real estate investment trust (REIT) landlord Ventas (NYSE: VTR) expects to ultimately receive $700 million from the deal.
The buyer, BM Eagle Holdings, is a joint venture led by affiliates of BlueMountain Capital Management, a privately held New York-based alternative asset manager. It has $22 billion in assets under management, including equity and debt in commercial real estate, as well as investments in operating businesses with real estate exposure.
BM Eagle Holdings will pay $700 million in cash for Kindred’s SNF business. The total value of the transaction to Kindred is anticipated to be $910 million, the Louisville-based company announced June 30. That figure includes cash proceeds, anticipated working capital liquidation, retained assets, tax benefits, and other items, minus estimated transaction and severance costs.
Chicago-based real estate investment trust Ventas owns 36 of the SNFs. As Kindred closes on the sale of these properties, it will pay Ventas, and the REIT will transfer the real estate to BlueMountain. Ventas, which also is a major owner of private-pay senior housing assets, expects to receive an aggregate $700 million for the SNFs it owns, the company stated on Friday.
“We are delighted to work with Kindred to position both companies for continued success,” said Debra A. Cafaro, chairman and CEO of Ventas, in a press release. “With the sale of 36 skilled nursing assets, we are improving our portfolio and enhancing our ability to deliver reliable growth and income for our shareholders. Upon the expected sale, our skilled nursing rent will be only one percent of our total business.”
Ventas plans to use proceeds from the sale to repay debt, further enhancing its liquidity. It is a strategy of Ventas currently to increase its liquidity to position itself as risks could dislocate the stock market.
After the payment to Ventas and other costs, Kindred anticipates realizing a net value of about $210 million from the sale. New operators associated with BlueMountain will take over the SNFs after they transition from Kindred, which did not identify the new operating companies by name.
“Today’s announcement is a historic milestone for all of Kindred’s stakeholders,” Kindred CEO and President Benjamin Breier stated in a press release. “Exiting the skilled nursing facility business, in its entirety, has been a long-stated goal of our enterprise. After more than two decades of nursing center operations, this announcement clears the way to closing that chapter of Kindred’s story, and turning the page to the future of integrated post-acute care.”
In total, the deal includes 89 SNFs with 11,308 licensed beds and seven assisted living centers with 380 licensed beds; together, these facilities employ about 11,500 people across 18 states. Kindred will retain a SNF it owns in Las Vegas, as well as hospital-based subacute units.
Kindred is staking its future on being the largest home health provider in the nation, as well as a significant provider in the inpatient rehabilitation facility and long-term acute care hospital sectors. The company also is pursuing a strategy to be a post-acute care manager, overseeing large patient populations for health systems, managed care organizations, and other entities.
Written by Tim Mullaney