Welltower, ProMedica Reportedly Pursuing $2 Billion QCP Acquisition

Welltower (NYSE: WELL), one of the “Big 3” senior housing real estate investment trusts (REITs), is rumored to be in talks to purchase Quality Care Properties Inc. (NYSE: QCP). 

Welltower and ProMedica, a nonprofit hospital network operator, reportedly made a $2 billion offer to acquire skilled nursing-focused QCP, Reuters reported Wednesday, citing people familiar with the situation. 

This offer values Bethesda, Maryland-based QCP at approximately $20 per share, which is near its current market value, Reuters’ sources said. 

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The discussions between the companies are still taking place, and there is no guarantee that a deal will be made, the sources added.
 
Welltower had not responded to Senior Housing News’ request for comment as of press time.

Presently, QCP is in the process of taking over skilled nursing operator HCR ManorCare, which entered Chapter 11 bankruptcy protection in March after defaulting on its lease obligations in 2017.

ManorCare was based in Toledo, Ohio, which is also where Welltower and ProMedica are based.

QCP is set to lose its status as a REIT as part of this deal, which a federal bankruptcy judge recently approved.

Welltower’s skilled nursing foothold

Welltower currently owns 82 post-acute and long-term care properties managed by Genesis Healthcare (NYSE: GEN), a troubled skilled nursing operator that, with the REIT’s help, recently secured a $555 million credit facility.

Still, Welltower CEO Tom DeRosa believes that the skilled nursing industry will be reinvented in the coming years, and has used this belief to justify the REIT’s foothold in skilled nursing. 

“[The SNF industry] will get reinvented, and as a health care REIT, we want the option to deploy capital in good structures around high quality real estate,” DeRosa said at the Citi 2018 Global Property CEO Conference in Hollywood, Florida.

DeRosa has also been highly critical of other health care REITs divesting of their troubled skilled nursing portfolios. And at one point he referred to these SNF assets in unflattering terms—so if Welltower now acquires the ManorCare assets, it might mark a change of tune.
 
In June 2016, about a month after Irvine, California-based health care REIT HCP Inc. (NYSE: HCP) announced that it planned to spin off its portfolio of HCR ManorCare skilled nursing assets and form QCP—and approximately 10 months after Ventas, Inc. (NYSE: VTR) spun off all of its skilled nursing assets into a publicly-traded REIT—DeRosa publicly criticized the moves.

“We will not hand you a leaking, steaming bag of real estate and say, ‘Here you go, do what you want to do with it, but I’m washing my hands of it,’” he said.

Written by Mary Kate Nelson

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