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News Update For the week ended April 14, 2017
Selected Industry Headlines

April 14, 2017 – HCP, Inc. (HCP) Robbins Arroyo LLP announces that a shareholder derivative complaint was filed on behalf of HCP, Inc. (NYSE: HCP) in the U.S. District Court for the Northern District of Ohio, Western Division.

The complaint is brought against certain officers and directors of HCP for alleged breaches of fiduciary duty and violations of the Securities Exchange Act of 1934 from March 30, 2015 through the present. HCP is an independent hybrid real estate investment trust.

HCP Accused of Covering Up Its Client’s Billing Fraud Practices – According to the complaint, HCP was highly dependent on ManorCare, a nursing home operator that served as HCP’s most significant client. Specifically, 30% of HCP’s revenue was derived from its leases with ManorCare and 40% of HCP’s real estate assets were subject to long-term leases with ManorCare. HCP touted that ManorCare was a reliable partner, stating that ManorCare had “a long history of compliance with regulations” and that ManorCare’s billing practices were “to the standard one would want.” However, according to the complaint, HCP officials were allegedly aware that ManorCare was engaged in rampant billing fraud, generating over $6 billion in false claims for reimbursement submitted to government programs. ManorCare’s billing fraud subjected it to three whistleblower lawsuits and an investigation by the U.S. Department of Justice (“DOJ”), which intervened in the whistleblower lawsuits.

The complaint alleges that as a result of ManorCare’s billing fraud, ManorCare’s reported revenue and earnings were false and its consolidated statements did not comply with Generally Accepted Accounting Principles. Even after the whistleblower actions and DOJ action were revealed, ManorCare and HCP denied that any wrongdoing had occurred. HCP revealed the truth in a series of corrective disclosures, stating that it had recorded two impairment charges totaling $505 million involving ManorCare. On February 9, 2016, HCP disclosed that its equity stake in ManorCare had been written down to zero, revealing it could no longer rely on ManorCare to pay its rent, and noting high legal costs incurred by ManorCare in defending against the whistleblower and DOJ lawsuits. On this news, HCP stock dropped 17% to close at $28.33 per share on February 9, 2016.

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April 13, 2017 – Omega Healthcare Investors, Inc. (OHI) announced that the Company’s Board of Directors declared a common stock dividend of $0.63 per share, increasing the quarterly common dividend by $0.01 per share over the previous quarter. The common stock dividend is payable Monday, May 15, 2017 to common stockholders of record as of the close of business on Monday, May 1, 2017.

 

April 13, 2017 – Senior Housing Properties Trust (SNH) that its 28515 Westinghouse Place property in Valencia, CA won The Building of the Year (TOBY) Award in the 100,000 to 249,000 square foot category from the Building Owners and Managers Association International (BOMA) for Greater Los Angeles.

The property is a 146,385 square foot medical office building leased as U.S. corporate headquarters to Advanced Bionics. This five-story, Class A, LEED Silver Certified office building in the Valencia submarket of Santa Clarita, CA sits within the Summit Oaks Commercial Park, located adjacent to Interstate 5. Amenities include a three-story parking garage and surface parking, an outdoor seating area with a fountain, showers and a large employee break room.

The property is managed by RMR Real Estate Services, a division of The RMR Group LLC. The RMR Group LLC manages Senior Housing Properties Trust and it is the majority owned operating subsidiary of The RMR Group Inc. (Nasdaq: RMR). RMR Real Estate Services is responsible for providing all aspects of property management services to more than 600 buildings with over 65 million square feet of commercial office, industrial, medical office, lab and retail space that are managed by The RMR Group LLC.

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April 12, 2017 – Brookdale Senior Living Inc. (BKD) announced that Mark J. Parrell, a member of Brookdale’s Board of Directors since 2015, has submitted notice that he will resign from the Board effective at the close of business on July 24, 2017 (the currently scheduled date of Brookdale’s 2017 annual meeting of stockholders) to dedicate more time to other professional commitments.

  Mr. Parrell intends to remain actively engaged as a member of the Board and the Audit and Investment Committees of the Board through such time.

Daniel A. Decker, Brookdale’s Executive Chairman of the Board, said, “On behalf of Brookdale and its Board of Directors, we wish Mark well in his future endeavors and thank him for his outstanding service to the Company and its shareholders.  During his tenure, Mark has made many valuable contributions in numerous aspects of our business, and we look forward to continuing to benefit from his advice and counsel over the next few months.”

Mr. Decker continued, “Brookdale’s Board and management continue to be highly focused on the execution of our business strategies, including achieving consistent operational excellence and optimizing our portfolio.  In addition, the Board remains hard at work, in conjunction with management and our financial and legal advisors, on our ongoing process to explore options and alternatives to create and enhance shareholder value.”

Mr. Parrell said, “Serving on the Board of Brookdale, a company dedicated to enriching the lives of seniors, has been a great privilege.  I know that the Board and management team are steadfast in their commitment to increasing value for shareholders while upholding the Company’s important mission.  I look forward to continuing to serve until the effective date of my resignation and wish them all the best in the future.”

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April 11, 2017 – Senior Housing Properties Trust (SNH) announced a regular quarterly cash distribution on its common shares of $0.39 per common share. This quarterly dividend will be paid to common shareholders of record as of the close of business on April 21, 2017 and distributed on or about May 18, 2017.


April 10, 2017 – Care Capital Properties (CCP), a company with a diversified portfolio of triple-net leased healthcare properties focused on the post-acute sector, announced that it has entered into a definitive agreement to acquire six behavioral health hospitals in a sale-leaseback transaction for $400 million and to fund up to $50 million in capital expenditures to finance expansion and improvements in the portfolio.

The properties are currently owned by affiliates of Signature Healthcare Services, LLC (“Signature”), one of the largest privately owned behavioral health care providers in the United States. Upon completion of the transaction, which is expected to occur in the second quarter of 2017, CCP will lease the properties to affiliates of Signature on a ten-year triple-net basis, with five renewals of five years each. The initial GAAP yield on the transaction is expected to be approximately 8.7%, and the investment was underwritten at 1.5x EBITDAR coverage on cash rent. “We are extremely pleased to announce this investment in a best-in-class portfolio of purpose-built behavioral real estate with a leading operator in the space. We are excited to establish a new relationship with Signature, which has an outstanding track record as a behavioral health care provider,” CCP Chief Executive Officer Raymond J. Lewis said. “This accretive transaction will enable us to efficiently recycle capital from our dispositions and diversify our portfolio into a new industry sector with a strategic operator, favorable investment attributes and strong cash flows.

Highlights of the Transaction

The portfolio is comprised of six behavioral health hospitals located in California, Arizona and Illinois. The properties contain a total of 712 beds, and all six properties either have recently been expanded or are currently in planning or under development to increase bed capacity. The properties primarily provide acute inpatient and outpatient psychiatric care, addiction services, geriatric psychiatric care, and child and adolescent psychiatric care.

Signature, founded in 2000, is one of the largest overall behavioral health care providers in the United States and the largest private provider of freestanding psychiatric services dedicated to behavioral health and substance abuse. The company operates eight other acute psychiatric hospitals in addition to the portfolio to be acquired by CCP. Signature is led by a long-tenured management team with over 150 years of combined industry experience.

“We look forward to partnering with CCP on this portfolio,” Signature Chief Executive Officer Soon K. Kim, M.D., said. “Signature is committed to the behavioral health space and will continue to invest in growing our platform through our development pipeline and by expanding existing facilities in underserved markets. We look forward to the potential of growing our relationship with CCP.”

CCP expects to fund approximately $380 million at closing and will have an option, exercisable beginning in the fourth quarter of 2018, to purchase one additional building for an amount that is expected to be approximately $20 million. In addition, the Company has agreed to provide up to $50 million for capital improvement projects in the portfolio over the next several years. CCP will also have a right of first offer on future real estate investment opportunities with Signature.

The transaction will be funded through cash on hand, disposition proceeds and borrowings under the Company’s revolving credit facility. Based on this capitalization, the full year GAAP accretion is projected to be approximately 13 cents. The transaction is subject to regulatory approval and other customary closing conditions and there can be no assurance as to whether or when the transaction will close. CCP expects to update its guidance on the subsequent earnings call following closing of the transaction.

Signature has been advised in this transaction by Goldman, Sachs & Co.

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April 10, 2017 – National Health Investors, Inc. (NHI) announced today details for the release of its results for the first quarter ended March 31, 2017. NHI plans to issue its earnings release for the first quarter before the market opens on Tuesday, May 9, 2017, and will host a conference call on the same day at 12 p.m. ET.


April 7, 2016 – Genesis HealthCare (GEN) announced that it has named Richard A. Feifer, MD, MPH, FACP as Chief Medical Officer of Genesis Physician Services (GPS). In this newly created position, Dr. Feifer will lead a team of nearly 400 full- and part-time physicians and nurse practitioners who provide more than 600,000 visits annually to residents and patients of Genesis HealthCare. 

Prior to joining Genesis, Dr. Feifer served as Aetna’s Chief Medical Officer of National Accounts. He led Clinical Consulting, Strategy, and Analysis, which helped our nation’s largest employers improve the health and productivity of their members.  Before Aetna, Dr. Feifer served as Vice President of Clinical Program Innovation and Evaluation at Medco, where he was responsible for the organization’s portfolio of care enhancement programs. A graduate of Brown University and the University of Pennsylvania School of Medicine, Dr. Feifer is a board-certified internist with experience in primary care, geriatrics, and urgent care medicine at the Fallon Clinic.  He received his MPH in Health Services Management from Columbia University, and is currently an Assistant Clinical Professor at the University of Connecticut.

“We are thrilled to have Dr. Feifer join the management team at Genesis,” states Chief Executive Officer, George V. Hager, Jr.   “Dr. Feifer’s professional focus and passion is in the design, implementation, evaluation, and communication of strategies to optimize population health, and to improve the quality and efficiency of healthcare. Given his area of expertise, he will be integral to our efforts to actively transition from volume-based, fee for service to value-based care and reimbursement.”

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April 6, 2016 – Ventas, Inc. (VTR) announced that it will issue its first quarter 2016 earnings release prior to the opening of trading on the New York Stock Exchange on Friday, April 29, 2016. A conference call to discuss those earnings will be held the same day at 10:00 a.m. Eastern Time (9:00 a.m. Central Time).


April 6, 2016 – National Health Investors, Inc. (NHI) announced that it has purchased 8 skilled nursing facilities in Texas for $118.5 million totaling 931 beds. The facilities are currently operated by NHI’s existing tenant, Legend Healthcare (“Legend”). Legend has elected to transition all of its current operations to a new operator and NHI has agreed to enter into a new 15-year master lease with affiliates of The Ensign Group, Inc. (ENSG) on 15 former Legend facilities for an initial annual amount of $17.75 million plus an annual escalator based on inflation. 

The lease has two 5-year renewal options. Upon entering the new lease, which is subject to usual and customary closing conditions, and is expected to close May 1, 2016, NHI will sell 2 of its existing facilities in Texas totaling 245 beds to affiliates of Ensign for $24.6 million. Upon entering the new lease, which will include a corporate guaranty from Ensign, the purchase options held by Legend will terminate. The net acquisitions and dispositions bring NHI’s net investment in the 15 facilities to approximately $211 million.

In addition, and as part of the transaction with Legend and Ensign, NHI has committed to purchase 4 skilled nursing facilities in Texas from Legend for $56 million and lease to Ensign. The facilities are in various stages of development and the purchase window for the first facility is expected to open in 2017.

Eric Mendelsohn, CEO and President of NHI, stated, “This new lease with Ensign further exemplifies NHI’s commitment to forming relationship-oriented partnerships with best-in-class operators. We are thrilled to add Ensign as a leading tenant in our skilled nursing portfolio.”

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April 5, 2016 – Healthcare Realty Trust, Inc. (HR) announced that on Wednesday evening, May 4, 2016, after the market closes, it expects to report results for the first quarter of 2016. On May 5, 2016, at 9:00 a.m. Central Time, Healthcare Realty Trust expects to hold a conference call to discuss earnings results, quarterly activities, general operations of the Company and industry trends.


 

April 4, 2016 – Ventas, Inc. (VTR) announced that it and Kindred Healthcare, Inc. (KND) (“Kindred”) have entered into several agreements (the “Agreements”) to improve the quality and productivity of the long term acute care hospital (“LTAC”) portfolio leased by Ventas to Kindred. 

Certain of the Agreements consist of lease amendments (“Lease Amendments”) to existing master leases between Ventas and Kindred (the “Master Leases”). Under these Lease Amendments, annual rent on seven identified LTACs (the “7 LTACs”), which is currently approximately $8 million, will immediately be re-allocated to other more productive post-acute assets currently leased by Kindred from Ventas under the Master Leases. Total annual rent on Ventas’s post-acute care portfolio operated by Kindred will remain the same as its current level.

“We are pleased to reach another value-creating agreement for shareholders of both Ventas and Kindred, which also deepens our collaborative partnership, and further strengthens Kindred’s position as the nation’s leading provider of post-acute care,” Ventas Chairman and CEO Debra A. Cafaro said. “These agreements accelerate Kindred’s efforts to position its LTAC business for success under LTAC patient criteria, while also enhancing the quality of our portfolio for our shareholders,” she added.

Separately, Ventas has agreed to sell the 7 LTACs, but closing remains subject to conditions to closing, including the receipt of all licensure, regulatory and other approvals. Ventas expects to receive $6.5 million in connection with the sale transactions.

These transactions are expected to better position the Ventas portfolio to succeed under the new LTAC patient criteria to be implemented by Kindred beginning on September 1, 2016.

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April 4, 2016 – Kindred Healthcare, Inc. (KND) announced that it has signed a definitive agreement to sell 12 long-term acute care (“LTAC”) hospitals (the “Hospitals”) to Curahealth, LLC (“Curahealth”), an affiliate of a private investment fund sponsored by Nautic Partners, LLC (“Nautic”), for $27.5 million. The Hospitals have, in aggregate, 783 licensed beds in Arizona, Louisiana, Massachusetts, Oklahoma, Pennsylvania, and Tennessee. 

Benjamin A. Breier, President and Chief Executive Officer of Kindred, commented, “We are pleased to announce this sale of 12 LTAC hospitals to Curahealth, as this transaction creates both strategic and financial value for Kindred. Optimizing our LTAC hospital portfolio is a key element of our LTAC criteria mitigation strategy and this transaction is another important step forward in our efforts. Nautic has a proven track record of success in the healthcare sector and will be a strong partner for these hospitals and the communities they serve.”

For the full fiscal year 2016, Kindred expects that the Hospitals will generate combined revenues of approximately $215 million and earnings before interest, income taxes, depreciation and amortization (“EBITDA”) at approximately breakeven. The Hospitals have $14 million of annual rent expense, of which approximately $8 million is with seven facilities leased from Ventas, Inc. (“Ventas”) (VTR).

Separately, Kindred has amended various master lease agreements with Ventas and has filed today an 8-K with details of these amendments.

Kindred expects to realize cash proceeds upon closing the transaction with Curahealth of approximately $21 million, subject to post-closing adjustments, with the remainder of the purchase price to be paid upon satisfaction of financial and other post-closing conditions. In addition, the transactions with Curahealth and Ventas are expected to generate future cash income tax benefits for Kindred of approximately $38 million. Kindred anticipates reporting pre-tax charges of approximately $54 million related to the Ventas lease amendments and approximately $45 million to $55 million related to the transaction with Curahealth within fiscal 2016. Kindred expects to close the transaction with Curahealth in the third quarter of 2016, subject to customary conditions to closing, including the receipt of all licensure, regulatory and other approvals. 

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SEC Filings

Date Company Type Description
4/12/2017 Care Capital Properties, Inc. 8-K On April 12, 2017, Care Capital Properties, Inc. (the “Company”) issued a press release announcing that on April 10, 2017, certain wholly owned subsidiaries of the Company, as buyers (collectively, the “CCP Entities”), entered into a Purchase and Sale Agreement (the “Purchase Agreement”) with certain affiliates of Signature Healthcare Services, LLC (“Signature”), as sellers (collectively, the “Sellers”), pursuant to which, among other things, the CCP Entities have agreed to acquire from the Sellers a portfolio of six behavioral health hospitals for an aggregate purchase price of $400 million (including one building that will be subject to an option to purchase by the CCP Entities, exercisable between October 2018 and October 2019). At closing, the CCP Entities will lease the properties to affiliates of Signature on a ten-year triple-net basis, with five renewals of five years each. Under the terms of the master lease, the CCP Entities have also agreed to fund up to $50 million in capital expenditures to finance expansion and improvements in the portfolio. The closing of the transaction, which is expected to occur in the second quarter of 2017, is subject to the satisfaction of customary closing conditions, including, but not limited to, the receipt of applicable regulatory approvals.
4/12/2017 Brookdale Senior Living, Inc. 8-K On April 12, 2017, Brookdale Senior Living, Inc. (the “Company”) issued a press release announcing that on April 10, 2017, Mark J. Parrell submitted notice that he will resign from the Board of Directors (the “Board”) of the Company effective at the close of business on July 24, 2017 (the currently scheduled date of the Company’s 2017 annual meeting of stockholders) to dedicate more time to other professional commitments. Mr. Parrell’s resignation was not due to any disagreement with the Company, the Board or the management of the Company on any matter relating to the Company’s operations, policies, practices or otherwise.
4/11/2017 National Health Investors, Inc. 8-K On April 10, 2017, National Health Investors, Inc. issued a press release announcing plans to release its results for the first quarter ended March 31, 2017 before the market opens on Tuesday, May 9, 2017, with an interactive teleconference call on the same day at 12 p.m. ET.

On April 3, 2017, National Health Investors, Inc. issued a press release announcing that it completed the sale of 1,123,184 common shares on its At-The-Market equity program during the first quarter ended March 31, 2017 at an average price of $72.31, resulting in net proceeds after commissions of $80 million.

4/07/2016 National Health Investors, Inc. 8-K
On April 7, 2016, National Health Investors, Inc. issued a press release announcing that it has purchased 8 skilled nursing facilities in Texas for $118.5 million totaling 931 beds. The facilities are currently operated by NHI’s existing tenant, Legend Healthcare (“Legend”). Legend has elected to transition all of its current operations to a new operator and NHI has agreed to enter into a new 15-year master lease with affiliates of The Ensign Group, Inc. (NASDAQ: ENSG) on 15 former Legend facilities for an initial annual amount of $17.75 million plus an annual escalator based on inflation. The lease has two 5-year renewal options. Upon entering the new lease, which is subject to usual and customary closing conditions, and is expected to close May 1, 2016, NHI will sell 2 of its existing facilities in Texas totaling 245 beds to affiliates of Ensign for $24.6 million. Upon entering the new lease, which will include a corporate guaranty from Ensign, the purchase options held by Legend will terminate. The net acquisitions and dispositions bring NHI’s net investment in the 15 facilities to approximately $211 million.

 

In addition, and as part of the transaction with Legend and Ensign, NHI has committed to purchase 4 skilled nursing facilities in Texas from Legend for $56 million and lease to Ensign. The facilities are in various stages of development and the purchase window for the first facility is expected to open in 2017.

4/06/2016 Medical Properties Trust, Inc. 8-K On April 6, 2016, Medical Properties Trust, Inc. issued a press release announcing that on April 3, 2016, Mr. L. Glenn Orr, Jr., age 75, retired as a member of the board of directors (the “Board”), and the number of directors on the Board decreased to seven members. Mr. Orr had been a member of the Board and its various committees since February 2005, and the Company expresses its appreciation and thanks to Mr. Orr for his 11 years of service and for his many contributions.
4/04/2016 New Senior Investment Group, Inc. 8-K On April 4, 2016, New Senior Investment Group, Inc. issued a press release announcing that the board of directors of the Company has appointed Mr. Bhairav Patel, 37, as Chief Accounting Officer effective as of March 30, 2016. Mr. Patel is a Managing Director in the Private Equity group of the Company’s manager, FIG LLC, which is an affiliate of Fortress Investment Group LLC (“Fortress”). Mr. Patel joined Fortress in 2007 and has served in various capacities within the corporate accounting and finance divisions and was until recently the head of Fortress’s financial planning & analysis group. Prior to joining Fortress in 2007, Mr. Patel served as an accounting manager at GSC Group, a credit-based alternative investment manager. Mr. Patel received a Bachelor’s degree and Master’s degree in Commerce from the University of Mumbai, and is a Certified Public Accountant.
4/04/2016 Kindred Healthcare, Inc. 8-K On April 4, 2016, Kindred Healthcare, Inc. issued a press release announcing that, in connection with the sale of twelve long-term acute care hospitals (collectively, the “Hospitals”) to Curahealth, LLC, Kindred Healthcare, Inc. (“Kindred” or the “Company”) entered into amendments to certain of its master lease agreements with Ventas, Inc. (“Ventas”) on April 3, 2016 to transition the operations of seven of such Hospitals which are leased from Ventas (the “Ventas Hospitals”). The Ventas Hospitals will remain leased under the applicable master lease agreement until the closing of the sale. Kindred will pay a fee to Ventas of $3.5 million following signing of the amendments and an additional $2.958 million upon the closing of the Sale of the Ventas Hospitals. Ventas will pay Kindred 50% of the sales proceeds for the real estate (after deduction of Ventas’ closing costs) attributed to the Ventas Hospitals in the Sale, which is anticipated to be immaterial.