LOUISVILLE, KY—Kindred Healthcare Inc. said Friday it would sell its skilled nursing facility business to a joint venture led by affiliates of BlueMountain Capital Management for $700 million in cash. Included in the sale are 36 SNFs in the portfolio of Ventas Inc. that are leased to Kindred and which it will buy from the Chicago-based healthcare REIT. Kindred's intention to buy the properties from Ventas was originally announced this past November.
“Exiting the skilled nursing facility business, in its entirety, has been a long-stated goal of our enterprise,” says Benjamin A. Breier, president and CEO of Kindred. “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 all, Kindred's current SNF portfolio, spread across 18 states, includes 89 nursing centers with 11,308 licensed beds and seven assisted living facilities with 380 licensed beds. In recent years, it had grown as large as 300 before Kindred began paring it down.
Total value of the deal, including cash proceeds, anticipated working capital liquidation, tax benefits, retained assets and other items, will be $910 million. The Louisville, KY-based healthcare company expects net value of approximately $210 million, after its $700-million acquisition of the Ventas real estate is factored in.
Additionally, EVP and CFO Stephen D. Farber says that exiting the SNF business will increase Kindred's annual cash flow by approximately $20 million to $30 million. That includes a reduction of about $88 million in annual rent obligations and the elimination of about $30 million in annual capital expenditures.
With the sale of the 36 Kindred-leased SNFs, Ventas expects to record a gain exceeding $600 million. Moreover, “we are improving our portfolio and enhancing our ability to deliver reliable growth and income for our shareholders,” says Debra A. Cafaro, chairman and CEO of Ventas. “Upon the expected sale, our skilled nursing rent will be only 1% of our total business,” a move consonant with the company's 2015 spinoff of its SNF platform into a separate, publicly traded REIT, Care Capital Properties.
Guggenheim Securities is acting as financial advisor, Polsinelli PC is acting as legal advisor and Cleary Gottlieb Steen & Hamilton LLP is acting as special counsel to Kindred. The company expects the sale to the BlueMountain JV to occur in phases beginning in the third quarter and to be completed by year's end.
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Paul Bubny
Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.
