LOUISVILLE, KY—Kindred Healthcare Inc. is being taken private by a group that includes TPG Capital, Welsh Carson and Humana, but its real estate arrangements will remain intact. The $4.1-billion privatization comes nearly six months after Kindred entered an agreement to sell its skilled nursing facility business to a joint venture led by affiliates of BlueMountain Capital Management for $700 million in cash, a sale that entailed Kindred buying 36 SNF properties that it leases from Ventas Inc.
Immediately following the acquisition of Kindred, which is expected to close next summer, its home health, hospice and community care businesses will be separated from Kindred and operated as a standalone company, Kindred at Home, to be 40% owned by Humana, with the remaining 60% owned by TPG and Welsh Carson. Kindred's long-term acute care hospitals, inpatient rehabilitation facilities and contract rehabilitation services businesses will be operated as Kindred Healthcare, a separate specialty hospital company with TPG and Welsh Carson as co-owners.
“We believe this agreement maximizes value for stockholders and represents a significant step forward in transforming home healthcare in America by enhancing access to care and reducing costs for people living with chronic conditions,” says Benjamin A. Breier, Kindred's president and CEO. “In addition, the specialty hospital company, Kindred Healthcare, will be uniquely positioned to care for the most medically-complex and rehab-intensive populations.”
Kindred Healthcare will continue to operate 30 LTAC and IRF facilities it leases from Ventas under the existing master lease on current terms and rent, including escalations. Following the privatization, the master lease will be guaranteed by Kindred Healthcare under its new ownership. The operator will have a significantly strengthened balance sheet upon completion of the transaction, says Ventas.
“This transaction demonstrates the immense interest from public and private investors in leading healthcare companies that are well-positioned to deliver outstanding, cost-effective care,” says Debra A. Cafaro, chairman and CEO of Ventas. “The significant equity investment in Kindred underscores the attractive nature of our assets, Kindred's platform and the potential of our LTACs and IRFs. We look forward to continuing our partnership with Kindred and working with the new owners as they drive above-market growth and serve increasing numbers of medically-complex patients.”
Earlier this month, Kindred said it had completed the sale of 80 SNFs and five assisted living facilities for aggregate proceeds of approximately $658 million as part of its deal with BlueMountain. Additionally, the company has reached an agreement with BlueMountain and the relevant landlord to close five leased facilities in Massachusetts.
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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.
