BETHESDA, Md. — Quality Care Properties Inc. (NYSE: QCP), the spinoff company of healthcare REIT HCP, has entered into a forbearance agreement with its principal tenant, HCR III Healthcare LLC and its parent HCR ManorCare Inc.
The agreement will require HCR ManorCare to make cash rent payments of $32 million for each of April, May and June, with a deferral of the additional $7.5 million per month due until July 5. The agreement also requires HCR ManorCare to deliver its 2016 audited financial statements and auditor consent to QCP by April 10.
QCP also agreed to provide HCR ManorCare with a temporary secured extension of credit of up to $7 million per month during each of April, May and June (up to $21 million in the aggregate), which would be due by the end of the year.
The purpose of the forbearance agreement is for QCP and HCR ManorCare to “engage in good faith discussions concerning a long-term restructuring of the terms of the master lease, the guaranty of the master lease and certain other matters,” according to a press release from QCP.
"We are pleased to have reached this agreement and are working with HCR ManorCare to reach a comprehensive, long-term solution to the master lease that seeks to both preserve and enhance the value of our properties, while supporting the ability of HCR ManorCare and its thousands of employees and caregivers to provide high-quality care for their patients and residents,” says Mark Ordan, QCP's chief executive officer. “We remain open to all appropriate solutions, including possibly transitioning to increased equity ownership in HCR ManorCare.”
QCP owns 257 skilled nursing facilities, 61 assisted living communities, a surgical hospital and a medical office building, spread across 29 states. HCR ManorCare accounted for 94 percent of QCP's total revenues in 2016.