Welltower Completes Sale of Interest in 28 Facilities to Chinese Investors

by Jeff Shaw

TOLEDO, Ohio — A joint venture between Cindat Capital Management Limited and Union Life Insurance, both Chinese investment companies, has completed its purchase of 75 percent interest in a Welltower-owned portfolio of 28 skilled nursing facilities.

Genesis Healthcare Inc. will continue to operate the facilities. The sale, announced in November, is part of a $930 million transaction that will also include the sale of 11 Brookdale-managed seniors housing communities.

Welltower (NYSE: HCN), the largest REIT in seniors housing by total units, expects to complete the rest of the sale during the first quarter of 2017. The company will maintain a 25 percent stake in all the properties.

As part of the transaction, Genesis has signed a new lease for the properties under which the company issued $23.7 million of notes payable to Welltower in exchange for reduced rent and lower lease escalators.

Additionally, Welltower restructured its two existing real estate loans to Genesis, which currently have an outstanding balance of $317 million and were scheduled to mature in 2017 and 2018. Under the restructuring, the two existing loans were split into four separate loans. Each loan has a five-year term, bears interest at 10 percent cash pay with 25 basis point annual escalators. All loans are cross-defaulted to one another, as well as to the original Welltower master lease, and are guaranteed in full by Genesis.

Genesis plans to pay off two of the four loans, totaling $74.8 million, through proceeds from HUD refinancing and asset sales. The remaining two loans, totaling $242.2 million, consist of a $103.6 million loan covering 13 facilities in Texas, and a $138.6 million loan covering 18 facilities outside the state.

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