Welltower Inc. completed the sale of 28 long-term and post-acute care facilities, master-leased to Genesis HealthCare Corp., to a joint venture. Welltower also completed the restructuring of two real estate loans to Genesis with an outstanding principal balance of $317.0 million.
With the completion of the sale of the Genesis properties, Welltower will own a 25% stake in the joint venture, while Cindat Capital Management and Union Life Insurance Co. will own 75%.
After Welltower completes the sale of 11 additional seniors housing properties, master-leased to Brookdale Senior Living Inc., in the first quarter of 2017, the company expects the aggregate value of the joint venture to be $930 million.
Genesis will continue to operate the 28 facilities through a new lease with the joint venture. In connection with the sale of the properties, Genesis issued $23.7 million of notes payable to Welltower in exchange for reduced rent and lower lease escalators.
Under the loan restructuring, the two Genesis loans, which were set to mature in 2017 and 2018, were split into four loans. Each of these loans has a five-year term and carries interest at 10% cash pay with 25-basis-point annual escalators.
Genesis anticipates paying off two of the loans with an aggregate principal balance of $74.8 million with proceeds from certain Housing and Urban Development refinancings and asset sales. The remaining two loans total $242.2 million and comprise a $103.6 million loan covering 13 Texas facilities and a $138.6 million loan covering 18 other facilities.
Welltower expects to record a noncash GAAP reserve of approximately $7 million in the fourth quarter in relation to the loan restructuring.