KENNETT SQUARE, Pa., Oct. 16, 2019 (GLOBE NEWSWIRE) -- Genesis HealthCare (Genesis or the Company), one of the nation’s largest providers of post-acute care services, today announced that it has made an investment with a private investor involving 18 skilled nursing facilities previously leased by Genesis from Second Spring Healthcare Investments (Second Spring) and Welltower Inc. (Welltower). Separately, eight owned facilities were sold to third parties for total sale proceeds of approximately $89 million. Proceeds were used to repay indebtedness and fund transaction expenses. Genesis will no longer operate the eight facilities.
Genesis continues to operate the 18 facilities pursuant to a new lease with the new owner. The 18 facilities had been included in the Company’s master leases with Second Spring and Welltower and were subject to annual rent escalators ranging from 2.0% to 2.5%. Under the new lease, rent escalators do not begin until year five. Through its investment, Genesis holds approximately a 30% interest in the entity that owns the real estate of the 18 facilities. Genesis also acquired a fixed price purchase option to acquire the real estate in 2024 at a 10% premium above the original acquisition cost.
The eight facilities that Genesis will no longer operate have aggregate annual revenue of approximately $83 million. As a result of all the transactions noted above, Genesis estimates its annual Adjusted EBITDA will decline approximately $4.5 million and pre-tax net loss will improve by $1.9 million.
“This transaction is very similar to the Next transaction we completed earlier in the year,” noted George V. Hager, Jr., Chief Executive Officer of Genesis. “Like Next, this delevering transaction provides us with the opportunity to participate in any upside accretion in the value of the real estate and is a positive step toward our goal of owning or having fixed price purchase options on 30% of our assets by the end of 2020.”
About Genesis Healthcare, Inc.
Genesis Healthcare, Inc. (NYSE: GEN) is a holding company with subsidiaries that, on a combined basis, comprise one of the nation's largest post-acute care providers with nearly 400 skilled nursing facilities and assisted/senior living communities in 26 states nationwide. Genesis subsidiaries also supply rehabilitation and respiratory therapy to approximately 1,200 healthcare providers in 44 states, the District of Columbia and China. References made in this release to "Genesis," "the Company," "we," "us" and "our" refer to Genesis Healthcare, Inc. and each of its wholly-owned companies. Visit our website at www.genesishcc.com.
