After announcing its intention to cease being an owner and operator of skilled nursing facilities at the end of 2016, Kindred Healthcare (NYSE: KND) has struck a deal to sell its SNF business for $700 million in cash.
The total value of the transaction to Kindred is expected to be $910 million, the Louisville-based company announced late Friday. That figure encompasses cash proceeds, anticipated working capital liquidation, tax benefits, retained assets, and other items, minus estimated transaction and severance costs.
The buyer is BM Eagle Holdings, a joint venture led by affiliates of BlueMountain Capital Management, a privately held New York-based alternative asset manager. It has $22 billion in assets under management, including equity and debt in commercial real estate, as well as investments in operating businesses with real estate exposure.
New operators associated with BlueMountain will take over the SNFs after they transition from Kindred, which did not identify the new operating companies by name.
“Today’s announcement is a historic milestone for all of Kindred’s stakeholders,” Kindred CEO and President Benjamin Breier stated in a press release. “Exiting the skilled nursing facility business, in its entirety, has been a long-stated goal of our enterprise. After more than two decades of nursing center operations, this announcement clears the way to closing that chapter of Kindred’s story, and turning the page to the future of integrated post-acute care.”
Kindred is staking its future on being the largest home health provider in the nation, as well as a significant provider in the inpatient rehabilitation facility and long-term acute care hospital sectors. The company also is pursuing a strategy to be a post-acute care manager, overseeing large patient populations for health systems, managed care organizations, and other entities.
In total, the deal includes 89 SNFs with 11,308 licensed beds and seven assisted living centers with 380 licensed beds; together, these facilities employ about 11,500 people across 18 states. Kindred will retain a SNF it owns in Las Vegas, as well as hospital-based subacute units.
Chicago-based real estate investment trust Ventas (NYSE: VTR) owns 36 of the SNFs. As Kindred closes on the sale of these properties, it will pay Ventas, and the REIT will transfer the real estate to BlueMountain. Ventas anticipates receiving an aggregate $700 million for the SNFs it owns, the company stated Friday.
After the $700 million payment to Ventas and other costs, Kindred anticipates realizing a net value of about $210 million from the sale.
The transaction is expected to close in a phased manner starting in the third quarter of 2017 and concluding by the end of the year.
Written by Tim Mullaney