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TOLEDO, Ohio, Nov. 7, 2022 /PRNewswire/ -- Welltower® Inc. (NYSE: WELL), or the "Company", today announced definitive agreements to effectuate the sale and transition of 147 skilled nursing facilities currently operated by ProMedica. As part of the agreement between Welltower and ProMedica, ProMedica will surrender its 15% interest in the skilled nursing assets currently held within the existing 85/15 Welltower/ProMedica joint venture and provide significant working capital support for the new operators to ensure a smooth transition of patient care and operations. Welltower released ProMedica from its skilled nursing lease obligation for these considerations, which total nearly half a billion dollars. The private-pay assisted living and memory care assets in the ProMedica joint venture will continue to be operated by ProMedica under a lease backed by the existing guaranty. Concurrently, Welltower entered into a definitive agreement to sell the 147 skilled nursing facilities to an 85/15 joint venture between Welltower and Integra Health ("Integra"). Welltower and Integra will enter into a master lease agreement which will result in a combined cash rent increase of over 4% to Welltower relative to the total current contractual rent from the existing ProMedica Senior Care joint venture.
"We thank ProMedica for its partnership and the high-quality care provided to residents throughout the devastating COVID-19 pandemic," said Shankh Mitra, Welltower's CEO and CIO. "The communities have enjoyed a strong rebound in occupancy over the last six months but have been impacted by the elevated use of agency labor. We are excited to announce this partnership with Integra as Integra's focused asset management and vast network of strong regional providers will allow the new joint venture to build on ProMedica's positive performance momentum, invest in the communities, and hire talent. We believe the transactions announced today will benefit all of Welltower's stakeholders and ensure first-rate resident care continues long into the future. The increase in skilled nursing rent, even under challenging operating and financial market conditions, validates our fundamental investment thesis – favorable basis and staying power are what drives real estate returns over time."
Integra Health Partnership
The Integra/Welltower JV is expected to close before year-end 2022 and does not contain any financing contingencies. At closing, Integra will enter into a master lease with the joint venture on the portfolio with plans to bring in select regional operators across various states that will operate the facilities upon receiving regulatory approvals. As these operators continue ProMedica's recent efforts to improve the skilled nursing properties' profitability, their turnaround efforts will be supported by the aforementioned operating reserves provided by ProMedica. The master lease will be backed by a significant guaranty as well as net worth covenants, and Integra's interest in the joint venture is subordinate to that of Welltower's.
ProMedica Senior Housing Portfolio
ProMedica will continue to lease and operate 58 private-pay assisted living and memory care communities under the existing 85/15 joint venture with Welltower. The lease will continue to be backed by the existing guaranty, and ProMedica's share of the rent will remain subordinate to that of Welltower's. Following the transition of the skilled nursing assets, we expect both senior care coverage and ProMedica's corporate credit to improve.
Financial Implications
The transactions are expected to be neutral to slightly accretive to Welltower's cash flow, leverage, and earnings.
ProMedica has paid all contractual rent due to Welltower through November 2022, and we do not expect any interruption in skilled nursing or assisted living rent payments.
Forward Looking Statement
This press release may contain "forward-looking" statements as defined in the Private Securities Litigation Reform Act of 1995. When Welltower uses words such as "may," "will," "intend," "should," "believe," "expect," "anticipate," "project," "estimate" or similar expressions that do not relate solely to historical matters, it is making forward-looking statements. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties that may cause Welltower's actual results to differ materially from Welltower's expectations discussed in the forward-looking statements. This may be a result of various factors, including, but not limited to, those factors discussed in Welltower's reports filed from time to time with the SEC. Welltower undertakes no obligation to update or revise publicly any forward-looking statements, whether because of new information, future events or otherwise, or to update the reasons why actual results could differ from those projected in any forward-looking statements.
About Welltower
Welltower® Inc. (NYSE: WELL), an S&P 500 company headquartered in Toledo, Ohio, is driving the transformation of health care infrastructure. The Company invests with leading seniors housing operators, post-acute providers and health systems to fund the real estate and infrastructure needed to scale innovative care delivery models and improve people's wellness and overall health care experience. Welltower, a real estate investment trust ("REIT"), owns interests in properties concentrated in major, high-growth markets in the United States, Canada and the United Kingdom, consisting of seniors housing, post-acute communities and outpatient medical properties. More information is available at www.welltower.com.
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