Health and Retirement Properties Trust has agreed to let Integrated Health Services operate certain nursing homes it owns and finances.
The deal was prompted by IHS' recent agreement to acquire Community Care of America, a Naples, Fla.-based operator of long-term-care facilities (Aug. 4, p. 4). HRPT, a Newton, Mass.-based real estate investment trust, has about $110 million invested in properties leased or mortgaged by CCA.
A letter of intent with IHS and CCA spells out terms of the agreement, including repayment of debt owed to HRPT and the sale of certain facilities to Owings Mills, Md.-based IHS. The REIT didn't return phone calls seeking comment on the total value of the deal. However, in a press release, HRPT said it will post "a modest capital gain" from the sale of certain properties to CCA. That gain, combined with certain losses, including the loss of rent from the sold properties and interest from mortgage prepayments, "are not expected to have a material impact" on the company's earnings or funds from operations.
HRPT recently announced a 24% increase in earnings to $27.9 million, or 28 cents per share, for the second quarter ended June 30. In the year-ago quarter, the REIT posted net income of $22.5 million, or 34 cents per share. Per-share earnings reflect a nonrecurring gain on a valuation adjustment to the company's investment in Hospitality Properties Trust. Revenues for the quarter rose 77% to $52.5 million.
The company also posted a gain in funds from operations-to $38.1 million, or 39 cents per share, from $24.8 million, or 38 cents per share-despite feeling the full effect of the company's issuance of 27 million common shares in a secondary offering in March.