Kindred Healthcare is terminating leases on nine nursing centers as part of a move to scale back its operations in the skilled-nursing space.
The Louisville, Ky.-based post-acute-care operator has been restructuring its operations for the past several quarters as it aims to put more emphasis on home health and rehabilitation services, shifting its focus away from skilled nursing.
The current leases on eight of the nursing centers expire in April 2018; the lease on the ninth expires in April 2020. Kindred Monday said it entered into an agreement with Ventas to transition all nine leases over the coming months. The time period was unspecified, but Kindred noted that if the transfers are not finalized by Dec. 31, 2015, its base rent will decrease by 50% until the deals are complete.
Kindred and Ventas will work together to find new tenants for the facilities, according to a news release.
The nine nursing centers have 903 beds and generated about $65 million in revenue in 2013, the release added. The annual rent on the facilities is about $10 million.
Kindred in January also will make a $40 million payment to Ventas to reimburse the real estate investment trust for deferred capital expenditures made at healthcare facilities that were previously transferred to new operators.
In an investor presentation for the third quarter, Kindred said its negotiations with Ventas have saved it more than $600 million on lease obligations.
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