Senior Housing Properties Trust (SNH), a healthcare real estate investment trust, has agreed to sell two rehabilitation hospitals in Massachusetts for $90m and expects to gain more than $30m on completion of the deal.
SNH will sell the two properties to a joint venture consisting of The Sanders Trust of Birmingham, Alabama, and Harrison Street Real State Capital of Chicago, Illinois.
The two hospitals, New England Rehabilitation Hospital and Braintree Rehabilitation Hospital, together have 364 licensed beds.
SNH acquired both hospitals in 2002, and currently leases them to Five Star Quality Care (FVE).
The lease agreement between FVE and SNH will be terminated and when the sale is completed the operation of the hospitals will be taken over by affiliates of private company Reliant Hospital Partners, subject to regulatory approval.
SNH has been trying for years to limit its exposure to government-funded programmes, a key reason for the sale of the Massachusetts properties.
SNH president and COO David Hegarty said that upon completion of the sale, the plan to reduce SNH’s exposure to possible future reductions in government-funded Medicare and Medicaid programmes will be nearly complete.
"SNH believes the rent reduction may be substantially offset by reinvesting the sale proceeds into additional healthcare related real estate, and any temporary reduction in earnings is more than offset by the reduced risk exposure to the politics and vagaries of government funding," Hegarty added.
SNH expects to close the transaction by mid-2014, subject to approval from the relevant regulatory bodies.