National Health Investors, Inc., has agreed to purchase back six Florida skilled nursing facilities from Care Foundation of America, Inc., for $67 million, 10 years after selling the six nursing homes to CFA for just over $32 million.
The purchase, expected to close within three months, will result in the dismissal of pending litigation between Murfreesboro, Tenn.-based NHI and CFA that began after CFA filed for Chapter 11 bankruptcy late last year, just before its promissory note to NHI became due. NHI currently provides mortgage loan financing to CFA, with the current principal balance owed to NHI being $22.9 million.
CFA had originally bought the six nursing homes from NHI in 1999 for $32.2 million. The complaint filed last year alleged that NHI executives controlled CFA's board of directors, leading the charity to purchase the six Florida nursing homes at over-inflated prices.
The facilities are leased to affiliates of Health Services Management, Inc., for $6.2 million annually, plus escalators over the initial lease term expiring in 2014. The facilities total 780 beds and have been part of NHI’s mortgage loan portfolio for 16 years.
“We are making this investment in skilled nursing facilities in Florida that have excellent cash flow and stable operations,” said Justin Hutchens, NHI's president and COO. “Health Services Management has done a fine job operating these facilities over the past decade.”
This business transaction will also resolve the dispute between the parties and will ensure that CFA can continue its charitable mission, he said.
NHI announced in July that it had completed the purchase of four skilled nursing facilities in Texas for $55.5 million. Including the purchase from CFA, NHI will have purchased 10 skilled nursing facilities totaling 1,275 beds for $122.5 million in Texas and Florida.
NHI’s investments involve 130 properties in 19 states and include skilled nursing facilities, assisted living facilities, independent living facilities, medical office buildings, residential projects for the developmentally disabled and an acute care hospital.