KINDRED HEALTHCARE, INC. (KND) Files An 8-K Entry into a Material Definitive Agreement
Item1.01. Entry into a Material Definitive Agreement.
On November 11, 2016, as part of the strategic decision
previously announced by Kindred Healthcare, Inc. (Kindred) to
exit its skilled nursing facility business, Kindred entered into
Agreement Regarding Master Leases No. 3 (the Agreement) with
Ventas, Inc. (Ventas) to provide Kindred with the option to
acquire the real estate for all 36 skilled nursing facilities
(the Ventas Properties) leased under its master lease agreements
with Ventas (each a Master Lease and, collectively, the Master
Leases) for an aggregate consideration of $700 million. The
Agreement also provides that, through October 31, 2018, Kindred
has the right to find one or more purchasers of the Ventas
Properties. As Kindred locates new owners/operators for the
Ventas Properties, in exchange for a payment by Kindred to Ventas
of the allocable portion of the $700 million purchase price,
Ventas has agreed to convey the real estate for the applicable
Ventas Property to the new owner/operator.Kindred, at its option,
may also elect to renew the leases for any of the Ventas
Properties through April 30, 2025, and transfer them into Master
Lease No. 5.
The Ventas Properties will remain leased under their current
Master Leases until Kindred exercises its purchase option or
April 30, 2018, whichever comes first. Currently, 11 of the
Ventas Properties are leased under Master Lease No. 1, 10 of the
Ventas Properties are leased under Master Lease No. 2, four of
the Ventas Properties are leased under Master Lease No. 4, and 11
of the Ventas Properties are leased under Master Lease No. 5.
If Kindred does not complete the acquisition of the Ventas
Properties by April 30, 2018, the lease for any remaining Ventas
Properties will be automatically renewed through April 30, 2025,
and transferred into Master Lease No. 5.Base rent for the Ventas
Properties that transfer into Master Lease No. 5 will escalate
annually at three times the increase (if any) in the consumer
price index (with a floor of 0% and a cap of 4%).
Also on November 11, 2016, Kindred renewed the leases for eight
long-term acute care (LTAC) hospitals Kindred leases from Ventas
(the Hospitals) through April 30, 2025, and transferred the
Hospitals into Master Lease No. 5, which is being amended and
restated. The Hospitals were previously leased under Master Lease
Nos. 1, 2 and 4, respectively, each of which were amended on
November 11, 2016. The base rent and rent escalators will remain
the same for the Hospitals, as well as for the other 23 LTAC
hospitals currently in Master Lease No. 5. The Hospitals will be
combined into a single renewal bundle with Kindreds other LTAC
hospitals expiring on April 30, 2025.
No rent from the Ventas Properties will be allocated to Kindreds
LTAC hospitals.
The amended and restated Master Lease No. 5 contains terms
substantially similar to the existing Master Lease No. 5, except
for modifications to certain restrictions applicable to Kindred
that will take effect if Kindred acquires all of the Ventas
Properties and pays Ventas the aggregate consideration. As noted
above, since all of the Ventas Properties will either be sold or
transferred into Master Lease No. 5, Kindreds other master lease
agreements with Ventas will be effectively terminated and only
Master Lease No. 5 will remain.
The foregoing description is qualified in its entirety by the
Agreement, Amendment No. 4 to Master Lease Agreement No. 1,
Amendment No. 2 to Master Lease Agreement No. 2, Amendment No. 4
to Master Lease Agreement No. 4 and the Second Amended and
Restated Master Lease Agreement No. 5, which are attached as
Exhibits 10.1, 10.2, 10.3, 10.4 and 10.5 hereto, respectively,
and incorporated herein by reference.
Item7.01. Regulation FD Disclosure.
Incorporated by reference is Exhibit 99.1 attached hereto, a
press release issued by Kindred on November 14, 2016 reporting
the agreements with Ventas noted in Item 1.01 herein. This
information is being furnished under Item7.01 and shall not be
deemed filed for purposes of Section18 of the Securities Exchange
Act of 1934, as amended (the Exchange Act), or otherwise subject
to the liability of such section, nor shall this information be
deemed incorporated by reference in any filing made by Kindred
under the Securities Act of 1933, as amended, or the Exchange
Act, except as expressly set forth by specific reference in such
a filing.
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Item9.01. Financial Statements and Exhibits.
(d)Exhibits
|
Exhibit No. |
Description of Exhibit |
|
| 10.1 |
Agreement Regarding Master Leases No. 3, dated as of November 11, 2016, among Kindred Healthcare, Inc., Kindred Healthcare Operating, Inc. and Ventas Realty, Limited Partnership. |
|
| 10.2 |
Amendment No. 4 to Second Amended and Restated Master Lease Agreement No. 1, dated as of November 11, 2016, among Kindred Healthcare, Inc., Kindred Healthcare Operating, Inc. and Ventas Realty, Limited Partnership. |
|
| 10.3 |
Amendment No. 2 to Second Amended and Restated Master Lease Agreement No. 2, dated as of November 11, 2016, among Kindred Healthcare, Inc., Kindred Healthcare Operating, Inc. and Ventas Realty, Limited Partnership. |
|
| 10.4 |
Amendment No. 4 to Second Amended and Restated Master Lease Agreement No. 4, dated as of November 11, 2016, among Kindred Healthcare, Inc., Kindred Healthcare Operating, Inc. and Ventas Realty, Limited Partnership. |
|
| 10.5 |
Second Amended and Restated Master Lease Agreement No. 5, dated as of November 11, 2016, among Kindred Healthcare, Inc., Kindred Healthcare Operating, Inc. and Ventas Realty, Limited Partnership. |
|
| 99.1 | Press Release, dated November 14, 2016. |
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About KINDRED HEALTHCARE, INC. (KND)