A dispute over senior living properties has led one real estate investment trust (REIT) to take legal action against another.
National Health Investors (NYSE: NHI) has filed a lawsuit in the Delaware Court of Chancery against Welltower (NYSE: WELL) and certain of its subsidiaries.
Murfreesboro, Tennessee-based NHI alleges that the Welltower entities have failed to honor certain legal obligations, following Toledo, Ohio-based Welltower’s acquisition of properties formerly leased to Holiday Retirement.
Welltower declined to comment for this article.
The case argues that Toledo, Ohio-based Welltower “fraudulently induced NHI to consent to the assignment of the leases,” NHI stated in a press release issued Dec. 27.
Subsequent to the lease assignments, the Welltower entities failed to pay rent or provide a promised security agreement, according to the press release; NHI believes Welltower withheld the payments to force a sale of the properties to Welltower or pressure NHI to agree to new conditions outside the assignment agreement.
The lawsuit states that Welltower currently owes NHI more than $14.1 million in back rent.
Louisville, Kentucky-based Atria Senior Living acquired the Holiday Retirement management company in 2021. Concurrently with that transaction, Welltower acquired ownership of 86 Holiday properties, in a deal valued at $1.58 billion.
As of the end of November 2021, NHI noted that it had sent a default notice to a “public health care REIT” over unpaid rent on 17 legacy Holiday properties. NHI holds $8.8 million in Holiday security deposits.
On NHI’s Q3 2021 earnings call in early November, CEO Eric Mendelsohn noted that NHI had not yet received any rent payments on legacy Holiday properties in the fourth quarter.
“That is obviously a sensitive legal topic, I hesitate to speculate on an earnings call, but just know that we are focused on recovering that, and that the balance sheet information we received from Atria indicates that those funds are accruing on the buildings’ balance sheets,” Mendelsohn said.
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