The prospective buyer of two Frederick County-owned care centers say it is not planning to dispose of the properties in a sale-leaseback transaction, a financing tool it has used on several prior occasions.
Aurora Health Management LLC has sold five of its seven health care facilities to a Maryland real estate investment trust, said Stanley Snow, Aurora’s president. The transactions — which let Aurora retain ownership of facility operations but dispose of the property — allow the company to finance a purchase or raise money for future acquisitions, according to Snow.
However, Aurora is considering more conventional ways to finance its $30 million purchase of Citizens Care and Rehabilitation Center and Montevue Assisted Living, Snow said.
Still, Aurora’s track record for reselling properties has raised concerns among those who oppose privatizing Citizens and Montevue. A resale of the two county-owned facilities could send down the drain any assurances of uninterrupted care for Montevue’s current residents, the sale opponents said.
About 60 residents at Montevue cannot afford to pay the full cost of assisted living and receive county-subsidized care. The county and Aurora have drafted a care agreement to make sure these residents can continue to live at Montevue even after the sale. Under the drafted agreement, the county would pay Aurora $10.7 million during a four-year period. In exchange, Aurora would care for the roughly 60 indigent residents for as long as it is medically appropriate for them to stay at Montevue.
However, some say all bets are off if Aurora resells Citizens and Montevue.
“By flipping the institutions, it could be all agreements are canceled. That has rather serious implications,” said Sonja Sperlich, a vocal opponent of selling Citizens and Montevue.
Snow said such fears are unfounded.
Though Aurora isn’t anticipating a property resale in this case, such a transaction would not negate the continuing care agreement, he said.
“The continuing care agreement has to do with the operations, not the ownership of the real estate,” Snow said. “We would still be the operator.”
Aurora is still the licensed operator at the five facilities currently owned by Sabra Health Care REIT Inc., he said.
Lori Depies, Frederick County manager, also said her understanding is that transferring property to Sabra wouldn’t weaken the continuing care provisions.
“The operations of the business would still sit with Aurora, and they would still be obligated under the agreement,” Depies said.
But Melanie Cox, a sale opponent who spent years as a nursing home executive, said she is not reassured by Snow’s statements. It would be up to attorneys to decide how a property acquisition by Sabra would affect Aurora’s agreements with the county, she said.
While Snow said Aurora is considering other forms of financing for purchasing the county facilities, Cox said correspondence from Sabra’s CEO seems to show the real estate investment trust is already eyeing Citizens and Montevue. The message was a response to an inquiry from sale opponents and describes Sabra’s confidence in Aurora’s ability to manage care centers.
“(W)e believe that Citizens/Montevue as operated by Aurora will be an asset which we would be proud to own long-term. We look forward to having the opportunity to invest in the future of Frederick,” stated the Oct. 9 message from Rick Matros, Sabra’s chairman, CEO and president.
In 2011, Sabra paid $18 million for two Aurora centers, one in Connecticut and another in Maryland, according to the real estate company’s website. The following year, Sabra spent $21.8 million to acquire three more of Aurora’s skilled nursing facilities, two in Connecticut and one in New Hampshire. Aurora is now leasing these facilities from Sabra on a 15-year agreement with two five-year renewal options, Snow said.
Information about Sabra’s transactions with Aurora is available online in news releases and company profiles.
But the group of privatization opponents claims that Aurora has not been forthcoming about its past transactions with Sabra.
They noted that during the bidding process for Citizens and Montevue, the county asked about Aurora’s past purchases and sales.
“Aurora has not sold any facilities within the last eight years,” Aurora’s response stated.
The response letter signed by Snow went on to list the facilities that Aurora had purchased during that time frame.
“They have been asked a specific question, and they have given an incorrect answer,” Cox said.
Snow said his answer pertained to whether the company had sold any facility operations and wasn’t in reference to the real estate transactions.
County commissioners voted in June to sell Citizens and Montevue to Aurora, but the transaction hasn’t been finalized.
Follow Bethany Rodgers on Twitter: @BethRodgersFNP.