Continuing a series of transactions to raise money to reduce debt, Integrated Health Services Inc. of Owings Mills announced yesterday that it has sold 32 nursing homes for $135 million in cash, but will continue to operate the facilities under a management contract.
The deal involves two companies with ties to IHS. Monarch Properties L.P., a real estate investment trust founded by Dr. Robert N. Elkins, bought the facilities.
Elkins is chairman and chief executive officer of IHS.
Monarch, in turn, will lease the facilities to Lyric Health Care LLC. IHS owns half of Lyric; the other half is owned by Timothy Nicholson, a member of the IHS board.
Lyric will contract with IHS to run the facilities, paying an undisclosed management fee.
In April, IHS announced that it was selling 44 facilities to Monarch for $371 million. That deal, however, was not completed.
Marc B. Levin, executive vice president of IHS, said the original deal was contingent on Monarch's completing an initial public offering to raise capital, but that never happened.
Monarch remains a private company.
IHS has sold other facilities, for $95 million, to other REITs not connected to it.
In all those transactions, Lyric then leased the facilities and hired IHS to manage them.
"That's all that's planned at this stage," Levin said yesterday, adding, "There are no other similar transactions in the immediate future."
But, he said, IHS wants Lyric to lease some non-IHS facilities.
IHS could then expand its business by contracting to run the newly leased Lyric nursing homes.
In addition to nursing homes, IHS operates home respiratory services, subacute care and contract rehabilitation services at 1,500 locations in 47 states.
Pub Date: 1/23/99