National Health Investors (NYSE: NHI) has reached a memorandum of understanding with Welltower (NYSE: WELL) over litigation filed earlier this year.
NHI in January filed a lawsuit in the Delaware Court of Chancery against Welltower and certain of its subsidiaries. The Murfreesboro, Tennessee-based company initially alleged that Toledo, Ohio-based Welltower did not honor certain legal obligations following its acquisition of 17 properties formerly leased to Holiday Retirement.
Welltower’s entities did not pay rent or provide a promised security agreement, according to NHI’s original complaint, which also alleged that Welltower withheld the payments to force a sale of the properties to Welltower or pressure NHI to agree to new conditions.
The lawsuit alleged that Welltower owed NHI more than $14 million in back rent. NHI also previously said it held $8.8 million in Holiday security deposits.
On Monday, NHI announced that the two companies agreed to a memorandum of understanding (MOU) with several stipulations to tentatively settle the matter until a final settlement agreement is executed.
Under the new MOU, NHI and Welltower have both stated they seek to transition 16 legacy Holiday properties to new tenants — Merrill Gardens and Discovery Senior Living — with Welltower using “commercially reasonable efforts” to complete the transaction by April 1.
NHI also plans to sell one additional legacy Holiday property, with Welltower agreeing to aid the sale’s closing.
Welltower under the agreement plans to pay NHI approximately $6.9 million in an escrow account until the settlement agreement’s execution. And, NHI is entitled to access to Holiday’s $8.8 million security deposit.
Once the final settlement agreement takes effect, NHI has agreed to file a stipulation of dismissal with prejudice and a form of order closing to settle the suit.