Quality Care Properties Chief Executive Officer Mark S. Ordan was paid $14 million in compensation last year, according to a proxy filed Friday with the Securities and Exchange Commission, after he helped orchestrate the REIT’s spin-off from HCP Inc. in late 2016.
Ordan began consulting for HCP in August 2016 as the company sought to divest the poorly performing HCR ManorCare portfolio, one of HCP’s main tenants, which had also been accused of defrauding Medicare.
HCP successfully spun off the ManorCare portfolio into a new company called Quality Care Properties, which operates as a publicly traded health care REIT focused on post-acute nursing services and assisted living.
The spin-off was also motivated by HCP’s desire to exit the “post-acute” space of health care properties, which then made up 26 percent of the company’s portfolio, in order to focus its revenue stream on private-pay sources.
Post-acute care consists of rehabilitation required after a patient’s stay in an acute-care hospital.
Ordan’s total compensation includes $1.2 million for his consulting work, $9.5 million in stock and options awards and a $3 million “completion bonus” in association with the successful spin-off from California-based HCP.
Prior to his consulting work at HCP, Ordan was CEO at Sunrise Senior Living from 2008 to 2013 and led the restructuring effort and eventual sale of the REIT. He has also been a director at VEREIT, WP Glimcher, and Washington Prime, all commercial REITs.
Greg Need, QCP’s president and chief investment officer, received $9.2 million in compensation in 2016, consisting of $6.5 million in stock and option awards and a $2 million completion bonus.
Need worked alongside Ordan at Sunrise Senior Living as chief investment officer from 2008 to 2013.
Chief Financial Officer and Treasurer C. Marc Richards also worked with Ordan previously as CFO at both Washington Prime and Sunrise Senior Living.
Richards was paid $5.1 million in 2016, with a $1 million bonus and $3.8 in stock and option awards.
According to QCP’s updated employment contracts, in 2017 Ordan, Need and Richards will receive base salaries of $800,000, $575,000 and $400,000 respectively, along with possible cash and equity awards grants as multiples of their salaries.
REITs are required by the SEC to distribute 90 percent of their taxable income to shareholders as dividends.
However, the company has also reserved the right to make future dividend payments that are made up of both dividends and stock in the company, which might concern some investors who are attracted to the strong dividend streams associated with REITs.
In May 2017, QCP announced it entered into a forbearance agreement with HCR ManorCare to defer $7.5 million of rent a month for April, May, and June while requiring HCR to make cash rent payments of $32 million each month.
QCP is also in a good-faith discussions with HCR concerning the long-term restructuring of the master lease terms, and has agreed to provide a temporary credit extension of up to $7 million each month for the same time period.
The QCP’s stock closed down slightly Thursday at $18.82 per share.
