The New Jersey-based skilled nursing and assisted living operator puts 33 of its properties into receivership. Not good for the lenders.
I am sure you have heard by now about Atrium Health and Senior Living placing 33 of its properties into receivership this week. This includes all their Wisconsin properties and one Michigan facility, but appears to leave out its 12 buildings in New Jersey.
Atrium operates both skilled nursing and assisted living, and only nine assisted living communities in Wisconsin were placed in receivership; the remainder were SNFs. The receiver has hired Health Dimensions Consulting to operate them during the receivership until it is decided whether to split them up and sell them, or sell as a portfolio of 33. Since many of the campuses have separate skilled nursing and assisted buildings, it may make it more complicated for buyers.
A little over three years ago, Midcap Financial provided $50 million in mortgage financing secured by 22 seniors housing and skilled nursing facilities on 16 distinct campuses in Wisconsin and one in Michigan, as well as $8 million in working capital funding. MidCap has filed a complaint in Wood County.
At the time, the loans were made to the owner, Rice, LLC, which leased the properties to Atrium with a purchase option. This was a major expansion for Atrium out of its familiar New Jersey locations, where it is based. Atrium had already been a MidCap customer but perhaps this was too much in too short a time period for Atrium.
As far as receiverships in the industry go, this is a pretty big one, but we don’t know whether it was a question of too much leverage, operations suffering, or probably both. This will not be the last one in this cycle.