A years-long bankruptcy process for a large CCRC in Tampa, Florida has finally concluded with a new not-for-profit owner stepping in, BRP Senior Housing Management (an affiliate of Big Rock Partners) now operating it and Ziegler closing a nearly $70 million bond financing to fund the deal. Unfortunately, the property has a long and complicated history under its previous ownership. Complicated, to say the least.
Originally built in 1985 with 445 independent living units, 72 assisted living units and 240 skilled nursing beds, University Village was acquired in 2000 by Westport Holdings Tampa, LP for $64.1 million, or around $85,000 per unit/bed. In that year, Westport Holdings was approved for a Certificate of Authority to operate the CCRC, and from then until March 31, 2014, it had two partnership interests: a 99% limited partnership interest known as Westport Senior Living Investment Fund, L.P. and a 1% general partnership interest known as Westport Holdings University Village, LLC, both controlled by Larry Landry. Before March 2014, the community was managed by AgeWell Senior Living, but the property was already struggling in previous couple of years to keep up with deferred maintenance and had well over $1.5 million of refunds payable. In addition, its lender, Horizon LP UV Lender, LLC, which previously purchased the existing debt at a steep discount to par value, was looking to foreclose on the property before issuing a forbearance through March 31, 2014.
So, on March 31, BVM University Village, LLC, an entity formed in 2013 by John Bartle, acquired the 99% limited partnership interest. The Florida Office of Insurance Regulation (OIR) also did not require an acquisition application for the limited partnership takeover, so long as they submitted an action plan for recovery. BVM retained 39.6% of the interest and simultaneously assigned a 13.2% interest to JF Consultants (controlled by Shabse Fuchs), a 26.4% interest to BHMSILF, LLC (which subsequently transferred the interest to IMH Healthcare), and a 19.8% interest to IMH Healthcare, LLC (controlled by Eli Freiden). To fund the purchase and retire a portion of the existing debt, Mr. Bartle approached USAmeriBank and Columbia Pacific Investment Fund Lending, LLC to provide $15 million and $9.5 million of debt, respectively. With that deal, the skilled nursing/assisted living facility was also spun off and received the USAmeriBank loan, which fell under the control of Valley National Bank after its merger with USAmeriBank. Plus, $3 million was set aside for a minimum liquid reserve and pledged as cash collateral to secure the loan. Meanwhile, the Columbia Pacific loan would be secured on the independent living community, funding a $1 million payment to the seller, retiring $5.6 million of existing mortgage debt and setting aside $1.75 million for a capital expenditure reserve.
Then, the general partner (still controlled by Mr. Landry and holding the Certificate of Authority to operate the property) resigned, and the OIR informed Mr. Bartle that the new general partner would be required to file an acquisition application. Another Bartle-controlled entity, Compliance Concepts, LLC, became the general partner, before resigning and being replaced by IMH Healthcare, of which Eli Freiden is the sole and managing member. IMH made no financial investment in the 1% interest, nor in its 19.8% interest in the limited partnership since the acquisition was funded solely with debt and was guaranteed by BVM. The acquisition application was denied based on the OIR receiving no financial information regarding Mr. Freiden, his company, nor any information on BVM Management or Mr. Bartle. So, with no acquisition application for the limited partnership and the denied application for the general partnership, BVM, JF Consultants and IMH owned 100% of the property’s interest without state approval to run the community.
In 2015, the property’s minimum liquid reserve was about $400,000 underfunded, and payments to vendors were around $1 million in arrears. There was also more than $9 million in liabilities from a PIP (Personal Income Protection) program initiated with the residents where the residents paid a deposit for a three-year term to lower their monthly fee. The seller used those funds to pay capital expenditures and other purposes but owed this large sum to both former residents and current ones. As a result, the OIR ordered the community to stop signing up new tenants and eventually initiated a receivership process. Not only that, but the Columbia Pacific loan came due in March 2016, so ownership decided to declare Chapter 11 bankruptcy protection on the independent living community.
The community, which has since grown to include 46 IL villages, also had around $35 million in owed contracts to the residents and/or their family members. Because of the ban on new move-ins, occupancy dropped to 30%, and is still declining. In order to make a clean start, Big Rock Partners (BRP) helped form a not-for-profit entity (Tampa Life Plan Village, Inc.) run by an independent board on three individuals experienced in the CCRC business. They acquired the community for approximately $16 million, or close to $33,000 per unit, while also assuming the $35 million in contract liabilities. BRP Senior Housing Management (BRP’s operating affiliate) was also hired as the manager. Troy Taylor of Algon Group served as restructuring advisor for the bankruptcy process. The United States Bankruptcy Court for the Middle District of Florida, the State of Florida Department of Financial Services and the OIR approved the acquisition on May 15, 2020. The SNF/AL building was not including in the bankruptcy nor this sale.
The buyer plans to invest upwards of $25 million in substantial renovations to the community, with $5-6 million in physical plant upgrades alone. Still, at that low basis, ownership will look to keep rents low and cater to a more middle market customer.
To finance the acquisition and renovation, Ziegler closed $58.65 million in tax-exempt bonds with a 7.5% interest rate and 8.3% yield, and $11.315 million of taxable revenue bonds at a 9.625% interest rate and 10.41% yield. The Florida Development Finance Corporation issued the bonds as a direct placement to Rosemawr, an alternative investment management firm based in New York City. Both series of bonds were structured as draw-down bonds that will be fully funded by the last draw on December 15, 2021. Plus, both series also feature a make-whole call on January 15, 2035 at par. Finally, the current residents agreed to subordinate their entrance fee refunds to the new debt and will receive them through the property’s equity once it nears and surpasses stabilization.
For the community, BRP will start to refill the units after completion of the renovations, expected in May 2021. And the SNF/AL building is still under control of Westport/BVM, for now, at least.
