CCRC, Hospitals, Transportation and More – Americas Municipals

In terms of new coverage, our Americas Municipals coverage team initiated on a number of names, including three CCRC-related situations as well as a pair of related assisted living facilities, a Staten Island-based hospital, a Maryland transportation situation, a Kansas convention center and a Maryland-based student housing project. 

Lifespace Communities (Edgemere) (CCRC): Dallas-based continuing care retirement facility Edgemere is in default on its $107 million-plus bond debt and is in the process of negotiating a forbearance agreement with its bondholders, after retaining FTI Consulting and Sidley Austin as advisors. We’ve previously reported on Edgemere’s parent company, Lifespace Communities, which owns and operates 14 communities in seven states and is in the process of issuing Series 2021 bonds, which are expected to close on or about Aug. 25. Edgemere is separately financed, however, and is not a part of the obligated group on that new issuance or on Lifespace’s other issuances.

Asbury (CCRC): The owner of two CCRCs in Tennessee – Asbury Place Maryville and Asbury Place Kingsport – is operating well below its required debt service coverage ratio, and if it does not raise the ratio by Dec. 31, it will be in default on its $41 million of bond debt. Although Asbury managed to meet its debt service ratio covenant last year after operating below required levels for the first, second and third quarters of the year, it remains to be seen whether the two CCRCs will be able to recover from the fallout of the Covid-19 pandemic, which continues to “affect occupancy” resulting in a census for both facilities that is “lower than anticipated,” according to Asbury’s quarterly financials.

Santa Fe (CCRC): Two out of three continuing care retirement communities owned by Florida-based SantaFe Senior Living Inc. – The Terraces at Bonita Springs and East Ridge at Cutler Bay – continue to miss bond covenants and are in active negotiations with bondholders. Bonita Springs is operating under a forbearance agreement with its bondholders that expires in October and has continued to miss its bond covenants. East Ridge has no such forbearance agreement in place and is also missing its bond covenants, but management says it will begin negotiations on an agreement with its bondholders.

Wingate Healthcare (Assisted Living):  Wingate Residences at Melbourne in Pittsfield, Mass., a 125-bed assisted living facility with 32 memory care units, and Wingate Residences at Blackstone in Providence, R.I., a 96-bed assisted living facility with 23 memory care units, recently disclosed that they are not in compliance with their bond certificates for the fiscal year ended June 30. The two facilities are related through common ownership and are members of the obligated group on $42.5 million of senior housing revenue bonds.

Richmond University Medical Center (Hospital): The Staten Island-based healthcare facility and teaching institution disclosed this month that it is in jeopardy of missing its required debt service coverage ratio. The hospital currently reports a negative 9.8x DSCR for the quarter ended June 30, while the bond indenture for its $111 million outstanding Series 2018 revenue bonds requires a DSCR of at least 1.15x as of the end of the calendar year. The Medical Center did not generate sufficient income to meet the minimum debt service coverage ratio requirement in 2020 and was granted a waiver by the bond trustee, according to Richmond’s 2020 annual financials. 

Purple Line (Transportation): We also initiated coverage on Maryland’s troubled Purple Line light rail project, a 16.2-mile, 21-station, east-west, light rail transitway with a western terminus in Bethesda and an eastern terminus in New Carrollton, with $313 million in green bonds outstanding. We reported that the Maryland Department of Transportation and the Maryland Transit Administration have agreed with Purple Line Transit Partners LLC to further extend the due date for negotiating a replacement design-build contractor agreement by one month. The borrower is currently under forbearance with its bond trustee while a new contractor is chosen to replace Purple Line Transit Constructors LLC, the current contractor, which notified the MDOT and MTA that it was terminating its contract after alleging that they caused various construction delays.

Sheraton Overland (Convention Center): On March 1, the bond trustee for $90 million of revenue bond debt tied to the Sheraton Overland Park Convention Center Hotel made a $2.2 million unscheduled draw on the debt service reserve and it is unclear whether hotel revenue and transient guest tax revenue from the city of Overland Park, Kan., will be sufficient to avoid another unscheduled draw when next interest payment is due Sept. 1. The bonds are special limited obligations secured by the revenue of the 412-room full-service hotel adjacent to Overland Park’s convention center and a portion of the city’s transient guest tax revenue.

Towson University (Student Housing): The Maryland Economic Development Corp., or MEDCO – the issuer on $42 million of outstanding bonds tied to the Millennium Hall student housing facility at Towson University – does not expect to be in compliance with its revenue covenant at the end of its June 30 fiscal year. 

Existing Coverage

We have written several stories on Provident Oklahoma’s Cross Village Student Housing Project at the University of Oklahoma and the litigation over the project, which was ultimately settled. As part of the settlement, the University of Oklahoma agreed to purchase the student housing project for $180 million. This week, Seth wrote a piece talking about a related new general revenue bond deal, which would finally close the book on the $253 million debacle. Although ratings agencies have given favorable ratings to the university’s general revenue bonds, former investors of the Cross Village Student Housing Project are skeptical of the university’s willingness to back student housing projects given that it chose to renew only a portion of the project’s lease in July 2019, triggering its restructuring.  

CalPlant, our favorite manufacturer of MDF from post-harvest rice straw experienced another setback this week, as CalPlant does not expect to achieve “plant acceptance” with German machinery company Siempelkamp until the end of September, a month later than last reported.

In terms of other existing coverage, Midtown Campus Properties (comments made during a recent hearing revealed that the student housing project still needed $1.4M for completion) Canterbury-on-the-Lake (continues to miss several covenants), Illinois/Exelon (the push by Illinois to advance legislation providing $700M in subsidies related to two Exelon nuclear power plants), Vista Grande Villa (ongoing failure to meet certain minimum covenant requirements), Estates at Crystal Bay Apartments (a proceeding in connection with the borrower’s efforts to pay off the bonds in full) and Nevada State College (disclosures focus on expense reduction efforts and the bondholder group’s retention of Arent Fox).

Primary Coverage

On the primary side, we published on pricing in connection with the $303 million of Series 2021 bonds being issued by the California Statewide Communities Development Authority on behalf of Front Porch Communities and Services. The financing will consolidate the operations of Front Porch and Covia Communities, which provide senior housing and life plan communities, primarily in California. 

The team also covered the pricing of $61.5 million of tax-exempt bonds being issued by Baytown Municipal Development District to finance the Baytown Convention Center Hotel Project, a 208-room hotel and convention center in Baytown, Texas. 

We also previewed the upcoming pricing for $130 million in tax-exempt sales tax revenue bonds that the state of Illinois is issuing as part one of two offerings that will total approximately $500 million of Build Illinois bonds.

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