CCRC & Senior Living Task Force

Our group has worked on structuring the issuance of new bond issues financing CCRCs and senior living projects, addressed all the health care regulatory issues relating to CCRCs/senior living projects, and represented clients in workouts of distressed CCRCs and other senior living facilities.

Our approach to distressed CCRC/senior living bonds is to be proactive in working with holders to assess the root causes of the distress avoid a bankruptcy filing and create a pragmatic framework for an effective resolution. Covenant breaches are best addressed by entering forbearance agreements that accomplish the following basic goals:

1. improves the collateral package and fixes any issues with perfection or material document deficiencies
2. establishes new appropriate financial covenants and operational thresholds
3. provides for pertinent budget and marketing guidelines
4. enhances ongoing disclosure
5. addresses any issues with the manager including replacement consistent with contractual constraints

Our Work

ArentFox Schiff has represented:

• Purchasers of a $550 million bond issuance which financed the purchase by a nonprofit of 26 nursing homes and assisted living facilities. The transaction was structured with 3 tranches of debt- senior secured, subordinate secured and unsecured. ArentFox Schiff was instrumental in structuring, negotiating, and closing the transaction.
• Fannie Mae in the financing of CCRCs and other senior living projects through master credit facilities aggregating around $500 million. These credit facilities included bond and conventionally financed properties and provided for additions, substitutions, and releases of properties. In addition, entrance fee issues were addressed to satisfy Fannie Mae’s credit concerns.
• An indenture trustee in connection with a workout and the exercise of remedies in connection with a CCRC in Georgia. The financing included three tiers of high-yield municipal bonds, two of which were issued on a tax-exempt basis. The work culminated in a consensual work-out among all of the parties, followed by the closing of a sale of the senior bonds to a new holder.
• An institutional bondholder in an out-of-court workout of a CCRC. Work included conducting due diligence while navigating security law issues, manager replacement, resolution of officer and director claims, and negotiation of a forbearance agreement and a liquidity support facility.
• A high yield municipal fund in the acquisition of a defaulted CCRC loan, the negotiation of a deed in lieu, rehabilitation of the property, and a sale of the property to a nonprofit with the proceeds of tax-exempt bonds.
• Senior living real property owners when the operators of the nursing homes and assisted living facilities have defaulted on loans or have filed for bankruptcy protection. Work included drafting and negotiating waivers and forbearance agreements with lenders, drafting default notices under leases with senior living operators, as well as assisting the real property owners in navigating the regulatory process to enable new operators to take over the operations of the senior living operations at the affected properties.
• A variety of clients in addressing the regulatory issues relating to CCRCs and senior living facilities. We have assisted clients in analyzing requirements related to operating reserves and entrance fee escrow requirements. We also regularly review loan agreements relating to CCRCs to evaluate regulatory matters. We routinely issue legal opinions relating to the property licensing of CCRC and senior living facilities. We also have experience in licensure and operational matters for CCRCs, including change of ownership licensure applications, disclosure statements, and policies and procedures.
• Clients in bond issuances financing CCRCs and other senior living facilities around the country.
• Several nonprofit CCRCs, handling matters from tax-exempt bond financings to corporate and management issues.