An auction sale is scheduled to be held on July 28, 2014 for a sale of 18 prime location skilled nursing facilities and 1 assisted living facility all located in Southern California containing a total of 1,905 of licensed beds.
7 of the skilled nursing facilities are being made available with new leases with an initial lease term of 15 years followed by three, five-year options and a fourth, four-year option (for a total of 34 years) with below market starting annual rent of $4,135,585 for 687 beds or approximately $502 per bed.
The addresses for these 7 facilities and the number of licensed beds for each of the facilities are as follows:
Country Villa Bay Vista (5901 Downey Avenue, Long Beach, CA 90805 – 70 licensed beds)
Country Villa East (2415 S. Western Avenue, Los Angeles, CA 90018 – 99 licensed beds)
Country Villa Mar Vista (3966 Marcasel Avenue, Los Angeles, CA 90066 – 68 licensed beds)
Country Villa North (3233 W. Pico Blvd., Los Angeles, CA 90019 – 99 licensed beds)
Country Villa Rehab (340 S. Alvarado Street, Los Angeles, CA 90057 – 177 licensed beds)
Country Villa Westwood (12121 Santa Monica Blvd., Los Angeles, CA 90025 – 93 licensed beds)
Country Villa Wilshire (855 N. Fairfax Avenue, Los Angeles, 90046 – 81 licensed beds)
The addresses and remaining lease terms (inclusive of options) and the number of licensed beds for each of the other 12 facilities are as follows:
Country Villa Bella Vista (933 E. Deodar St., Ontario, CA 91764) – (2023 – approximately 9 years left – 59 licensed beds)
North Point Health and Wellness Center (668 E. Bullard Avenue, Fresno, CA 93710) – (2036 – approximately 22 years left – 99 licensed beds)
Country Villa Los Feliz (3002 Rowena Avenue, Los Angeles, CA 90039) – (2016 – approximately 2 years left – 131 licensed beds)
Country Villa Pavillion (5916 W. Pico Blvd., Los Angeles, CA 90035) – (2036 – approximately 22 years left – 59 licensed beds)
Country Villa Terrace (6070 W. Pico Blvd., Los Angeles, CA 90035) – (2036 – approximately 22 years left – 49 licensed beds)
Country Villa Terrace Assisted Living Center (6050 W. Pico Blvd., Los Angeles, CA 90035) – (2036 – approximately 22 years left – 136 licensed beds)
Country Villa Plaza (1209 Hemlock Way, Santa Ana, CA 92707) – (2031 – approximately 17 years left – 145 licensed beds)
Country Villa Sheraton (9655 Sepulveda Blvd., North Hills, CA 91343) – (2031 – approximately 17 years left – 138 licensed beds)
Country Villa South (3515 Overland Avenue, Los Angeles, CA 90034) – (2027 – approximately 13 years left – 87 licensed beds)
Country Villa Belmont Heights (1730 Grand Avenue, Long Beach, CA 90804) – (2018 – approximately 4 years left – 117 licensed beds)
Country Villa Claremont (590 S. Indian Hill Blvd., Claremont, CA 91711) – (2027 – approximately 13 years left & includes a favorable purchase option of the underlying real estate – 99 licensed beds)
Country Villa Hacienda (1311 E. Date Street, San Bernardino, CA 92404) – (2021 – approximately 7 years left – 99 licensed beds)
The primary terms of the stalking horse bid are as follows:
Purchase Price – $62 million (inclusive of all accounts receivable which are estimated at approximately $27 million)
Key Money – $2 million to the landlords of the 7 new long-term leases
Employee Performance Payments to 5 Key Members of Management – $1 million
Replacement Loans to two of the facilities related to the 7 new long-term leases – replace the existing first trust deed loans to Country Villa Wilshire (in the amount of approximately $4,128,000) and to Country Villa North (in the amount of approximately $4,872,000) with new first trust deed loans in the same amount with (i) interest at a market based variable interest rate with a start rate of 5.25% per annum and adjusted annually to the then current one-year LIBOR rate (currently, 0.54%) plus 4.71% (up to a maximum interest rate of 8.0% per annum), (ii) have a term of five years, and (iii) have monthly payments computed based upon a twenty-five year amortization. Alternatively, an overbidder can increase the initial annual rent for the 7 new long-term leases by a total of $250,000
Auction Sale and Overbidding Procedures – The auction sale will be held on July 28, 2014. The breakup fee/expense reimbursement that will be owing to the stalking horse bidder in the event of a successful overbid will not be considered in determining the highest and best bid – which means that the bidding will be on a level playing field and the staking horse bidder will not be receiving any bidding advantage as a result of its breakup fee/expense reimbursement. To be qualified to participate at the Auction, within five business days prior to the auction, an overbidder (which includes any group of overbidders working together as one bidder) must do the following: (i) demonstrate that the overbidder has available to it $72 million of cash (or any higher amount that is bid by the overbidder at the auction) which is not subject to any financing contingency; (ii) deposit cash in the amount of $40 million into a trust account (which is the same deposit that the stalking horse is required to provide); (iii) submit an initial overbid which contains the same terms as described above but increases the $62 million purchase price by at least $2 million to a minimum initial overbid of at least $64 million; and (iv) any overbid must be void of any financing or due diligence contingencies. Any overbids after the initial bid at the auction must be higher than the then existing lead overbid in increments of not less than $250,000.
Interim Management Agreement – After the bankruptcy court has approved the winning bidder at the auction, the winning bidder shall have the right if it wants to enter into an industry standard interim management agreement for the facilities to take over immediate management of the facilities pending the closing of the transaction.
If you are interested in learning more about this unique opportunity, please contact Shep Roylance of JCH Consulting Group who is serving as the sales agent and whose contact information is below. Also below is the contact information for Country Villa’s bankruptcy counsel Ron Bender of Levene, Neale, Bender, Yoo & Brill L.L.P. and contact information for bankruptcy counsel to the Official Committee of Unsecured Creditors Hamid Rafatjoo of Venable LLP.
After executing a standard NDA, you will be provided access to the data room which contains the following: (1) the signed term sheet with the stalking horse bidder which lays out the entire structure of the transaction against which you will be overbidding; (2) the form of lease for the 7 new long-term leases; (3) copies of all existing real property leases for the 12 facilities; (4) financial information relating to the operating performance of all 19 facilities in 2012, 2013 and 2014 (to date); (5) information regarding the current outstanding accounts receivable; (6) a copy of the form of MOTA to be used; (7) a copy of the email from counsel to the Los Feliz landlord indicating the financial terms the Los Feliz landlord is looking for to provide an extension of the Los Feliz lease; and (8) a copy of the email and attachments from counsel to the Belmont landlord indicating what the Belmont landlord is looking for to provide an extension of the Belmont lease.
SVP | JCH Consulting Group
Senior Housing & Skilled Nursing Brokerage
Direct 805.633.4649 | Mobile 818.515.0530 | eFax 805.392.5171
firstname.lastname@example.org | www.shepjch.com | BRE: 1378282
Ron Bender, Esq.
Levene, Neale, Bender, Yoo & Brill L.L.P.
10250 Constellation Blvd. | Suite 1700 | Los Angeles, CA 90067
Phone 310.229.1234 | Direct 310.229.3330 | Cell 310.261.0215 |
email@example.com | www.lnbyb.com
Hamid R. Rafatjoo, Esq. | Venable LLP
t 310.229.9900 | f 310.229.9901
2049 Century Park East, Suite 2100, Los Angeles, CA 90067
HRafatjoo@Venable.com | www.Venable.com