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JCH Sells Bay Area Skilled Nursing Bankruptcy Assets in 363 Sale

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Shep Roylance of the Premier Housing and Senior Housing & Skilled Nursing Brokerage Firm, JCH Consulting Group announces his representation of both the Debtor and Seller in the 363 sale of A&C Healthcare Service’s two skilled nursing assets.  The successful sale consisted of 60 Bed Camden Convalescent Hospital and the 140 bed A&C Convalescent Hospital of Millbrae.

Shep Roylance was employed by the Federal Bankruptcy Court to market and sell A&C Healthcare Services’ three senior housing assets.    At the auction conducted by Alan Stomel, Javed Ellahie and Shep Roylance, three bids were made from Roylance’s pool of qualified nursing home buyers.  The highest bids were made by a two groups of investors highly experienced in the operation of skilled nursing facilities. The Camden Convalescent Hospital transaction was structured by the sale of the business and the assumption of a 15 year lease NNN lease.   The A&C Convalescent Hospital of Millbrae transaction was structured by the sale of the business and the assumption of a 5 year lease.  Landlord and Tenant are negotiating a new 20 year NNN lease for Millbrae.

In his capacity as Senior Vice President of JCH and with unparalleled knowledge of the healthcare industry, Roylance specializes in the acquisition and disposition of skilled nursing facilities and healthcare facilities across the entire spectrum of the senior housing market.  Additionally Roylance’s knowledge and experience in the intricacies of the Bankruptcy court is invaluable in the execution of transactions of facilities in Bankruptcy.  The successful close of A&C’s transaction marks Roylance’s second closing of facilities in Bankruptcy since the beginning of the year.

For more than a decade Shep’s main goal has continued to be the improvement of the quality of care of the senior population, providing world-class nursing home brokerage and assisted living brokerage service to both buyers and sellers of long term care facilities.  Although Roylance services individual owner/operators, regional and national healthcare providers, he specifically targets the representation of institutional investor’s healthcare portfolios in part or in entirety.   As a problem solver in troubled facilities in bankruptcy, Roylance contributes to the continuing growth of a stable healthcare industry.  His judicious representation of the entire spectrum of the senior housing market has earned him an outstanding nationwide reputation.

Factors Leading to Skilled Nursing Facility Bankruptcies

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The skilled nursing facility industry has been dealt several successive blows in recent years, leaving many SNF owners with few options to keep struggling facilities afloat. As a result, SNF bankruptcy is becoming increasingly commonplace.

Financial Realities Lead to Tough Circumstances

The economic downturn seems to have impacted everyone, but a series of laws, amendments, and shifts in the market have been especially difficult for those in the skilled nursing industry. Here’s a brief list of what has occurred:

  • 1997 – Balanced Budget Amendment Act allows states to mandate managed care plans for individuals wanting Medicaid coverage for nursing home services, resulting in extremely low negotiated reimbursement rates
  • 1999 – Health Care Financing Administration changes Medicare reimbursement, almost immediately triggering a round of SNF bankruptcies
  • 2008 – Economic downturn and official “bursting” of the housing bubble guts many retirement savings accounts, negates home equity, and makes selling a home difficult for seniors
  • 2010 – Patient Protection and Affordable Care Act increases benefits for in-home care, reducing overall demand for SNFs and effectively ensuring that those who are in SNFs will be frailer and in need of more care
  • 2011 – Centers for Medicare & Medicaid Services announced an 11.1% reduction in reimbursement rates, which was twice as bad as what had been predicted
  • 2011 – As a direct result of this announcement, stock prices for publicly traded SNFs plummet
  • 2012 – Medicare Payment Advisory Commission recommended an additional 4% cut in reimbursement to SNFs that will go into effect in 2014 and recommended no cost of living adjustment for 2013

Debt and expenses remains high among SNFs. This is particularly difficult to manage as the majority of unpaid Medicare co-payments are owned by state governments, and states lack the financial resources and the will to reimburse SNFs for the money owed. Some nursing home brokerage firms have been able to help clients buy a skilled nursing facility when it’s in distress, saving their clients money and helping the previous owners avoid a messy financial conclusion.

The Bankruptcy Process

When a skilled nursing facility is no longer financially solvent, bankruptcy may be the only route. Working with financial and legal experts, the SNF will choose between two types of bankruptcy: Chapter 7 (liquidation) and Chapter 11 (reorganization). With a Chapter 7 bankruptcy, a trustee is appointed to assess the company’s debts and assets and to collect and reduce property to raise cash, which is then distributed to those who are owed money. A trustee is also appointed to ensure patients are responsibly transferred before the SNF closes. In Chapter 11, the owner acts in lieu of a trustee, and works with a committee of creditors. They find ways to work with vendors and pay employees while continuing to operate, with the ultimate goal being to regain firm financial footing – usually by restructuring the business and selling off some of the company’s property.

Bankruptcy can provide an opportunity for those who plan to buy nursing homes. They may find a SNF for sale at a substantially reduced price, which can enable them to make improvements or operate in the black that much more quickly.

Sold – 74 Bed Skilled Nursing Facility in Ventura County, California.

Shep Roylance of the Premier Senior Housing and Skilled Nursing Brokerage Firm, The JCH Group, announces his representation of a Group of Skilled Nursing Investors in their acquisition of Ojai’s Los Robles Care Center in Ventura California, a 74 Bed nursing home.  The acquisition included two adjacent homes to accommodate staff and offices.   JCH represented both buyer and seller in this transaction which successfully removed the Los Robles Care Center, Inc. from Chapter 11 Bankruptcy.

The addition of the Ojai Skilled Nursing Facility expands the investment group’s existing impressive portfolio and greatly enhances the group’s presence in Southern California.  After the close, the buyer will complete the development of a 20 bed sub-acute unit within the facilty.  The investment group will enter into a long term triple net lease with one of the premier operators.

In his capacity as Senior Vice President of JCH and with unparalleled knowledge of the healthcare industry, Shep specializes in the acquisition and disposition of skilled nursing facilities and healthcare facilities across the entire spectrum of the senior housing market.  Additionally Shep’s knowledge and experience in the intricacies of the Bankruptcy court is invaluable in his execution of transactions of facilities in Bankruptcy.

For more than a decade Shep’s main goal has continued to be the improvement of the quality of care of our nation’s senior population, providing world-class nursing home brokerage and assisted living brokerage services to both buyers and seller of long term care facilities.  Although Shep services individual owner/operators, regional and nation healthcare providers alike, he specifically targets the representation of institutional investor’s health care portfolios in part or in entirety.  Shep’s judicious representation of the entire spectrum of the senior housing market has earned him an outstanding nationwide reputation.

Shepard Roylance
Direct: 805-633-4649
Email: Shep@shepjch.com