The Situation
South Franklin Circle is a retirement community with 199 independent-living units composed of 143 apartments, 13 townhomes, 27 cottage homes, 16 garden homes and a 40-unit assisted living facility.
Built-in 2009 in Chagrin Falls, Ohio, near Cleveland, the campus of this continuing care retirement community (CCRC) is affiliated with a longtime area provider of senior care, Judson Services, Inc. South Franklin Circle residents have access to skilled nursing beds at this parent company’s nearby facility.
The Challenge
Several years after its completion, South Franklin Circle was only about 50% occupied. In addition, the CCRC had more than $100 million in bank debt and was in default.
Further negotiations with the bank group were stalled, and South Franklin Circle’s parent company was financially supporting the CCRC, despite dwindling resources.
The Hamlin Solution
Hamlin Capital Advisors contacted an investor with significant funds to invest in CCRCs such as South Franklin Circle. Due to this investor’s decisiveness and its rapid access to capital, the banks agreed to write down a significant portion of South Franklin Circle’s debt in exchange for an immediate cash payment in the form of a new bond issue. The banks also accepted a small parity debt position and a hope note for the balance, while the parent company’s financial responsibility was significantly reduced.
Today, South Franklin Circle enjoys growing occupancy and a considerably lower debt burden.
