Country Villa Portfolio Acquired Through Sales Hearing and Bankruptcy Auction

Aug. 25, 2015 - PRLog -- Country Villa Health Services selected Shep Roylance of JCH Senior Housing Group to represent them in the marketing, sales, overbid, and auction of their 19 facilities. Together with partners Jim Hazzard and Nick Stahler, Roylance oversaw the bankruptcy auction sale of Country Villa’s 18 skilled nursing facilities and one assisted living facility, all of which can be found in prime locations throughout Southern California.

JCH Consulting Group, Inc. represented Country Villa Health Services in their bankruptcy auction, which took place in U.S. Bankruptcy Court in Orange County, California on Monday July 28, 2014. The presiding judge, Judge Catherine E. Bauer, chose the stalking horse offer of $65,000,000 over the higher Covenant Care and Kaiser offer of $73,000,000. The judge’s ruling was based on Covenant Care’s and Kaiser’s noncompliant overbid. A huge transaction for both Country Villa and JCH Consulting Group, Roylance showcases how important this deal really was: “This listing was incredibly important to me, for many reasons. I went after the listing harder than I had ever in the past, in large part because of my experience with bankruptcy and California skilled nursing.”

Based on Roylance’s reputation as a force to be reckoned with when it comes to bankruptcy transactions, Roylance was determined to represent the debtor. While Roylance is no stranger to bankruptcy transactions, the Country Villa sales hearing was like nothing he had ever seen. “It was standing room only with many union members there to witness the event. After the judge gave Covenant Care time to consider their offer, they held firm to their offer. Country Villa, their bankruptcy counsel Ron Bender of Levene, Neale, Bender, Yoo & Brill L.L.P. and creditor committee counsel Hamid R. Rafatjoo, Esq. from Venable LLP were forced to turn down a higher bid due to the fact Covenant Care’s bid did not conform to critical stalking horse bid terms.”

Country Villa had 19 facilities in Southern California: 18 skilled nursing facilities, and one assisted living facility, which brought the grand total of licensed beds to 1,905. The entire portfolio was offered for sale at an auction on July 28, 2014. The facilities are in prime locations ranging from Los Angeles to Long Beach to Ontario. Seven of the skilled nursing facilities were 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.

JCH Senior Housing Group brought highly-qualified portfolio buyers to the auction. With the state of the overwhelming demand from all healthcare portfolio buyers, Roylance was expecting a lively auction, and was not disappointed. JCH reports the primary terms of the stalking horse bid were as follows: The purchase price is $62 million (inclusive of all accounts receivable which are estimated at approximately $27 million), key money will be $2 million to the landlords of the seven new long-term leases and an employee performance payments to five key members of management - $1 million

The pre-auction month was an intense and busy time for Roylance who prepared the offering memorandum and distributed documentation to his own valued qualified client base and to the local and national market of healthcare owners and operators. There were three overbids, but only the stalking horse bidder and Covenant Care and Kaiser met the qualifying requisite of depositing $40 million in an escrow account, which allowed them to appear and participate in the auction. The exciting, lively auction Roylance anticipated became an auction between the two qualifying participants.

The winning bid of $65,000,000 was presented by Shlomo Rechnitz, the founder of the medical supply company Twin Med LLC and the owner of Bruis & Rockport Services, the largest nursing home provider in California. Rechnitz increased his presence in California by adding Country Villa’s 18 skilled nursing facilities and one assisted living facility to his portfolio.

Shep Roylanceof the JCH Senior Housing Group specializes in the acquisition and disposition of skilled nursing facilities and healthcare facilities across the entire spectrum of the senior housing market. His expertise in representing troubled skilled nursing and senior housing facilities in bankruptcy has earned the JCH Senior Housing Group nationwide recognition.

Shepard W. Roylance

SVP- The JCH Senior Housing Group

Direct:   (805) 633-4649

Email: Shep@shepjch.com

Web:  www.shepjch.com