Thanks to higher-than-expected costs related to COVID-19, some struggling senior living and skilled nursing facilities are being pushed into default, according to a report Wednesday in Bond Buyer.
Earlier this week, American Eagle Delaware Holding Co., a borrower with bonds that are now junk-rated, told the publication that it had less than 30 days’ worth of cash on hand. The company owns 16 memory care, assisted and independent living communities in eight states and had struggled with liquidity problems before the first case of COVID-19 was detected, although the pandemic has made things worse. The company is seeking a forbearance agreement to stop paying debt service for six months while pursuing a potential bond restructuring, according to a May 11 material event notice.
Bond Buyer also reported that Tallahassee NHHI LLC failed to make the June 1 interest payment on $33.23 million of unrated bonds issued by CTA in 2015 to finance a 151-unit assisted living and skilled nursing facility in Florida called Tallahassee Tapestry. It, too, was struggling financially before the COVID-19 outbreak and received a going concern opinion from auditors, indicating potential difficulty continuing as a going concern, for the year ended Sept. 30, 2019.
“In our opinion, potentially severe and ongoing impacts associated with the COVID-19 pandemic exacerbate” liquidity and debt service problems, S&P analyst Aulii Limtiaco told Bond Buyer.
