Healthcare Management Partners (HMP), acting as the court-appointed receiver, has closed the sale of substantially all assets pertaining to nine senior care facilities which were placed in receivership on January 20th, 2017, by the United States District Court for New Jersey in response to a complaint brought by the Securities and Exchange Commission.

HMP working with Nashville-based partners at the Waller law firm decided to utilize an approach commonly referred to as a stalking horse auction to maximize returns on the sale of the nine senior care facilities.  A stalking horse auction involves a purchaser (the stalking horse purchaser) who is willing to publicly submit their bid ahead of a formal auction.  The stalking horse purchaser’s bid effectively establishes a floor for bids at the auction and ensures that there will be at least one party who will bid at the auction.  It also enables the seller to market-test the stalking horse purchaser’s initial bid to determine whether higher and better offers can be obtained. 

The stalking horse auctions of all nine facilities were conducted simultaneously.  Through the process, HMP was able to increase the initial stalking horse bids from $23,925,000 to $26,637,000.

Ultimately, Agemark Acquisition, LLC was the successful bidder for eight of the nine facilities, and Opelika Retirement Investors, LLC was the successful bidder for the ninth facility; both are experienced operators. The team’s efforts resulted in approximately 55 potential purchasers conducting due diligence on the facilities. 

“The Stalking Horse Auction was a significant step forward to returning funds to the investors in these nine senior care communities,” said Derek Pierce, managing director at HMP who was personally named receiver of the facilities. “We were able to secure strong, capable bidders, while seeking the best possible offer for the facilities and moving expeditiously towards closing. For more than a year, I’ve overseen the operations at these facilities and I believe they are well positioned to thrive under new permanent ownership.”

In addition to Pierce, the HMP team included Ronald Winters, Lauren Douglas, Tyler Brasher, and Ward Tishler. The Waller team was led by Ryan Cochran and Blake Roth. HMP also employed Mike Pardoll with Marcus & Millichap as real estate broker and exclusive listing agent to market the facilities and the stalking horse auction.

The facilities sold include:

•    Opelika ALF, LLC for total gross cash consideration of $2,000,000;
•    Columbus ALF, LLC for total gross cash consideration of $4,350,000;
•    Oxton Place of Douglas, LLC, for total gross cash consideration of $2,253,000;
•    Gainesville ALF, LLC for total gross cash consideration of $4,234,000;
•    Rome ALF, LLC for total gross cash consideration of $2,250,000;
•    Savannah ALF, LLC for total gross cash consideration of $1,790,000;
•    Senior Solutions of Social Circle, LLC for total gross cash consideration of $5,090,000;
•    Montgomery ALF, LLC for total gross cash consideration of $995,000; and
•    Waterford Place ALF, LLC for total gross cash consideration of $3,675,000.

Additional archived information about the receivership and the facility sales can be found at oxtonseniorlivingreceivership.com.