Garrison Capital: Former Hospital Borrower Files Chapter 11

“Forest Park Medical Center Fort Worth filed for bankruptcy in an attempt to avoid seeing its facility sold in foreclosure on the Tarrant County courthouse steps.

FPMC Fort Worth Realty Partners LP, which holds the loan on the hospital, filed for reorganization in North Texas bankruptcy court late Monday. Filing a bankruptcy typically blocks the sale of property. The hospital was scheduled for foreclosure this afternoon.

Sabra Texas Holdings, part of the Sabra Health Care REIT of Irvine, Calif., posted the hospital for sale earlier this month after Forest Park Fort Worth missed an interest payment on a $66.8 million construction loan, according to court documents and company officials”.

Extract from the full press release .

According to Garrison Capital’s (GARS) SEC filings, and Advantage Data’s records, the BDC had $9.451mn in secured first lien loans to Forest Park hospital through March 31, 2016.

The BDC took a $5.8mn Realized Loss in the IIQ of 2016 on the debt, which had been on non-accrual in the prior two quarters.

We’re not sure if the GARS debt was on the hospital building itself, or to the management company.

Anyway, the IIQ 2016 write-off and similar problems at Forest Park San Antonio have been black spots on the BDC’s credit record.

ONE TO GO

The San Antonio facility, to which GARS has $10.7mn still outstanding, has been on non accrual since the IIIQ of 2015.

At September 2016, GARS had reduced the debt by 73% over cost.

We do not have enough info to determine if that discount will prove appropriate for the final tally.

The good news for GARS appears to be that the San Antonio situation appears set to be resolved in the months ahead, whatever the final financial outcome.

That should release any remaining capital ($2.9mn at September 2016) to be redeployed into income producing assets.

Nonetheless, using September 2016’s value and the June 2016 Realized Loss, GARS may have lost $13.6mn on these ill fated hospital loans.

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