ruptcy are new; too bad; this co should never have gotten ino this sorry shape; really a management problem; nhi seems to be following suit; if they know the banks are not going to do business with them, why didnt they start looking elsewhere a long time ago; piss poor management
<< I'm not convinced the banks see any LTC-specific problems. >>
I don't think you can assume that BoA has any special insight because if they did then they wouldn't have made the original loan.
I assume that BoA wants to shrink the loan balance through mandatory paydowns. MT sold $1 bn of assets at significant discounts in order to pay down its revolver; BoA would like to see the same thing here. MT also realized losses on those sales making it unnecessary to pay any common stock dividend.
"I'm not convinced the banks see any LTC-specific problems. LTC is just in the wrong business. "
No question that LTC is probably in the wrong industry right now for the banks, but I think that their might be one LTC specific problem in the banks' views. That would be all the stock repurchasing that LTC did earlier this year. From the conference call after the dividend cut, I thought I remembered them saying that the dividend reduction was to prepare themselves for refinancing, but I think most of the saved cash went into repurchasing stock. At least for the first quarter of the calendar year. I wouldn't imagine that the lenders were too pleased about that. I will have to admit though that at the time I too thought it was a good idea.
No question BofA is simply the lead bank and is representing the others. If the other banks didn't agree with BofA they'd just do the deal on their own.
I'm not convinced the banks see any LTC-specific problems. LTC is just in the wrong business. Banks lost billions in nursing homes recently. The entire sector is toxic to them. "Lend to a nursing home, destroy your career" is every lending officer's motto right now.
You ask the $64M question. Why aren't these troubled REIT management's looking far enough ahead to see these financing or refinancing issues. Its not as though the healthcare REITs aren't aware of their refinancing prospects after this governmt created MediCare crisis.
I have postulated that being a REIT is too much of a trap for a troubled REIT. LTC, OHI, and NHI should have de-REITed a year ago. Yes those stocks would have been hammered but they would have been able to transform themselves into a better credit risk immediately because all the dividend income (net of applicable corporate level taxation) represents free cash flow making these entities better risks for the bank(s) involved. I think over time troubled REITs will have to look at the HOT model for de-REITing to survive. WYN de-REITed and is surviving too albeit not in any fashion like HOT but WYN waited too long and was forced to take on a prfd stock that has tied up WYN's hands in certain ways going forward.
dereiting is not the answer; reits serve a usefull purpose for income investors and reit manages know this; what irks me is that there are a number of alternatives to banks for dough; the notion of a lender lawsuit tells me lts management was counting on the banks to renew and were surprised when they said no; this should have been no surprise and is reflective of piss poor managing imho