Notes Payable and Other Debt

6 Months Ended

Jun. 30, 2022

Debt Disclosure [Abstract]

Notes Payable and Other Debt

NOTE 8. NOTES PAYABLE AND OTHER DEBT

See Note 8 – Notes Payable and Other Debt in Part II, Item 8, Financial Statements and Supplementary Data, included in the Annual Report for a detailed description of all the Company’s debt facilities.

Notes payable and other debt consists of the following:

(Amounts in 000’s)	June 30, 2022			December 31, 2021
Senior debt—guaranteed by HUD	$	29,703		$	30,178
Senior debt—guaranteed by USDA (a)		7,672			7,824
Senior debt—guaranteed by SBA(b)		589			602
Senior debt—bonds		6,253			6,379
Senior debt—other mortgage indebtedness		8,435			8,601
Other debt		1,275			594
Subtotal		53,927			54,178
Deferred financing costs		(1,135	)		(1,177	)
Unamortized discount on bonds		(122	)		(125	)
Notes payable and other debt	$	52,670		$	52,876

(a) U.S. Department of Agriculture (USDA)

(b) U.S. Small Business Administration (SBA)

The following is a detailed listing of the debt facilities that comprise each of the above categories:

(Amounts in 000’s)
Facility	Lender	Maturity	Interest Rate (a)			June 30, 2022		December 31, 2021
Senior debt - guaranteed by HUD (b)
The Pavilion Care Center	Lument Capital	12/01/2027	Fixed	4.16	%	$	798	$	862
Hearth and Care of Greenfield	Lument Capital	08/01/2038	Fixed	4.20	%		1,807		1,845
Woodland Manor	Midland State Bank	10/01/2044	Fixed	3.75	%		4,768		4,836
Glenvue	Midland State Bank	10/01/2044	Fixed	3.75	%		7,404		7,509
Autumn Breeze	KeyBank	01/01/2045	Fixed	3.65	%		6,437		6,528
Georgetown	Midland State Bank	10/01/2046	Fixed	2.98	%		3,260		3,305
Sumter Valley	KeyBank	01/01/2047	Fixed	3.70	%		5,229		5,293
Total						$	29,703	$	30,178
Senior debt - guaranteed by USDA (c)
Mountain Trace (d)	Community B&T	12/24/2036	Prime + 1.75%	5.75	%	$	3,761	$	3,835
Southland (e)	Cadence Bank, NA	07/27/2036	Prime + 1.50%	6.00	%		3,911		3,989
Total						$	7,672	$	7,824
Senior debt - guaranteed by SBA
Southland(f)	Cadence Bank, NA	07/27/2036	Prime + 2.25%	5.50	%		589		602
Total						$	589	$	602

(a)Represents cash interest rates as of June 30, 2022 as adjusted for interest rate floor limitations, if applicable. The rates exclude amortization of deferred financing costs, which range from 0.09% to 0.53% per annum.

(b)For the seven SNFs, the Company has term loans with financial institutions that are insured 100% by HUD. The loans are secured by, among other things, an assignment of all rents paid under any existing or future leases and rental agreements with respect to the underlying facility. The loans contain customary events of default, including fraud or material misrepresentations or material omission, the commencement of a forfeiture action or proceeding, failure to make required payments, and failure to perform or comply with certain agreements. Upon the occurrence of certain events of default, the

lenders may, after receiving the prior written approval of HUD, terminate the loans and all amounts under the loans will become immediately due and payable. In connection with entering into each loan, the Company entered into a healthcare regulatory agreement and a promissory note, each containing customary terms and conditions. Pursuant to the CARES Act, up to three months of debt service payments for six of the credit facilities can be made from our restricted cash reserves.

(c)For the two SNFs, the Company has term loans with financial institutions that are insured 70% to 80% by the USDA. The loans have an annual renewal fee for the USDA guarantee of 0.25% of the guaranteed portion. The loans had prepayment penalties of 1%, capped at 1% for the remainder of the first 10 years of the term and 0% thereafter.

(d)Pursuant to the CARES Act, the monthly principal and interest payments due May 1, 2020 through August 1, 2020 for the Mountain Trace Facility loan were deferred. Monthly payments that commenced on September 1, 2020 were being applied to current interest, then deferred interest until the deferred interest was paid in full on April 1, 2021. Payments have been re-amortized over the extended term of the loan.

(e)Pursuant to the CARES Act, the monthly principal and interest payments due May 1, 2020 through October 1, 2020 for the loan for that certain 126-bed SNF commonly known as Southland, located in Dublin, Georgia, were deferred as a part of the USDA Payment Program. Monthly payments recommenced on November 1, 2020 with payments through February 2021 being applied to principal and interest. Monthly payments that commenced on March 1, 2021 are being applied to current interest, then deferred interest until the deferred interest is paid in full, payments will be re-amortized over the extended term of the loan.

(f)For the one SNF, commonly known as Southland, the Company has a term loan with a financial institution, which is 75% insured by the SBA. The SBA funded two monthly debt payments during the three months ended March 31, 2021 and six payments commencing on March 1, 2020 and ending on August 1, 2020.

(Amounts in 000’s)
Facility	Lender	Maturity	Interest Rate (a)			June 30, 2022		December 31, 2021
Senior debt - bonds
Eaglewood Bonds Series A	City of Springfield, Ohio	05/01/2042	Fixed	7.65	%	$	6,253	$	6,379

(a)Represents cash interest rates as of June 30, 2022. The rates exclude amortization of deferred financing of approximately 0.01% per annum.

(Amounts in 000’s)
Facility	Lender	Maturity	Interest Rate (a)			June 30, 2022		December 31, 2021
Senior debt - other mortgage indebtedness
Meadowood (b)	Exchange Bank of Alabama	10/01/2026	Fixed	4.50	%	$	3,399	$	3,478
Coosa (c)	Exchange Bank of Alabama	10/10/2026	Fixed	3.95	%		5,036		5,123
Total						$	8,435	$	8,601

(a)Represents cash interest rates as of June 30, 2022 as adjusted for interest rate floor limitations, if applicable. The rates exclude amortization of deferred financing costs of 0.34% per annum.

(b)On October 1, 2021, the Exchange Bank of Alabama and the Company extended the maturity date of the Meadowood Credit Facility which is secured by the Meadowood Facility and the assets of Coosa, and which is guaranteed by Regional Health Properties, Inc., from May 1, 2022 to October 1, 2026.

(c)On September 30, 2021, the Company refinanced the MCB Coosa Loan secured by the Coosa Facility, incurring approximately $0.1 million in new fees. The Coosa Credit Facility, guaranteed by Regional Health Properties, Inc. includes customary terms, including events of default with an associated annual 5% default interest rate, and is secured by the Coosa Facility and the assets of Meadowood. Upon the occurrence of certain events of default, the lenders may terminate the Coosa Credit Facility and the Meadowood Credit Facility and all amounts due under both credit facilities will become immediately due and payable. The Coosa Credit Facility has prepayment penalties of 5% in the 1st year, 4% in the 2nd year and 1% thereafter.

(Amounts in 000’s)
Lender	Maturity	Interest Rate			June 30, 2022		December 31, 2021
Other debt
First Insurance Funding (a)	03/01/2022	Fixed	3.63	%	$	729	$	99
Key Bank (c)	08/25/2023	Fixed	0.00	%		495		495
Marlin Capital Solutions	06/1/2027	Fixed	5.00	%		51		—
Total					$	1,275	$	594

(a)Annual Insurance financing primarily for the Company’s directors and officers insurance.

(b)On August 17, 2021, Key Bank and the Company extended the maturity date from August 25, 2021 to August 25, 2023.

Debt Covenant Compliance

As of June 30, 2022, the Company had 16 credit related instruments outstanding that include various financial and administrative covenant requirements. Covenant requirements include, but are not limited to, fixed charge coverage ratios, debt service coverage ratios, minimum earnings before interest, taxes, depreciation, and amortization or earnings before interest, taxes, depreciation, amortization, and restructuring or rent costs, and current ratios. Certain financial covenant requirements are based on consolidated financial measurements whereas others are based on measurements at the subsidiary level (i.e., facility, multiple facilities or a combination of subsidiaries). The subsidiary level requirements are as follows: (i) financial covenants measured against subsidiaries of the Company; and (ii) financial covenants measured against third-party operator performance. Some covenants are based on annual financial metric measurements, whereas others are based on monthly and quarterly financial metric measurements. The Company routinely tracks and monitors its compliance with its covenant requirements.

As of June 30, 2022, the Company was in compliance with the various financial and administrative covenants under the Company’s outstanding credit related instruments.

Scheduled Maturities

The schedule below summarizes the scheduled gross maturities as of June 30, 2022 for each of the next five years and thereafter.

For the twelve months ended June 30,	(Amounts in 000’s)
2023	$	2,554
2024		2,404
2025		2,002
2026		2,099
2027		8,774
Thereafter		36,094
Subtotal	$	53,927
Less: unamortized discounts		(122	)
Less: deferred financing costs, net		(1,135	)
Total notes and other debt	$	52,670