Negotiations for refinancing had been going on for a year to reduce the facility’s $100 million debt load by $34 million. In October, progress stalled when one of the five banks, Sovereign, the U.S. arm of a Spanish banking firm, would not join the other banks in terms discussed. “At the end of the day, one bank forced us to take it to court,” Mrs. Dunn said of the subsequent bankruptcy filing.
The process to recapitalize started because the original plan for financing in 2007 wasn’t working with the stalled housing market. The recession also was responsible for the need to refinance, she noted.
Hamlin Capital Management will replace the banks as the primary long- term lender.
Because of the downturn in the housing market that began in 2008, the year before the retirement community opened, occupying the units was slower.
“The two things hit us, housing mar- ket and recessionary period, affecting fill assumptions for the housing, (so) we had to come up with a revised plan for financing,” Mrs. Dunn said.
While South Franklin Circle representatives have been busy with refinancing issues, the retirement community is moving ahead.
“We promised business as usual, and we continue to keep up a positive pace,” Mrs. Dunn said. “The proof is we had five new move-ins the fourth quarter of 2012. It shows the confidence people have in South Franklin Circle, and we have had a very successful fourth quarter.”
The discount in the debt lifts the burden for South Franklin Circle and gives it a longer time to fill its homes and apartments.
In the meantime, the economy seems to be looking up. The stock market is picking up and people looking to move to South Franklin Circle are selling their homes quicker, according to Mrs. Dunn.
Of the 199 homes at South Franklin Circle, 107 are occupied. Seventeen people are waiting to sell their houses who have reserved a home.
Eventually, additional phases will be proposed for the community. Phase two of the retirement complex off South Franklin Street just outside of Chagrin Falls is about 10 years away. There is enough land with close to 89 acres. The master design contemplated 20 percent coverage with 80 percent green space, according to Mrs. Dunn.
Many in the area outside of the retire- ment community use the on-site Radius restaurant and a fitness center. A walking trail, part of Cleveland Metroparks, connects to Chagrin Falls.
Courtesy of The Chagrin Valley Times.