Retirement centers resolve bond default

Owners of assisted and independent living retirement centers in South Carolina resolved a default on $24.5 million of bonds, according to a posting.

Borrowers CR Lakewood, LLC, and CR Lakeside Place, LLC, failed to make principal payments due on November 1 though they did make interest payments, according to a posting on the Municipal Securities Rulemaking Board's EMMA web site. The bonds affected were the South Carolina Jobs-Economic Development Authority economic development revenue refunding bonds (CR Lake portfolio) Series 2021A and taxable 2021B, the former having been issued for $33.6 million and the latter being issued for $3.2 million.

The borrowers posted to EMMA on Monday, saying all the principal and interest due for November 1 had been given to the bond trustee, UMB, by Thursday. The contact at UMB overseeing the account, Michael Slade, on Friday morning had said he was unaware of the payment. He could not be reached Monday.

The 2021A bonds have a 4.625% coupon with a final maturity in 2056 and the 2021Bs which carry an 8% coupon mature in 2030. Neither were rated by the ratings agencies. The bonds are dated November 2021.

The default came as the retirement sector is undergoing stress. As of the start of the month 22.5% of all retirement sector municipal bonds had some sort of impairment, according to Municipal Market Analytics Default Trends, the highest of the 17 muni bond sectors MMA follows.

The borrowers haven't released any annual comprehensive financial reports since selling the bonds. However, they have released unaudited financial information with the most recent one showing CR Lakewood had earnings from operations of $73,227 and $1.637 million in current liabilities as of August 31.

However, including other expenses, CR Lakewood had a loss of $75,543 in the month and $412,002 in the first eight months of the fiscal year.

It had $97,910 in total current assets and negative $9,504 in cash and cash equivalents as of the end of August.

The 2021A bonds were trading around 30 cents on the dollar at the start of the year and traded with a high price of 55.51 cents on the dollar and a low price of 54.71 cents in five trades totaling $200,000, on Nov. 7, the most recent trade. The 2021B bonds were trading around 60 cents on the dollar at the start of the year and on Oct. 9 traded at a high price of 71 cents on the dollar and a low price of 68.5 cents on the dollar in four trades totaling $180,000.

Efforts to obtain comment from the S.C. Jobs and Economic Development Authority were unsuccessful.