v3.26.1
Notes Payable and Other Debt
 6 Months Ended
Jun. 30, 2026
Debt Disclosure [Abstract]  
Notes Payable and Other Debt

NOTE 9. NOTES PAYABLE AND OTHER DEBT

Entry into Forbearance Agreements

On February 27, 2026, the Company and Erin Property Holdings, LLC (the “Borrower”) entered into two Forbearance Agreements with effective dates of February 1, 2026 (the “Forbearance Agreements”) with Cadence Bank, N.A. (the “Lender”) relating to certain defaults by the Company and the Borrower under the loan agreements in the principal amount of $5,000,000 due on July 27, 2036 (the “USDA Note”) and the principal amount of $800,000 due on July 27, 2036 (the “SBA Note” and, together with the USDA Note, the “Notes”) that were issued by the Borrower to the Company to reflect payment obligations pursuant to the Security Agreement, dated as of July 27, 2011 (the “Security Agreement”), between the Borrower and the Lender.

Pursuant to the Forbearance Agreements, (a) the Borrower agreed to make payments of $21,047.76 as a one-time forbearance payment and $6,764.21 for the 2026 USDA annual renewal fee toward the SBA Note no later than February 27, 2026, and (b) the Company and the Lender agreed, subject to the terms and conditions set forth in the Forbearance Agreements, to forbear from exercising its rights and remedies on account of the failure by the Company and the Borrower to pay the amounts due under the USDA Note and SBA Note by the expiration of the period (“Forbearance Period”) of February 1, 2027.

During the Forbearance Period, the Company and the Borrower shall make monthly payments of principal and interest in accordance with the terms of the USDA Note and the SBA Note with interest continuing to accrue in accordance with the terms of the Notes which amounts shall remain the obligation of the Company and the Borrower.

The remaining balances of the USDA Note and the SBA Note will be due at the end of the Forbearance Period and include all principal, interest, late charges and statutory attorney's fees.

See Note 10 – 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,
2026

 

 

December 31,
2025

 

Senior debt—guaranteed by HUD

 

$

26,837

 

 

$

27,281

 

Senior debt—guaranteed by USDA (1)

 

 

6,392

 

 

 

6,575

 

Senior debt—guaranteed by SBA(2)

 

 

494

 

 

 

509

 

Senior debt—bonds

 

 

5,638

 

 

 

5,811

 

Senior debt—other mortgage indebtedness

 

 

3,072

 

 

 

2,979

 

Other debt

 

 

930

 

 

 

805

 

Subtotal

 

 

43,363

 

 

 

43,960

 

Deferred financing costs

 

 

(704

)

 

 

(706

)

Unamortized discount on bonds

 

 

(98

)

 

 

(101

)

Notes payable and other debt

 

$

42,561

 

 

$

43,153

 
(1)
U.S. Department of Agriculture (USDA)
(2)
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 (1)

 

 

June 30,
2026

 

 

December 31,
2025

 

Senior debt - guaranteed by HUD (2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Pavilion Care Center

 

Newpoint Capital

 

12/01/2039

 

Fixed

 

 

3.97

%

 

$

707

 

 

$

727

 

Hearth and Care of Greenfield

 

Newpoint Capital

 

08/01/2050

 

Fixed

 

 

3.97

%

 

 

1,803

 

 

 

1,825

 

Woodland Manor

 

Newpoint Capital

 

11/01/2052

 

Fixed

 

 

3.97

%

 

 

4,654

 

 

 

4,703

 

Glenvue

 

Newpoint Capital

 

10/01/2044

 

Fixed

 

 

3.75

%

 

 

6,489

 

 

 

6,611

 

Autumn Breeze

 

KeyBank

 

01/01/2045

 

Fixed

 

 

3.65

%

 

 

5,646

 

 

 

5,751

 

Georgetown

 

Newpoint Capital

 

10/01/2046

 

Fixed

 

 

2.98

%

 

 

2,872

 

 

 

2,923

 

Sumter Valley

 

KeyBank

 

01/01/2047

 

Fixed

 

 

3.70

%

 

 

4,666

 

 

 

4,741

 

Total

 

 

 

 

 

 

 

 

 

 

$

26,837

 

 

$

27,281

 

Senior debt - guaranteed by USDA (3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mountain Trace

 

Community B&T

 

12/24/2036

 

Prime + 1.75%

 

 

10.25

%

 

 

3,114

 

 

 

3,193

 

Southland

 

Cadence Bank, NA

 

07/27/2036

 

Prime + 1.50%

 

 

10.00

%

 

 

3,278

 

 

 

3,382

 

Total

 

 

 

 

 

 

 

 

 

 

$

6,392

 

 

$

6,575

 

Senior debt - guaranteed by SBA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Southland(4)

 

Cadence Bank, NA

 

07/27/2036

 

Prime + 2.25%

 

 

10.75

%

 

 

494

 

 

 

509

 

Total

 

 

 

 

 

 

 

 

 

 

$

494

 

 

$

509

 

 

(1)
Represents interest rates as of June 30, 2026 as adjusted for interest rate floor limitations, if applicable. The rates exclude amortization of deferred financing costs which are approximately 0.16% per annum.
(2)
For the seven SNF’s, the Company has term loans insured 100% by HUD with financial institutions. 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 loans, the facilities entered into a healthcare regulatory agreement and a promissory note, each containing customary terms and conditions.
(3)
For the two SNF’s, the Company has term loans with financial institutions, which 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 have prepayment penalties of 1% through 2020, capped at 1% for the remainder of the first 10 years of the term and 0% thereafter.
(4)
For one SNF, commonly known as Southland, the Company has a term loan with a financial institution, which is insured 75% by the SBA.

 

(Amounts in 000’s)

 

 

 

 

 

 

 

 

 

 

 

 

Facility

 

Lender

 

Maturity

 

Interest Rate (1)

 

June 30, 2026

 

December 31, 2025

Senior debt - bonds

 

 

 

 

 

 

 

 

 

 

 

 

Eaglewood Bonds Series A

 

City of Springfield, Ohio

 

05/01/2042

 

Fixed

 

7.65%

 

$5,638

 

$5,811
(1)
Represents cash interest rates as of June 30, 2026. The rates exclude amortization of deferred financing of approximately 0.10% per annum.

(Amounts in 000’s)

 

 

 

 

 

 

 

 

 

 

 

 

Facility

 

Lender

 

Maturity

 

Interest Rate (1)

 

June 30,
2026

 

December 31,
2025

Senior debt - other mortgage indebtedness

 

 

 

 

 

 

 

 

Meadowood (2)

 

Exchange Bank of Alabama

 

10/01/2026

 

Fixed

 

4.50%

 

$2,889

 

$2,979

Meadowood - Line of Credit

 

Exchange Bank of Alabama

 

02/15/2027

 

Fixed

 

6.75%

 

183

 

—

Total

 

 

 

 

 

 

 

 

 

$3,072

 

$2,979
(1)
Represents cash interest rates as of June 30, 2026 as adjusted for interest rate floor limitations, if applicable. The rates exclude amortization of deferred financing costs of 0.34% per annum.
(2)
The Meadowood Credit Facility is secured by the Meadowood Facility and the assets of Coosa, which is guaranteed by Regional Health Properties, Inc.

 

(Amounts in 000’s)

 

 

 

 

 

 

 

 

 

 

 

 

 

Lender

 

Maturity

 

Interest Rate

 

 

June 30,
2026

 

 

December 31,
2025

 

Other debt

 

 

 

 

 

 

 

 

 

 

 

 

 

First Insurance Funding (1)

 

08/15/2026

 

Fixed

 

 

10.95

%

 

$

229

 

 

$

254

 

AFCO Insurance

 

08/09/2026

 

Fixed

 

 

9.50

%

 

 

—

 

 

 

34

 

Cavalier Senior Living

 

11/15/2026

 

Fixed

 

 

6.00

%

 

 

19

 

 

 

22

 

First Horizon Bank

 

02/24/2031

 

Fixed

 

 

7.25

%

 

 

187

 

 

 

—

 

Key Bank (2)

 

08/25/2030

 

Fixed

 

 

0.00

%

 

 

495

 

 

 

495

 

Total

 

 

 

 

 

 

 

 

$

930

 

 

$

805

 
(1)
Annual Insurance financing primarily for the Company's directors and officers insurance.
(2)
On December 30, 2022, Key Bank and the Company extended the maturity date from August 25, 2025 to August 25, 2030.

Debt Covenant Compliance

As of June 30, 2026, the Company had 18 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, 2026, the Company was in compliance with the various financial and administrative covenants related to all of the Company’s credit facilities, except with respect to the Southland-related USDA and SBA notes that are subject to the forbearance arrangements.

Scheduled Maturities

The schedule below summarizes the scheduled gross maturities as of June 30, 2026 for the remaining six months ending December 31, 2026 and each of the next four years and thereafter.

For the Twelve Months Ended December 31,

 

(Amounts in 000’s)

 

For the remaining six months ending December 31, 2026

 

$

7,401

 

2027

 

 

1,393

 

2028

 

 

1,393

 

2029

 

 

1,611

 

2030

 

 

2,180

 

Thereafter

 

 

29,385

 

Subtotal

 

$

43,363

 

Less: unamortized discounts

 

 

(98

)

Less: deferred financing costs, net

 

 

(704

)

Total notes and other debt

 

$

42,561