The US Bankruptcy Court approved the sale last week and the newownership is arranging for the continued operation of both of theseprograms, the hospital's clinics and other medical services undernew management. GlobeSt.com has learned that the Skilled NursingFacility is operated on the site of the 333,000-sf Main Campus thatis being sold to Sunset and the Lombardi Home Health Program is ahome care program "so little to no space is needed to operate thebusiness in the ordinary course."

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According to CIT, the transaction, when completed, will be "oneof the first successful sales and restructurings of medicalservices at a hospital slated for closure by the BergerCommission," a non-partisan panel created by former Gov. GeorgePataki and the New York State Legislature to review the regionaland local supply of hospital and nursing home beds throughout theState. Natalie Wilensky, managing director of CIT InvestmentBanking Services, Real Estate, tells GlobeSt.com that thetransaction is subject to Department of Health approval and isexpected to close in Q4 2008. "Much work was done in advance of anauction to involve DOH in the bidder prequalification process andgain certain assurances that the buyer and its operating partnerswould likely pass DOH approval requirements."

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She notes that "this deal is a great example of how financiallystressed institutions can effectively monetize real estate assetsand restructure services so that business continues and communityneeds are served." As far as reasons for selling, Wilensky saysthat upon learning that the Berger Commission would recommend thatVictory close as a hospital and its 240 acute care beds bedecertified, Victory filed for Bankruptcy protection in November2006. "At the time of filing, Victory's liabilities exceeded itsassets; hence, unsecured creditors wanted assets sold to repaydebts." She says that in June, 2007, CIT was engaged as the realestate advisor by both the debtor and the Official Committee ofUnsecured Creditors to sell the real property and the relatedbusinesses "for the benefit of creditors."

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Wilensky says that the hospital, through CIT, sought proposalsfrom "qualified bidders, operators and real estate owners forredevelopment plans, with a preference for those that provided forthe continuation of certain medical services at the site."

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As far as interested buyers, Wilensky notes that following"extensive financial and real property due diligence," CIT preparedand sent a Request for Proposal to more than 160 parties, includingHealthcare REITS, developers, medical operators and real estateowners. Approximately 40 letters of interest and confidentialityagreements were signed with these entities to gain access to asecured, web based due diligence site. In late August, she says,CIT presented "best and final bids" to Victory's Board of Trusteesand in October thru December, CIT, together with its clients,prequalified certain bidders with the DOH, "as medical certificatesof need can not be transferred without DOH approval."

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In January, 2008, a stalking horse contract was negotiated andsigned with an entity for an all asset sale, which includes the"real property and related medical businesses," and an auction washeld on March 31. Wilensky tells GlobeSt.com that three entitieswere financially qualified to participate in the auction; eachsigned a purchase and sale agreement and posted deposits and Sunsetcame out as the "successful bidder."

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Sunset was attracted to the all asset sale, Wilensky says,because the hospital is "strategically well located in Brooklyn,"where it has served the communities of Bay Ridge, Fort Hamilton andDyker Heights for 100 years. "With an approximately 333,000-sf maincampus sitting on 1.5 acres across from Dyker Beach Golf Course andPoly Prep Country Day School, it is an excellent piece of realestate."

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Wilensky adds that Sunset, which is controlled and owned by areal estate entrepreneur and owner, has successfully leasedproperty to hospitals and medical service providers. "Therefore,they believed that medical services could be profitably provided atthe site," she says. "They will reconfigure services at the siteonce they finalize a hospital partner for urgi-care operations andrenovations and upgrades will be forthcoming."

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Natalie Dolce

Natalie Dolce, editor-in-chief of GlobeSt.com and GlobeSt. Real Estate Forum, is responsible for working with editorial staff, freelancers and senior management to help plan the overarching vision that encompasses GlobeSt.com, including short-term and long-term goals for the website, how content integrates through the company’s other product lines and the overall quality of content. Previously she served as national executive editor and editor of the West Coast region for GlobeSt.com and Real Estate Forum, and was responsible for coverage of news and information pertaining to that vital real estate region. Prior to moving out to the Southern California office, she was Northeast bureau chief, covering New York City for GlobeSt.com. Her background includes a stint at InStyle Magazine, and as managing editor with New York Press, an alternative weekly New York City paper. In her career, she has also covered a variety of beats for M magazine, Arthur Frommer's Budget Travel, FashionLedge.com, and Co-Ed magazine. Dolce has also freelanced for a number of publications, including MSNBC.com and Museums New York magazine.