A Tampa-based senior living facilities operator has filed a federal lawsuit against Truist Bank arguing it conducted a faulty appraisal leading to the wrongful demand to fully repay an $83 million loan.
The operator, Validus Senior Living, claims it never missed a payment and that the single appraisal wrongly showed a property valuation on its Inspired Living Alpharetta facility in Georgia had been slashed in half over the past 10 months.
The company, run by entrepreneur Mario Garcia Jr., claims instead that the property showed strong performance and property values in the region were generally on the rise. Yet Truist is demanding immediate, full repayment of the $83 million loan.
"As we lay out in our complaint, Truist decided to do this not because of anything Mr. Garcia or VSL Holdings has done, but simply because the bank doesn't like the senior living category anymore," said attorney John Anthony. "Here we are right in the middle of the holiday season and Truist is taking an action that could potentially disrupt the lives of hundreds of senior citizens who call our communities home, as well as Validus employees and their families."
The company says Truist had been trying for months to end its relationship with Validus. When that didn't pan out, Truist pressured an appraiser to issue a lower valuation of the property that would cause Validus to default on the terms of its lending agreement, according to the complaint, which was filed earlier this month in the Middle District of Florida.
The complaint directly blames Wall Street analysts who are "scrutinizing financial institutions" and take a "dim view" of the senior living sector.
Truist and Validus have a forbearance agreement stating that Validus must maintain a minimum 80% loan-to-value ratio on its facilities. The loan in question covers the Georgia property and two others. With the new appraisal Validus claims is a low-ball, the company is in violation of that agreement.
Validus acknowledges the agreement, but in the complaint argues such agreements "are not to be used as a cudgel … to chase a compliant borrower out of the bank because the bank no longer wishes to lend in a given sector, even though the borrower is not in default."
Validus further adds in its complaint that it has never defaulted on its loan.
The complaint seeks declaratory relief, including timely adjudication.
In a press release, Validus says it runs its facilities "with a consistently high level of professional care" and maintains "state-of-the-art medical practices and standards" that allow them "to maintain value even in difficult times."
The company notes that during the COVID-19 crisis, which took a particularly onerous toll on senior living facilities, Truist was still pressuring Validus to exit its loan. In response, the company reduced its debt by $3.5 million, the complaint says.
"I was the founding chair of a Tampa bank, so I understand the complexities of the commercial lending business and regulation very well. I have financed millions of dollars to support our various portfolios without incident, litigation or ever missing a payment. We have always engaged in good faith dialogue with Truist and I am saddened that we had to resort to litigation," Garcia said.
Garcia previously served as the founding Chair of GulfShore Bank in Tampa.
The loan in question originated in 2017 with SunTrust before it merged with BB&T to become Truist, according to the Tampa Bay Business Journal.
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