ATRS Thought Riley Owned Clubs.IF ARKANSAS TEACHERS Retirement System had any doubt about how rough-and-tumble real estate lending can be, Pat Riley For the American guitarist, see . Patrick James "Pat" Riley (born March 20, 1945) is an American National Basketball Association head coach and team president of the Miami Heat. Sr. has helped school them otherwise. The Little Rock businessman defaulted on a $11.5 million loan a year ago and negotiated a settlement this summer that allowed him to wallk away from a personal guarantee backing the debt. "I'm satisfied with the way it went and given the circumstances, I think it was very fair to me," Riley said. "At one time, I had a good deal more equity in the business, but as time went on I didn't have much equity." And now ATRS ATRS Arkansas Teacher Retirement System ATRS Automated Transport and Retrieval System ATRS Aerial Targets Squadron ATRS Automated Trouble Reporting System ATRS Arkansas Therapeutic Recreation Society ATRS Automatic Turbine Run-up System is the owner of two nursing homes (Riley's Oak Hill Manors in Little Rock and North Little Rock), a retirement center (Woodland Heights Woodland Heights is the name of three places in the United States of America:
All are marginally profitable at best or losing money, according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. an ATRS assessment of the properties. And in the case of his namesake name·sake n. One that is named after another. [From the phrase for the name's sake.] namesake Noun office building, Riley transferred an additional debt obligation of more than $1.1 million to the pension fund. The mortgage is held by yet another state pension fund, the Arkansas Public Employees Retirement System. The ATRS loan was secured by Riley's Oak Hill Manor South at 8701 Riley Drive in west Little Rock and Riley's Oak Hill Manor North at 251 John Ashley John Ashley may refer to
Undergirding it was the personal guarantee of the 77-year-old president of Riley's Inc. That pledge, backed with Riley's stated net worth of $28 million in 1999, was envisioned as a financial safeguard to protect ATRS should the loan become troubled. Reality proved otherwise. Riley's net worth total was boosted by generous appraisals of his various holdings. It also included properties that ATRS officials discovered to be problematic. Bill Shirron, executive director of the $7.2 billion pension fund, was surprised to learn that Riley claimed no ownership of his family's Riley's Health & Fitness Centers Inc. The corporation owns the 3,500-member Little Rock Athletic Club at 4610 Sam Peck Road and the 850-member North Little Rock Athletic Club at 3804 McCain Park Drive. It also manages the 275-member Downtown Athletic Club The Downtown Athletic Club was an athletic club in a 35-story building located at 19 West Street in Lower Manhattan, New York City, USA. It was founded in 1926. By 1927, it had purchased this site next to the Hudson River to construct its own building. . Shirron said Riley's personal financial statements indicated he did have an ownership interest in the athletic club ventures, which factored into his net worth claim. ATRS advisers viewed this discrepancy as an opening to successfully force Riley to pay up through a foreclosure foreclosure Legal proceeding by which a borrower's rights to a mortgaged property may be extinguished if the borrower fails to live up to the obligations agreed to in the loan contract. action. "That was one of the things that our attorneys thought we could win in court," Shirron said. "But when we decided to go with a settlement, we decided not to look into it further." Did Riley provide inaccurate financial information to ATRS? "They wondered if I had done something [wrong] late in the game," he said. "But they decided I hadn't, so they didn't pursue it." "There was a danger of him taking personal bankruptcy Personal bankruptcy is a procedure which, in certain jurisdictions, allows an individual to declare bankruptcy. In other jurisdictions, bankruptcies are reserved for corporations. and deteriorating de·te·ri·o·rate v. de·te·ri·o·rat·ed, de·te·ri·o·rat·ing, de·te·ri·o·rates v.tr. To diminish or impair in quality, character, or value: the assets further," said Frank White, state bank commissioner and a member of the ATRS board. But what about the safety net of Riley's supposed substantial net worth backing his personal guarantee? "That was our question," White said. "What happened to it?" For now, Shirron seems content to let sleeping dogs lie. "It was at least a three-week process of discussing the offer," he said. "We discussed at length on foreclosing on the properties and suing him for the rest of it. "We would've had to challenge [Riley's claim that he didn't have an ownership interest in the athletic clubs] because that was a substantial part of his net worth. The attorneys felt like we had a good chance at success. But instead of pursuing money from Riley to cover his bad debt, ATRS accepted the two nursing homes pledged as security for the loan. In return for releasing him from personal liability, Riley also gave the pension fund Woodland Heights at 8700 Riley Drive and the Riley Building. ATRS took possession of the properties on Aug. 10. New Responsibilities Now ATRS will have to operate the projects in an effort to recoup recoup To sell an asset at a price sufficient to recover the original outlay or to offset a previous loss. its $11.5 million -- actually $12.6 million counting the pending pay-off of Riley's debt on the Riley Building. The pension fund also has authorization to spend another $1.5 million to make needed improvements to the properties. "We're still trying to work them out," Shirron said. "Woodland Heights and the [Oak Hill Manor] South facility are, in pretty good shape, and occupancy is picking up. "The [Oak Hill Manor] North, we're making progress toward reopening Reopening Treasury offerings of additional amounts of outstanding issues, rather than an entirely new issue. A reopened issue will always have the same maturity date, CUSIP number, and interest rate as the original issue. it and hopefully in the next two weeks we'll be able to take residents." The North Little Rock facility was closed down by the state Department of Human Services' Office of Long Term Care for repeatedly failing to comply with state quality of care standards. The losing battle with state regulators was preceded by the death of an Oak Hill North resident, Wayne Boydston, on July 23, 1998. The cause of death first was labeled "natural causes" but later was ruled accidental after the body was exhumed Exhumed may refer to:
Asphyxiation Oxygen starvation of tissues. after he became wedged wedged - 1. To be stuck, incapable of proceeding without help. This is different from having crashed. If the system has crashed, it has become totally non-functioning. If the system is wedged, it is trying to do something but cannot make progress; it may be capable of doing a few in his bedrails while tied to his bed. Alawsuit by Boydston's family claiming negligence against Riley's operation recently was settled out of court. Riley first ran afoul of a·foul of prep. 1. In or into collision, entanglement, or conflict with. 2. Up against; in trouble with: ran afoul of the law. the pension fund last year when he failed to supply financial statements for fiscal year 1999, constituting a default under the loan agreement. A Nov. 7, 2000, letter sent to Riley also asked him to certify cer·ti·fy v. cer·ti·fied, cer·ti·fy·ing, cer·ti·fies v.tr. 1. a. To confirm formally as true, accurate, or genuine. b. that he had not triggered two other default provisions. The first was failing to maintain regulatory compliance regarding the nursing home operations. The second was failing to notify the pension fund of "any material adverse change in circumstances (financial or otherwise) of the borrower, the guarantor guarantor n. a person or entity that agrees to be responsible for another's debt or performance under a contract, if the other fails to pay or perform. (See: guarantee) GUARANTOR, contracts. He who makes a guaranty. 2. or of the project." Riley quit making loan payments to ATRS in May. A curious footnote Text that appears at the bottom of a page that adds explanation. It is often used to give credit to the source of information. When accumulated and printed at the end of a document, they are called "endnotes." to the Riley loan was a $50,000 finder's fee Finder's fee A fee a person or company charges for service as an intermediary in a transaction. finder's fee The charge levied by a person or firm for putting together a deal. paid to former state Sen. Nick Wilson, D-Pocahontas, when the original terms of the loan were amended in 1995. "I never had a connection with Nick Wilson in the deal," Riley said. "That was on M.R. Godwin." Wilson was paid the money by Godwin, a mortgage consultant and former head of the now defunct DEFUNCT. A term used for one that is deceased or dead. In some acts of assembly in Pennsylvania, such deceased person is called a decedent. (q.v.) First Federal Savings & Loan Association of Little Rock. Riley hired Godwin to help renegotiate re·ne·go·ti·ate tr.v. re·ne·go·ti·at·ed, re·ne·go·ti·at·ing, re·ne·go·ti·ates 1. To negotiate anew. 2. To revise the terms of (a contract) so as to limit or regain excess profits gained by the contractor. parts of the loan agreement. "It was baffling baf·fle tr.v. baf·fled, baf·fling, baf·fles 1. To frustrate or check (a person) as by confusing or perplexing; stymie. 2. To impede the force or movement of. n. 1. to me," Shirron said. "We had no idea any of this had gone on. When the FBI told me, I was in total shock there had been a check written to Nick Wilson. "Mr. Riley. wanted a longer amortization period for the loan. We said fine, but you'll have to pay a higher interest rate. So we bumped it up a half point to 8.5 percent." ATRS eventually may sell some or all of the Riley properties after getting them in better financial shape to attract buyers. "We haven't set a long-term strategy," Shirron said. "We want to get all four buildings cash flowing." Riley's $14 Million Loan Deal in April 1993 With Arkansas Teachers Retirement System Repay existing debt * HUD guaranteed loan held by Weyerhaeuser Mortgage Co. of Federal Way, Wash $2,918,617 * HUD guaranteed loan made by Commercial National Mortgage Co. of Little Rock $1,330,553 * Second mortgage held by Meritor Savings Bank of Philadelphia, secured by Oak Hill Manor North and South $9,435,926 Total existing debt $13,736,096 Cost of loan (fees, title $1,90,000 insurance, etc.) Refurbishing and remodeling costs * Oak Hill Manor South $222,516 * Oak Hill Manor North $163,909 Total $386,425 Building additions and changes * Add 28 beds at Oak Hill Manor North $500,000 * Add physical therapy space at Oak Hill Manor North $100,000 Total $600,000 Additional capital investment by $912,521 Pat Riley Sr. Total funds expended $14,912,521 Original collateral Primary * Riley's Oak Hill Manor South, a 224-bed skilled care nursing home developed on 6.2 acres at 8701 Riley Drive in Little Rock. Riley owned and operated the facility since 1971. Riley's value: $10,950,000 Adjusted value by ATRS: $5,000,000 * Riley's Oak Hill Manor North, a 224-bed skilled care nursing home developed on live acres at 2501 John Ashley Drive in North Little Rock. Riley developed the project in 1978. Riley's value: $7,750,000 Adjusted value by ATRS: $4,500,000 Secondary * Woodland Heights [*] an 82-unit luxury retirement high-rise developed on five acres at 8700 Riely Drive in Little Rock. Riley developed the project in 1985 Riley's value: $8,300,000 Adjusted value by ATRS: $6,000,000 Other * Shares of Wal-Mart Stores Inc. [*] valued at at $1,160,000 * Life insurance policy on Riley that will remain in force for the duration of the loan, with the pension fund as the beneficiary $1,000,000 Personal Guarantee Pat Riley Sr., with stated net worth on Jan. 10, 1992 $25,004,735 (*)The pension fund later allowed Riley to remove Woodland Heights and the Wal-Mart stock as collateral after he reduced the debt below $12 million. Sources: Riley's loan proposal filed with Arkansas Teacher Retirement System and ATRS' subsequent analysis. |
|
||||||||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion