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Tampa-based entrepreneur Mario Garcia Jr. and his company, Validus Senior Living of Tampa, filed a federal lawsuit against financial services giant Truist bank.
Garcia alleges the bank has improperly demanded full payment for an $83 million loan based on a single faulty appraisal, even though Validus has never missed a payment, the company says in a Wednesday news release.
Validus Senior Living says the issue revolves around an appraisal of the Validus Senior Living facility in Georgia — named Inspired Living Alpharetta — where most of the residents suffer from Alzheimer's disease.
"The facility is serving its community well, with improved occupancy levels and cashflow," Validus Senior Living says.
Through a financial arrangement explained in the federal complaint, Truist holds an $83 million note on the Georgia property and two others owned by Validus Senior Living. Truist recently completed an appraisal of the Georgia property that they claim shows the value of the property has dropped in half in the past 10 months, despite the property's strong performance and a general increase in property values. Validus Senior Living says its facilities have "state-of-the-art medical practices and standards, allowing them to maintain value even in difficult times."
Based on this appraisal alone, Truist is now demanding all $83 million be paid back immediately, says Validus Senior Living.
Truist, one of the largest banks in the United States with $543 billion in assets, did not immediately return a message from the Business Observer.
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," Garcia's attorney John Anthony in a statement. "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 most recent agreement between Validus Senior Living and Truist included a loan-to-value ratio of collateral to outstanding debt, the company says.
An LTV is commonly used in good faith to measure the strength of a loan, Validus Senior Living says, "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."
The co-founder of the company says he regrets turning to litigation.
"I was the founding chair of a Tampa bank, so I understand the complexities of the commercial lending business and regulation very well," Garcia says in the statement. "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."
During the COVID-19 crisis, which hit senior living facilities particularly hard, Truist continued to pressure Garcia to exit its loan with them, according to the complaint.
Garcia and company says they further reduced the debt owed by $6 million.
The federal complaint, filed in the U.S. Middle District of Florida, asks the court for declaratory relief, including "timely adjudication of this matter so the various Validus properties can continue to serve their senior citizens and their families," the company says.
This story was updated to reflect the correct debt reduction of $6 million.
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