Curated Municipal Bond Watchlists
The Naughty List
Uncover potential opportunities in the municipal bond market with our curated list of distressed bonds.
Discover Hidden Value in Distressed Municipal Bonds
Updated: January 2025
Gain insights into market inefficiencies
- Our AI-powered platform scans millions of municipal bonds to identify those recently trading at distressed prices, owned in municipal bond funds and backed by collateralized assets, such as real estate holdings or other assets, showcasing potential for turnaround. This professionally curated selection offers a unique window into the world of distressed municipal assets.
Why This Matters:
While these bonds trade at distressed prices, some may hold hidden value:
- Potential for turnaround and price recovery
- Backed by collateralized assets, i.e real estate holdings
- Supported by valuable underlying assets
Important Considerations:
- Market prices may reflect underlying credit concerns
- Lower prices could indicate higher risk profiles
- Liquidity may vary significantly among listings
- Due diligence is essential before any investment decisions
1. NASSAU CNTY NY INDL
ISIN: US63166UAS06
state
New York
last traded price
$9.15
last traded date
12/10/2024
held in funds
Yes
The Amsterdam at Harborside: A Tale of Repeated Distress
Muni Jeopardy: Distressed Bonds Municipal Bonds
Briefing Document:
Overview
The Harborside, a once-promising continuing care retirement community on Long Island’s affluent north shore, has faced a turbulent financial journey, marked by three bankruptcy filings since 2014. In late 2023, a proposed sale to Life Care Services briefly boosted its distressed bonds from $1.55 to $16.30 by mid-2024. However, the deal's collapse in October 2024 due to regulatory denial has plunged its future—and that of its 180 elderly residents—back into uncertainty, cementing its status as a top entry on distressed municipal bond watchlists.
Key Points
Debt Structure and Security:
- Types: The 2021 Bonds consist of First Priority Bonds and Subordinate Priority Bonds.
- Security: The 2021 Bonds are general obligations of the District, secured by a pledge of Lodging Tax Revenues.
- Reserve Fund: A Reserve Fund will be maintained to ensure timely payment of principal and interest on the bonds.
Financial Health and Management:
- Debt Limitations: The 2021 Bonds are issued within the District's legal debt limit without requiring voter approval.
- Lodging Tax Revenues: These revenues are the primary source of repayment for the 2021 Bonds.
- Financial Reporting: The District will provide annual financial reports and notices of specific events to bondholders through the Municipal Securities Rulemaking Board's Electronic Municipal Market Access (EMMA) system.
- Investment Policy: The District adheres to a conservative investment policy, prioritizing safety and liquidity.
Timeline of Events
2010
The Harborside opens as a continuing care retirement community (CCRC) on Long Island’s affluent north shore.
2014
The Harborside files for Chapter 11 bankruptcy for the first time, citing financial challenges.
2021
The Harborside files for bankruptcy a second time, continuing its pattern of financial instability.
March 2023
The Harborside files for Chapter 11 bankruptcy for the third time in nine years.
December 2023
- A bankruptcy court approves the sale of The Harborside to Life Care Services (LCS) for $63 million.
- Municipal bonds tied to The Harborside trade at $1.55 following years of financial uncertainty.
August 19, 2024
After the sale is finalized, municipal bonds associated with The Harborside experience a dramatic 850% increase in value, reaching $16.30.
FAQ
1. What is the current occupancy trend at the Amsterdam at Harborside retirement community?
The Amsterdam at Harborside is experiencing a downward trend in Independent Living (IL) occupancy. While the budgeted IL occupancy for 2023 was between 76% and 78%, the actual occupancy rate has steadily declined throughout the year, reaching 45% as of April 2024. This trend is significantly below the projected occupancy levels and raises concerns about the financial health of the community.
2. How are the Enriched Housing (EH) and Skilled Nursing (SN) units performing compared to occupancy covenants?
While IL occupancy is declining, EH and SN units are performing better. EH units have consistently exceeded the occupancy covenant of 75% in 2022 and, despite falling short of the increased 85% covenant in 2023 and 2024, still maintain a strong occupancy rate. SN units, however, have struggled to meet the 85% covenant since its implementation in 2023, resulting in a growing variance.
3. What are "Sale Bidder Refundable Deposits" and how have they changed?
"Sale Bidder Refundable Deposits" represent funds held by the community as liabilities owed to potential buyers of units. These deposits experienced a significant decrease between reporting periods, dropping from $3,485,165 to $4,658,973. This change suggests either a decline in new sales or an increase in refunds issued to potential buyers.
4. What is the significance of the "Days Cash on Hand" metric?
"Days Cash on Hand" is a critical liquidity indicator that measures the number of days a community can operate using its available cash and investments. The Amsterdam at Harborside consistently exceeded the required "Days Cash on Hand" for 2022, indicating a strong financial position. However, future projections and the declining occupancy in IL units could impact this metric.
5. What are the primary purposes for issuing bonds in the context of a Continuing Care Retirement Community (CCRC)?
CCRCs commonly issue bonds to finance the construction or expansion of facilities, refinance existing debt, or cover operational expenses. In the case of the Georgia Proton Treatment Center, the Series 2017A Tax-Exempt Bonds were issued to finance a portion of the project costs, which included the development of a proton therapy center. These bonds are secured by the revenues generated from the facility's operations.
6. What are some key risks associated with investing in bonds issued by a CCRC?
Investing in CCRC bonds carries inherent risks, including: occupancy risk stemming from lower-than-projected resident admissions, operational risks arising from unexpected expenses or mismanagement, and interest rate risk affecting the value of bonds in a fluctuating interest rate environment. Additionally, regulatory changes and competition within the senior housing market can impact the financial performance of a CCRC.
7. What is the role of a trustee in a bond issuance?
The trustee, in this case, UMB Bank, N.A., acts as a fiduciary for bondholders, ensuring that the issuer fulfills its obligations under the Indenture agreement. The trustee manages bond proceeds, monitors compliance with covenants, and takes appropriate action in the event of a default. UMB Bank also provides information to bondholders, facilitating transparency and accountability.
8. What kind of information is included in an Official Statement for a bond issuance?
The Official Statement, as exemplified in the provided source for the Georgia Proton Treatment Center, provides a comprehensive overview of the bond offering, including details about the project, the issuer, the financial structure of the bonds, and the risks associated with investing. It includes information about the CCRC, its management, market analysis, financial projections, and legal matters related to the bond issuance. This document serves as a crucial resource for potential investors to assess the opportunity and make informed decisions.
| # | Name | ISIN | State | Last Traded Price | Last Trade Date | Funds Holding |
| 1. | NASSAU CNTY NY INDL | US63166UAS06 | New York | $9.15 | 12/10/2024 | Yes |
| 2. | CALIFORNIA STWD CMNTY | US13080SLL69 | California | $20.5 | 10/23/2024 | Yes |
| 3. | PHILADELPHIA INDL-A | US717800AC07 | Pennsylvania | $54.85 | 08/01/2024 | Yes |
| 4. | NEW HOPE CULT EDU-B | US64542PBV67 | Texas | $57.13 | 11/18/2024 | Yes |
| 5. | PR ELEC PWR-XX | US74526QVX77 | Puerto Rico | $50.5 | 12/10/2024 | Yes |
| 6. | CENT FALLS FAC REF | US153457AX48 | Rhode Island | $38.49 | 11/06/2024 | Yes |
| 7. | ARIZONA ST INDL DEV A | US040523AF98 | Arizona | $4 | 12/04/2024 | Yes |
| 8. | CA DEV-A-DAUGHTERS OF | US130911B337 | California | $33.5 | 06/24/2024 | Yes |
| 9. | TARRANT ED-A-SR LVG C | US87638RKD88 | Texas | $55.76 | 12/05/2024 | Yes |
| 10. | ATLANTA DEV AUTH-A1 | US04781GAC50 | Georgia | $19.61 | 07/22/2024 | Yes |
* Price data shown is an estimated for a specific muni bond. It is not necessarily the price a muni bond can be bought or sold for.
** Yield data shown is for the last recorded trade for a specific muni bond. It is not necessarily the yield a muni bond can be bought or sold for.
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