Senior housing project defaults on loan

Campo Felice, a towering senior housing project in Fort Myers that was once a derelict hotel, has apparently defaulted on its mortgage.

In all, more than $63.7 million in debt is outstanding, according to the commercial real estate brokerage firm that has been tasked with selling the note. Brokerage firm Newmark Knight Frank currently lists the loan as “non-performing” and “in payment default.”

“The offering presents investors the opportunity to acquire a first lien senior mortgage loan secured by a recently redeveloped resort-style senior living community poised for improved operations upon successful lease-up of the Property,” Newmark Knight’s offering states.

Campo Felice’s occupancy could not be determined. Monthly rents prior to the pandemic ranged from $2,030 per month to $5,420 monthly, excluding a $3,000 administrative fee.

Campo Felice Holdings LLC and related groups borrowed $62 million from an affiliate of AllianceBernstein Ltd. Partnership, a New York-based lender with global headquarters in Luxembourg, in July 2018, according to Lee County Property records.

The floating-rate debt, carrying an interest rate of the London Interbank Offering Rate plus 4.75%, matured in July.

“Loan proceeds were utilized to re-finance the property and provide future funding proceeds for carry cost shortfalls,” Newmark Knight states.

Neither Newmark Knight officials nor Rob Harris, who is listed in state records as Campo Felice’s principal owner, returned telephone calls for comment. Investor submissions for the sale were due on Aug. 18, the offering states.

Senior housing communities such as the 24-story Campo Felice — happy fields in Italian — have been particularly hard hit by the coronavirus pandemic as a result of declining occupancies and lost opportunities to add residents because of lockdowns.

In late April, for instance, operator Welltower Inc. cautioned investors that “move-in volumes have decreased meaningfully on a year-over-year basis.” Two months later, Griffin-American Healthcare REIT disclosed that it was suspending shareholders distributions to preserve cash, noting that the pandemic “has hit the healthcare sector directly.”

Campo Felice also has suffered from increased competition in Southwest Florida from properties such as Discovery Village in Fort Myers and Moorings Park, in Naples.

The 323-unit senior living tower, at 2500 Edwards Drive on the Caloosahatchee River, also becomes one of the first major Gulf Coast commercial real estate casualties of the pandemic, together with Westfield-Radamco’s Sarasota Square Mall. The Sarasota County retail hub, which has lost anchor tenants such as Dillard’s and Sears in recent years, is undergoing foreclosure, records show.

In both cases, analysts say both properties had experienced issues that were accelerated by the pandemic.

Campo Felice opened in 2017 after a successful renovation of a former Sheraton hotel by developer The MacFarlane Group, which purchased the 55 and over property for $12.57 million in early 2015, county property records indicate.

Amtel Group of Florida opened the hotel in 1986 as part of a wave of hospitality development aimed at taking advantage of proposed casino gambling. The 417-room hotel fell into foreclosure seven years later, however, after legislation allowing gambling failed to pass, and closed permanently in 2008.

Following the conversion to senior housing, MacFarlane sold its interests in Campo Felice in April 2018 to a Harris-led entity, records show.

In addition to its residences, the roughly $100 million project also contains amenities such as a 175-seat lecture hall, movie theater, multiple restaurants, a fitness center and swimming pool.

The property also has the ability to tap into $9.7 million in Fort Myers tax deductions, Newmark Knight states.

The AllianceBernstein move isn’t the first time Campo Felice has apparently faced financial trouble in recent years.

In February 2019, Pial Holdings Ltd., of the British Virgin Islands, filed a foreclosure lawsuit against Campo Felice ownership over an unpaid $11.06 million loan.

That debt, which was intended to fund a $45 million expansion to add assisted living and memory care units, was accruing interest of $3,359 per day at the time of the filing, according to Lee County court records.

The eight-story expansion never reached fruition, however.

Newmark Knight, however, believes that positive demographic shifts into Southwest Florida could still benefit Campo Felice moving forward.

“The excellent demographic profile and the Loan’s low basis below replacement cost provides an investor an attractive entry point into one of the nation’s top senior housing markets,” Newmark Knight’s offering states.