UNYTS interested in acquiring Sheehan site

August 30, 2012 Updated Aug 30, 2012 at 8:12 AM EDT

By WKBW News
By Business First by Tracey Drury

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August 30, 2012 Updated Aug 30, 2012 at 8:12 AM EDT

Upstate New York Transplant Services is eyeing the shuttered Sheehan Health System facility on Michigan Avenue as a possible new downtown site, with an Aug. 31 hearing in U.S. Bankruptcy Court that could potentially fast-track their efforts.

Sheehan, on Aug. 24 filed for Chapter 11 protection under the U.S. Bankruptcy Code, citing liabilities of $5.45 million and assets of $6.3 million. Friday's hearing, set before U.S. Western District Bankruptcy Court Chief Judge Carl Bucki, is considered a prelude to seeking a buyer for the 145,000-square-foot hospital that sits on eight acres of land off of Michigan Avenue on Buffalo's East Side.

Sheehan closed in June following years of financial difficulties. The property, which is listed in the bankruptcy filing, as having a $3 million book value is listed as one of the hospital's primary assets along with $3.3 million in furnishings and equipment.

UNYTS has been scouting sites in the downtown area where it can consolidate operations, including a 55,000-square-foot facility on Broadway and 12,000 of leased space in Williamsville, where it houses its blood collection operation.

"It's got tremendous parking, dock space and the things we need on a daily basis to make us run," said Mark Simon, executive director at UNYTS. "We've been looking to consolidate our operations for a while."

The Sheehan facility would be ideal, he said, offering plenty of space and parking for the 200-person workforce as well as its blood collection vehicle fleet.

"One of our biggest problems is parking and how we get all of our trucks and people in one location," Simon said. "Broadway is great but there's not enough parking. All of our blood buses and collections vehicles and all the staging materials are in Williamsville. It's a part of our workforce I don't see very often."

UNYTS plans to partner with McGuire Development to bid on the property once an auction date is set. UNYTS would look to take half to two-thirds of the facility. No specific plans have yet been determined for the remainder, but there's potential for revenue by leasing it to a tenant, Simon said.

"We've looked at a number of various sites," said James Dentinger, McGuire Development president. "Yes, Sheehan was one and is one of those sites. We certainly looked at it more closely in recent days."

Bankruptcy court cleared liens could make the sale of the Sheehan property move on a fast track basis. The hospital also has $3.17 million in outstanding accounts receivables, according to the filing, prepared by Garry Graber, a partner at Hodgson Russ.

But, hindering the hospital are the liabilities including $485,099 in a secured claim by General Electric Capital Corp., $845,727 in four separate claims by the Internal Revenue Service, and $126,654 to National Grid. Other liabilities included $1.9 million to New York state in Medicaid overpayments; as well as $93,531 owed the state Department of Labor for unemployment insurance.

Founded in 1888, Sheehan was an independent nonprofit health facility, providing services for about 10,000 patients annually, most on government programs.

With a budget of $25 million, UNYTS has been growing due to its blood collection contracts with area hospitals, including the entire Kaleida system, hospitals in Niagara and Wyoming counties and Roswell Park Cancer Institute. Blood services now account for 40 percent of the overall operation.

If the Sheehan site doesn't work out, Simon said he'll continue to look for an appropriate downtown site, but there's no rush. UNYTS owns the Broadway site and has a short-term lease in Williamsville, which is not under any time constraint. He's also talked to officials on the Buffalo Niagara Medical Campus about potential opportunities, Simon said.

"We've been talking to people all along to find the right location for us, but there's not a lot of those locations to be had," he said.

While Sheehan closed its hospital and clinic operations earlier this summer, Schofield Residence remains a tenant on the third floor, with plans to move out by late September into leased space on Fulton Street.

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