An Iowa life care retirement community voluntarily filed for prepackaged Chapter 11 bankruptcy last Friday, citing the economic downturn’s “significant adverse impact” on the community’s ability to attract new residents into its independent living units.
Deerfield Retirement Community Inc. in Urbandale, Iowa is a 224-unit continuing care retirement community sponsored and managed by Lifespace Communities Inc. that opened in May 2005.
The community owes nearly $41 million in Series 2007A and Series 2007B refinanced bond debt, along with almost $19 million of unsecured obligations to Lifespace and another approximately $5.8 million in entrance fee refunds to estates of former residents, according to court documents. The bonds were issued by the Iowa Finance Authority.
Although the community’s 24 assisted living units and 30 skilled nursing units are 90.4% and 88.6% occupied, respectively, its 170 independent living units are only 68% occupied.
“Many factors, including the steep decline in the residential real estate market, which impaired the ability of some potential residents to sell their houses and then move into the facility, and increased competition, resulted in the debtor’s failure to attract residents and quickly as was forecasted,” said the community in bankruptcy documents filed by Lifespace Communities president and CEO Scott Harrison on January 10.
“This slower occupancy and the resulting utilization of working capital to fund debt service meant less revenue and cash available for the Debtor to pay operating expenses,” the documents stated.
Written by Alyssa Gerace