A luxury community owned and operated by Lifespace Communities is filing for Chapter 11 bankruptcy after encountering financial headwinds due to the Covid-19 pandemic.
The Dallas, Texas-based continuing care retirement community (CCRC), Edgemere is currently negotiating with its financial stakeholders on a restructuring plan, according to an April 14 press release about the bankruptcy filing. The community also is seeking court approval for debtor-in-possession financing provided by UMB Bank.
West Des Moines, Iowa-based Lifespace is a nonprofit organization that owns and operates 14 CCRCs across seven states. The operator affiliated with Texas-based Senior Quality Lifestyles Corporation (SQLC) in 2019.
The 504-unit CCRC has liabilities totaling between $100 million and $500 million, according to its bankruptcy filing All of the community’s 30 largest unsecured claims are related to refundable entrance fees; with two residents owed more than $1.2 million and $1.3 million, bankruptcy documents showed.
The community has faced many challenges since the outset of the Covid-19 pandemic, with occupancy falling to 74% in 2021, down from 93% in 2018, financial records obtained by Dallas Morning News showed. That contributed to the community’s annual losses, which grew to $30 million in 2021.
A historic winter storm that tore through Texas in February, 2021, added to the company’s troubles, Lifespace President and CEO Jesse Jantzen said in a press release.
“Like previous challenges we have overcome, we will tackle these issues head-on and remain committed to identifying a long-term financial solution,” he said.
In addition to filing for Chapter 11 bankruptcy, the community also sued its landlord Intercity Investments Inc. and its agent, private equity firm Kong Capital. In its initial complaint, Edgemere alleged breach of contract, fraud, and interference with business, and civil conspiracy, among other claims.
“The only outstanding piece is resolution with the landlord and its agents, and we have filed a lawsuit against them alleging claims for their actions over the last year,” said Jantzen in a release.
Despite the bankruptcy filing, the community will remain open and operating throughout its restructuring process. Lifespace Communities has not filed for Chapter 11 and will remain the owner and operator of the community.
Lifespace is not the only CCRC or life plan community that has declared bankruptcy as a result of the Covid-19 pandemic.
For instance, the organization behind The Prospect-Woodward Home, a CCRC in New Hampshire, filed for Chapter 11 bankruptcy protection last year before it was acquired by Skokie, Illinois-based senior living nonprofit Covenant Living.
Residents paid an entrance fee that ranged from about $350,000 to more than $1.4 million.
The Dallas Morning News reported Edgemere’s financial headwinds in February when a forbearance expired which had allowed the community to delay rent payments.
Citing the impact of the Covid-19 pandemic and winter storm Uri, a major winter system that caused nearly 10 million power outages in early 2021, Lifespace Communities President and CEO Jesse Jantzen promised to tackle the restructuring head-on in a statement.
Alongside the bankruptcy filing, Edgemere filed a lawsuit against its landlord, Intercity Investments, Inc., and Intercity’s agent, Kong Capital, according to a release.