Lifespace Communities is lending “unprecedented support” to its troubled Edgemere community in Dallas as the property shifts to a rental payment structure for residents.
The Des Moines-based senior living operator has put forth a bid to support the embattled property ahead of a potential sale by agreeing to fund up to $143.4 million of the community’s restructuring plan. The payment will go toward refunds of entrance fees for residents who may have not otherwise received them due to the community’s current financial situation, according to Lifespace.
The proposed restructuring plan from Lifespace Communities expects Edgemere to change hands to a new owner, who would transition the community from a life care contract community to a rental community. In the process, resident leases would be terminated and replaced by new rental agreements.
The payments are necessary, as residents could otherwise have lost their refunds in Edgemere’s proposed restructuring plan, according to Lifespace.
“Lifespace Communities feels compelled by its long-standing charitable mission and deep commitment to support its residents to deliver an extraordinary solution to mitigate the impact felt by current and former residents as a result of this unique and challenging situation,” Lifespace Communities President andCEO Jesse Jantzen said in the release.
Jantzen said Lifespace also offered to continue management of Edgemere in the short-term ahead of any sale of the property. He added that Lifespace has the “financial foundation and strength” to make residents whole again without “compromising the health of the enterprise or impacting current and future residents.
“This contribution is consistent with Lifespace’s core mission of doing right by its residents,” Jantzen said.
The payment and proposed restructuring plan is the latest in the saga of Edgemere and its financial woes. The community filed for Chapter 11 bankruptcy in April after reporting over $112 million in debt, citing issues caused by the Covid-19 pandemic and the major winter storm that knocked out power and damaged infrastructure in the state in 2021.i.
Edgemere initially had two restructuring plans, one from the community, which included suing its landlord; and one from the holders of its debt, which involved a sale of the community according to Dallas Morning News. Unrefunded deposits for former residents equaled about $37 million, while current residents’ totaled about $107 million, the Dallas Morning News report noted.
Lifespace Communities owns and operates 14 CCRCs across seven states. The operator affiliated with Texas-based Senior Quality Lifestyles Corporation in 2019, a move that brought Edgemere into its portfolio. Lifespace said Edgemere was subject to a 55-year ground lease in place prior to the acquisition.
Earlier this year, a report by Moody’s Investors Service in April found that senior living communities represented the largest portion of delinquencies in the first quarter of this year. Those woes could persist in 2023 with Bank of America Research showing first-time defaults could reach as high as $2.1 billion in the year ahead.
Senior living companies accounted for more than $600 million in first-time payment defaults, representing about 46% of the $1.33 billion of total first-time defaults so far in 2022, according to research from Bank of America Research cited by industry publication The Bond Buyer.
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