Press "Enter" to skip to content

Senior Living Developer LaSalle Group Files For Chapter 11 Bankruptcy

The LaSalle Group, a Dallas-based development company with a focus on senior living, has voluntarily filed for Chapter 11 bankruptcy protection.

The company is owned by Mitch Warren, who until recently also served as CEO. He has now stepped down from that role to smooth the way for a restructuring, he told Senior Housing News.

Warren also owns TLG Family Management, which operates senior living communities developed by LaSalle. Warren is continuing as CEO of TLG. The majority of the portfolio consists of about 40 standalone memory care buildings under the Autumn Leaves brand.

“The LaSalle Group, Inc. today, May 2, 2019, filed for bankruptcy protection under Chapter 11.  TLG Family Management, LLC, the management company responsible for the day-to-day management and operation of all Autumn Leaves memory care communities did not file bankruptcy and has no plans to file,” Warren told SHN. “All operations will continue uninterrupted and as usual at all Autumn Leaves locations.”

The LaSalle Group has estimated assets between $10 million and $50 million and estimated liabilities in the same range, according to the petition filed Thursday in the Northern District of Texas.

“It’s a bareboned bankruptcy petition, but notably, The LaSalle Group does not anticipate any recovery for unsecured creditors, which suggests that the senior secured lender is underwater,” George Mesires, head of the senior housing practice at law firm Faegre Baker Daniels in Chicago, told Senior Housing News after reviewing the court document.

Signs of LaSalle’s financial trouble have been brewing for several months.

Five memory care properties triple-net leased by LaSalle to NHI (NYSE: NHI), a Murfreesboro, Tennessee-based real estate investment trust (REIT), have been out of compliance with lease provisions and unable to meet their rent obligations. The five Autumn Leaves communities were two months in arrears as of Dec. 31, 2018, NHI CEO Eric Mendelsohn said during the REIT’s Q4 2018 earnings call in February.

LaSalle and NHI were still working toward a resolution as of late March, Warren told Senior Housing News at that time.

NHI declined to comment for this article. The REIT’s Q1 2019 earnings call is scheduled to take place next Tuesday, May 7.

LaSalle’s troubles are not confined to these five properties. The company is facing lawsuits from a slew of financial institutions and vendors, court filings indicate.

Among the most recent is a case filed by BMO Harris Bank on April 4 in the Circuit Court of Cook County in Illinois. That suit seeks about $9.3 million owed on a loan made to LaSalle’s Cypresswood memory care community in Houston, Texas.

Since June 2018, separate suits have been filed against LaSalle by, among others, The American National Bank of Texas, Plainscapital Bank, Bank First National, Origin Bancorp, Green Bank, Nerk Enterprises, Branch Banking and Trust Company, and A Place for Mom.

Meanwhile, at least one Autumn Leaves property has just transitioned to a new operator. On April 29, Naperville, Illinois-based Charter Senior Living announced that it has taken over management of Autumn Leaves of Glen Ellyn, located in Glen Ellyn, Illinois. The community will be renamed Charter Senior Living of Glen Ellyn.

Some other companies specializing in freestanding memory care have also been under pressure, as occupancies fell following a boom in supply that started around 2015.

The post Senior Living Developer LaSalle Group Files For Chapter 11 Bankruptcy appeared first on Senior Housing News.

Source: Senior Housing News

Be First to Comment

    Leave a Reply