One proposal involves selling the retirement community for $48.5 million
Debt holders of Edgemere have a bankruptcy plan that involves selling the luxury retirement community to a new owner.
Court documents show an unnamed bidder offered $48.5 million for the community. In its April bankruptcy filing, Edgemere reported more than 400 residents with 304 independent-living units, 113 assisted-living units, and 87 nursing beds in the 8500 block of Thackery Street.
The sale plan competes with one filed by Edgemere and a committee of unsecured creditors whose deposits are on the line. That plan would involve a $20 million cash infusion from Edgemere’s parent company, Lifespace Communities.
The deadline for creditors to vote on the plans is Jan. 3, and a confirmation hearing is set for Jan. 10. A $10 million emergency loan that Edgemere received approval for in June comes due Dec. 31.
The proceedings have been contentious from the beginning. Edgemere sued its landlord, Intercity Investments, simultaneously with its bankruptcy filing, alleging in court documents that Intercity was working with Kong Capital to terminate its 50-plus-year ground lease.
Edgemere’s proposed plan leans on its parent company, Lifespace, a nonprofit based in Dallas and Iowa that operates 17 communities in seven states. Lifespace reported $282 million in revenue in its most recent tax filings in 2020.
Credit rating agency Fitch Ratings, in a September report, expressed concern about Lifespace’s declining independent living occupancy “but believes that by virtue of its size and scale, Lifespace possesses the operating flexibility to weather what is expected to be a transitory stress and recover occupancy to levels consistent with historical averages over the next one to two years.”
Per the plan, Lifespace would agree to waive management fees Edgemere owes for nine years, saving about $17.4 million.
Per The Dallas Morning News, the plan would refinance $109.1 million in bond debt and issue new bonds in 2023 that would provide about $89 million in new capital. Lifespace would agree to make debt payments on the bonds if Edgemere cannot pay them. That agreement is for $9 million per year for seven years, court documents show.
Current or former residents (or their families) who already paid a hefty entry fee each would receive back 40% of their money. Current residents would be offered new contracts, and both groups would receive 20% of what they’re owed up front and the other 20% in five years.
Former residents are owed $37 million, and current residents’ deposits total $107 million.
The debt holders’ plan involves selling “substantially all” of Edgemere’s assets to a new owner. Like Edgemere’s plan, the debt holders’ plan would offer residents a new monthly rental agreement, doing away with the entrance fee model.
All of Edgemere’s unsold assets would go to creditors, including former residents or their estates, per their plan.