Dallas luxury retirement home Edgemere files for bankruptcy and sues owner


The first Edgemere Retirement Community filed for bankruptcy Thursday morning, citing financial pressures from the COVID-19 pandemic and last year’s Texas freeze.

The Dallas Continuing Care Retirement Community, which allows seniors to age in different levels of care without relocating, mentioned it negotiates a restructuring plan with its financial stakeholders.

Families who owed millions of dollars in entry fee refunds will become unsecured creditors in bankruptcy, putting them behind bond investors and others to get their money back. For these families, filing for bankruptcy caused more anguish.

“This filing pretty much confirms to me that we won’t get the money back,” said William Thomas, whose family are awaiting a $293,411 refund from his stepfather’s Edgemere stay. Her stepfather, John Stallings, moved away almost three years ago and died more than two years ago.

Edgemere said the 1.55 million square foot facility with 304 self-contained living apartments, 113 assisted living suites and 87 care beds will continue to operate throughout the bankruptcy proceedings.

The bankruptcy filing estimates that Edgemere has between 1,000 and 5,000 creditors. Its assets and liabilities are both estimated between $100 million and $500 million.

Simultaneously with its bankruptcy filing, Edgemere also sued its owner, Intercity Investments Inc., and private equity firm Kong Capital, alleging breach of contract, fraud, interference with its business and civil conspiracy. Edgemere said he “intends to pursue the lawsuit vigorously.”

Jesse Jantzen, CEO of Edgemere’s parent company, Lifespace Communities Inc., said in a statement that Edgemere filed for Chapter 11 bankruptcy protection with the support of its bondholders. He declined a further interview with The Dallas Morning News.

“We remain true to our commitment to our residents as we work through this process in a way that will allow current and future residents to enjoy all that Edgemere has to offer for many years to come,” said Jantzen in the bankruptcy announcement.

On March 9, Edgemere said he had reached a new agreement with the bondholders and paid off the rent he owed the landowner, giving him time to discuss strengthening his finances. Edgemere also said it has made arrangements for upcoming lease payments.

Edgemere said it plans to meet its commitments to all stakeholders, including employee wages and benefit programs.

After the dire financial situation of the retirement community became known to residents and their families, questions arose as to whether their entrance fees were protected. Edgemere is charging a large upfront sum of between $346,000 and $1.45 million for people living in independent living units. When a resident moves or dies, the contracts stipulate that the resident or his estate will receive up to 90% of the sum. This refund is triggered after the unit is rented to a new resident who has paid a new entrance fee.

When a continuing care retirement community files for bankruptcy, the residents and their families are considered unsecured creditors.

Edgemere’s bankruptcy filing shows 30 largest unsecured debts, all of whom are residents having to repay the entrance fee. These claims total $25.5 million, with one resident owing $1.3 million.

Dr. Paul Radman, a former endodontist and president of the Edgemere Residents Association, said Jantzen met with Edgemere residents Thursday morning to explain what the court filing means and answer questions. Radman said he felt no anger or concern from residents.

“I expected a lot of gasps and worries and to my surprise everyone was very happy that it happened,” he said. “Everyone was very happy because they thought it was the right decision.”

Radman said Edgemere continues to attract new residents because it’s “the Ritz Carlton of retirement homes.”

“Some people want the Ritz Carlton and some people want the Hilton Garden Inn,” he said.

Senior residence bankruptcies are difficult situations, Thomas said, because residents who still live there don’t want to talk about it because they rely on the facility for care and for future reimbursement. His stepfather’s repayment was meant to be an inheritance for his three daughters, Thomas said.

When Edgemere was unable to pay rent last fall, it took effort to protect incoming deposits from residents received after September 27, 2021, placing them with an escrow agent in earlier negotiations. on debt restructuring.

“Upon resolution of a successful restructuring, the Escrowed Deposits will be released pursuant to the Escrow Agreement, and any refunds related to Entry Fees held in Escrow will be paid pursuant to the Resident Agreements,” Edgemere said in a statement. Q&A for online residents.

Edgemere is continuing to issue refunds, with the last being issued on April 8, Edgemere spokeswoman Rachel Chesley said. Recent refunds like this are for residents who have recently left the community entirely after two conditions were previously met: the resident left their apartment for a higher level of care within the community before September 27 and Edgemere sold the unit before September. 27.

The Dallas Morning News first reported on Edgemere’s financial difficulties in February, following the expiration of a forbearance agreement that allowed the company to delay paying monthly rent to Intercity Investments, plus interest and principal on its $109 million in outstanding debt.

According to its 2021 financial report, the occupancy rate of Edgemere’s 304 independent living apartments has been steadily declining, from 93.3% in 2018 to 74% last year. As a result, Edgemere’s annual losses have accelerated in recent years, from $12 million in 2018 to around $30 million last year, according to its 2018 and 2021 financial reports.

Fitch Ratings, one of three major ratings agencies that examine organizations’ ability to repay debt on time and in full, downgraded Edgemere’s bonds in November to a “D,” or default, according to Fitch website. In mid-March, Fitch withdrew its rating entirely, citing Edgemere’s default.

Edgemere, one of Dallas' premier retirement communities, is battling declining occupancy...

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