Luxury senior living home is on brink of collapse, landlord says

3 minute read

A sign is seen outside the U.S. District Bankruptcy Court for the Southern District of New York in Manhattan, New York, U.S., January 9, 2020. REUTERS/Brendan McDermid

Register now for FREE unlimited access to Reuters.com
  • Edgemere senior living facility OK'd to tap bankruptcy loan
  • Company says it will seek rent relief

(Reuters) - A Dallas-based luxury senior living community is teetering on the brink of a financial collapse, lawyers for its landlord argued in a bankruptcy court on Monday.

Northwest Senior Housing Corporation, known as Edgemere, filed for Chapter 11 protection last week with nearly $112 million in debt. The company filed for bankruptcy in the midst of a dispute with its landlord, Intercity Investment Properties, over its 16.25-acre campus and the future of its 55-year lease.

Lawyers for Edgemere at Polsinelli appeared before U.S. Bankruptcy Judge Michelle Larson in Dallas on Monday seeking temporary approval to tap $2 million of a $10 million loan to fund operations, including payroll, during the bankruptcy. Larson approved the request.

Register now for FREE unlimited access to Reuters.com

But a lawyer for Intercity, Elizabeth "Lisa" Vandesteeg of Levenfeld Pearlstein, told the judge during the hearing that it believes Edgemere is on the brink of administrative insolvency, meaning it won’t be able to pay even its top-line expenses. The landlord has indicated that it was ready to terminate the lease, which it says would put the land back in its control.

“Edgemere has run out of money,” she said.

Intercity said Edgemere failed to pay its rent on time from September through March, but Edgemere says those overdue payments were eventually made.

“The idea that there’s some sort of catastrophe around the corner…is illusory,” said Jeremy Johnson of Polsinelli.

But Johnson also told the judge that Edgemere will move to pause its requirement to pay rent for 60 days.

Edgemere provides some nursing home services but is largely a high-end independent senior living community. The company blamed its financial trouble on the combination of falling occupancy rates, increased competition, management turnover and the economic impact of the COVID-19 pandemic. New residents typically pay a large entrance fee that can range from $350,000 to $1.4 million, as well as fixed monthly fees.

The same day it filed for bankruptcy, Edgemere sued Intercity, alleging that it attempted to “destroy” its business by trying to terminate the lease and improperly take back the property being leased.

Vandesteeg said on Monday that the complaint is rife with “inaccuracies” and that Edgemere is trying to “vilify the landlord.”

The company does not yet have a plan to exit bankruptcy but says it is in negotiations with its sole owner, Lifespace Communities Inc., and bond trustee on a restructuring strategy.

The case is In re Northwest Senior Housing Corporation, U.S. Bankruptcy Court, Northern District of Texas, No. 22-3065.

For Edgemere: Jeremy Johnson, Brenna Dolphin and Trinitee Green of Polsinelli PC

For Intercity: Elizabeth "Lisa" Vandesteeg, Harold Israel and Eileen Sethna of Levenfeld Pearlstein and Michael Held, Jennifer Wertz and J. Machir Stull of Jackson Walker

Register now for FREE unlimited access to Reuters.com

Our Standards: The Thomson Reuters Trust Principles.

Thomson Reuters

Maria Chutchian reports on corporate bankruptcies and restructurings. She can be reached at maria.chutchian@thomsonreuters.com.