Edgemere Saga Comes To An End With Court-Approved Rescue Plan, New Ownership
A new owner is preparing to purchase Edgemere in Dallas, putting to bed a years-long saga that forced the luxury senior living community to file for bankruptcy last spring.
Bay 9 Holdings, an affiliate of San Francisco-based Lapis Advisers, will take over ownership of the 1.5M SF community in the coming weeks, according to a news release. Long Hill at Edgemere will become the property’s manager.
“Our home at Edgemere has always been the best senior living community in DFW; bankruptcy held that at risk for the past year,” Edgemere Resident Association President Jim Eckelberger said in a statement. “Now the risk is gone and the new management company, Long Hill, has committed to bettering what is already a marvelous place to live.”
Bay 9 will acquire Edgemere for $48.5M and convert it to a rental model, according to bankruptcy filings. The rescue plan, approved Monday by U.S. Bankruptcy Court Judge Michelle Larson, also requires the property’s current owner, Lifespace Communities, to reimburse $145M worth of entrance fees owed to 300 families, according to The Dallas Morning News.
Approval of the plan follows months of Chapter 11 court proceedings that stemmed from financial hardship Edgemere said it endured in the wake of the coronavirus pandemic and the devastating winter storm of 2021.
Loss of revenue from those two events, which Edgemere said totaled around $30M in 2021, left the company unable to pay out millions of dollars in deposits owed to families whose relatives had either died or moved out. The company’s bankruptcy filing listed the 30 largest unsecured claims, which totaled $25.5M and in two cases exceeded $1M.
Edgemere operates on an entrance fee model that requires residents to pay deposits of between $345K and $1.4M, per the DMN. Those fees are supposed to be refunded, but only once Edgemere sells the unit to a new tenant, which became increasingly hard to do during the pandemic, the company claimed.
In early 2021, Edgemere entered a forbearance agreement with its landlord, Intercity Investments Inc. A year later, Intercity declined to extend the agreement, which had allowed the property to delay monthly rent payments as well as interest and principal on its $109M of outstanding debt, per the DMN.
Edgemere went on to sue Intercity and private equity firm Kong Capital, claiming the firms worked together to terminate the property’s 55-year ground lease and make windfall profits by converting it to a senior living rental community.
Intercity countersued, claiming Edgemere misled its residents about its financial situation and calling for its Chapter 11 case to be dismissed, according to McKnight Senior Living.
An attorney representing affected Edgemere families told the DMN that concerns over whether they would ever be repaid have been put to rest. Lapis Municipal Opportunities Fund, Bay 9’s parent sponsor, has invested in more than 40 senior living communities without defaulting, according to the DMN.
The fund also transferred $9M over the asking price to Bay 9, signaling support for the sale, Larson said during the ruling.
