A nonprofit senior living operator with three communities in the Dallas area has filed for Chapter 11 bankruptcy after challenges exacerbated by the Covid-19 pandemic, with a harassed horse bidder already lined up for a sale in bankruptcy.
The operator, Christian Care Communities & Services (CCC&S), has three communities in the Dallas/Fort Worth area totaling 760 units. They include communities in Allen, Fort Worth and Mesquite Texas. The organization also owns unimproved property adjacent to its Mesquite and Fort Worth communities.
The organization’s estimated assets and liabilities include between about $50 million and $100 million, with outstanding municipal bonds totaling about $50 million, according to its bankruptcy court filing.
Prior to the filing, the company negotiated a purchase agreement with North Texas Benevolent Holdings, which will serve as the offer to purchase in a bankruptcy sale proposal with an agreed price of $44,250,000. A looming horse sale is an initial offer on the assets of a bankrupt entity that effectively establishes a low-end bidding floor so that bidders cannot underbid the purchase price.
CCC&S expects the sale of the properties to be completed in August or September.
North Texas Benevolent Holdings plans to lease the communities to affiliates of Boncrest Resource Group, which will honor all residency contracts, deposits and entrance fees, according to a news release about the bankruptcy filing.
“We are grateful to have found an operator who shares our long-term commitment and values,” said Sabrina Porter, president and CEO of Christian Care Communities & Services, in a press release. “This sale, once approved by the bankruptcy court, will provide stability and sustainability to our communities for years to come.”
Although the pandemic has “exacerbated” the company’s financial difficulties, these challenges began in 2018. The company had planned several CapEx projects which were suspended in 2020 due to a lack of funding, according to the filing of bankruptcy.
The pandemic has resulted in a “significant decline” in occupancy in the company’s three communities, while at the same time “market forces have limited the ability to increase residents’ rental income to match these increased liabilities,” according to the filing.
In April 2021, credit rating agency Fitch Ratings downgraded the organization to a D rating after it failed to pay its bond principal payments that were due the previous month.
“The decrease in fundraising contributions also meant that donations were not sufficient to cover the shortfall,” the filing continues. “Based on extensive financial analysis and other due diligence, the Debtors have determined that it is in the best interests of their property, their residents and the future of their communities to sell substantially all of their assets.
Christian Care Centers is not the only senior living organization to have filed for bankruptcy following the challenges of Covid-19. In April, a court approved a Chapter 11 bankruptcy plan for American Eagle Delaware Holding Company and its subsidiary Eagle Senior Living.
Retirement homes accounted for the largest share of delinquencies reported by municipal bond issuers in the first quarter of 2022, showing that it was “the sector least well positioned to withstand the pandemic”, according to a Moody’s Investors Service April 15 report.
“This is both because of the inherent vulnerability that older people’s lives have to a health emergency that disproportionately affects older people, and because the inherent financial weakness of many borrowers has left them with little leeway. to survive a disaster of any kind,” the report said. .