CCRC The Buckingham files for bankruptcy, seeks to restructure $ 140 million in bond debt
A Houston-based Continuing Care Retirement Community (CCRC) is the latest campus to file for Chapter 11 bankruptcy protection as it aims to restructure $ 140.3 million in bond debt.
CPAB, The Buckingham, cited pressures from multiple challenges, including Hurricane Harvey in 2017 and the coronavirus pandemic, which impacted the community’s ability to attract new residents and generate income in order to to cover expenses and pay off debts.
In addition, The Buckingham defaulted on some of its debts. The case was filed in U.S. Southern District Bankruptcy Court on June 25.
CCRCs have generally proven to be resilient during the pandemic. On Monday, Fitch Ratings released a report noting that strong residential real estate markets and healthy consumer demand have created favorable winds for the sector.
Yet some CCRCs – also known as life plan communities – have struggled and filed for bankruptcy in order to restructure after the pandemic strained operations or exacerbated existing struggles.
Built in 2005 in the affluent River Oaks neighborhood of Houston, The Buckingham is a paid campus that was once part of a CCRC portfolio owned by Senior Quality Lifestyle Corporation (SQLC). When that company affiliated with Lifespace Communities in 2019, Buckingham disaffiliated and separated from an independent board made up of experienced bankruptcy and restructuring members who recognized the barriers the community faced.
The Buckingham is managed by Greystone Management Services, which also handles marketing for the community. It consists of 303 independent residences, 67 assisted living units, 33 memory care units and 92 qualified nursing residences. As of June 23, occupancy rates were 71% for assisted-living residences, 62% for independent residences, 57% for qualified nursing care and 45% for memory care.
Construction was financed through tax-exempt bonds issued through the Tarrant County Cultural Education Facility Finance Corporation. The current bond trustee is UMB Bank. At the date of the petition, $ 140.34 million in principal remained unpaid related to the bond debt, plus $ 16.3 million in interest.
Buckingham claims $ 198.2 million in assets against $ 345.1 million in liabilities, including $ 130.4 million in conditional entry fee refunds, according to the deposit.
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The restructuring plan, if approved, will continue operations without impacting residents; restructure debt to better align it with projected cash flows; and pay all unpaid living expenses. In addition, the community would receive an injection of $ 28.5 million to fund reserves and necessary capital improvements.
“We are incredibly optimistic that this difficult but prudent step to refinance our debt will put our community on a stronger future path than ever before,” said Michael Wyse, chairman of the board of The Buckingham, in a statement.
Earlier this month, The Amsterdam at Harborside in Port Washington, New York, filed for Chapter 11 bankruptcy for the second time in seven years, with a pre-negotiated $ 199.5 million restructuring plan. dollars of bond debt.
Park Place of Elmhurst, in the Chicago suburb of Elmhurst, Illinois, filed for Chapter 11 protection in December 2020 after defaulting on a $ 15.5 million bond debt issued by Illinois Finance Authority.
Henry Ford Village, a CPAB in Dearborn, Michigan, is on the verge of bankruptcy after a court approved a $ 76.3 million takeover bid by a subsidiary of Sage Healthcare Partners.