Deerfield Retirement Community Inc. fell behind on more than $40 million in loan obligations tied to its construction in 2000 at 13731 Hickman Road in Urbandale, according to a court document filed by CEO Scott Harrison.
"Many factors, including the steep decline in the residential real estate market, which impaired the ability of some potential residents to sell their houses and then move into the facility, and increased competition, resulted in the debtor's failure to attract residents as quickly as was forecasted," Harrison said in bankruptcy court records. "This slower occupancy and the resulting utilization of working capital to fund debt service meant less revenue and cash available for the Debtor to pay operating expenses."
The filing seeks approval of what it estimates will be a two-month reorganization. The petition and reorganization plan were filed Jan. 10 in U.S. Bankruptcy Court for the Southern District of Iowa in Des Moines.
According to the filing, Deerfield owes $40.9 million on nearly $44.2 million in bonds issued 2007 to refinance $80 million in bonds issued in 2003. The bonds were issued by the Iowa Finance Authority and mature at different rates.
In addition, Deerfield owes $18.8 million to its parent company, Lifespace Communities Inc. Harrison is president and CEO of Lifespace, which provides management services at Deerfield. The retirement community also owes nearly $5.8 million in refunds to the estates of former residents.
Deerfield occupies more than 45 acres of land and has 32 townhouses and 138 independent living apartments, common areas, a residential care facility with 24 units, and a health center with 30 skilled nursing care beds. It charges entrance fees of $129,000 to $636,000, plus monthly service fees.
The residential care facility is 90.4 percent occupied, and the health-care unit is 88.6 percent occupied. However, the occupancy level of the living units is 68 percent, according to bankruptcy documents.
"As the largest component of the facility, the low occupancy in the living units was one of the primary drivers in the need to restructure the debtor's long term bond obligations," according to records signed by Harrison.
The company has filed a motion to continue paying wages and benefits for its 165 employees during the restructuring.