Potential purchasers step forward for Luther Manor properties

ASBURY, Iowa — Two prospective buyers have stepped forward for senior living properties previously run by a Dubuque nonprofit organization.

Luther Manor Communities, located at 3131 Hillcrest Road in Dubuque and 5300 Grand Meadow Drive in Asbury, was placed into receivership in August 2023 after failing to pay back over $15.7 million in loans.

The facilities since have been managed by Walnut Creek Management Co. to continue serving residents while the properties’ court-appointed receiver, Kansas City-based attorney Michael Flanagan, marketed the facilities to potential buyers.

Recently filed court documents state that two suitable buyers have been identified: one for the Hillcrest property and another for the Grand Meadows location. The proposed purchase price for both properties equals a combined total of $29.8 million.

“We exposed the assets as broadly as we could to as many potential buyers as we could, and the two offers represent the highest and best offers that we received,” Flanagan said. “It’s really one of the best outcomes that we could have hoped for.”

Efforts by the Telegraph Herald to reach the potential purchasers were unsuccessful, but Flanagan said both have expressed intentions to maintain current operations at the properties. Per court documents, both also intend to maintain all or “substantially all” Luther Manor staff.

Tutera Senior Living and Health Care put in a $21.3 million offer for the Asbury campus, which includes the skilled nursing and assisted living facility at 5300 Grand Meadow Drive and 48 adjacent townhomes for older adults.

Of that, roughly $13.8 million would go toward the assumption of all obligations related to current occupancy agreements and fees on the townhomes. The remainder would go toward the repayment of Luther Manor’s debt.

The Hillcrest campus received an $8.5 million offer from the newly formed 3131 Hillcrest Propco LLC for the facility that includes 103 skilled nursing beds and 32 independent living units.

Additional information on the Hillcrest purchaser was not immediately available, though Flanagan said it has experience in senior- living operations.

“The new owners don’t want anyone to leave or move,” Flanagan said. “They’re both purchasing these properties with the intent to keep those doors open and to keep providing the services that are currently offered there.”

The proposals will go before the court on Aug. 19 for consideration, as is standard for properties put into receivership. If both purchases move forward as planned, the Dubuque and Asbury campuses would be split.

Luther Manor Administrator Kim Harkey said she is aware of the proposals and is working to prepare staff for the possibility of new owners while continuing to provide residents with high-quality care.

She said the idea of the Dubuque and Asbury campuses being split was somewhat disheartening, though she found comfort in the fact that both potential buyers have experience in senior care.

“It’ll be a change going from a nonprofit to a (for-)profit organization, but times are tough in the industry and to provide the kind of quality care that we’re known for, we have to embrace those changes,” Harkey said.

The hearing on the potential property sales comes almost exactly one year after the Luther Manor properties were put into receivership.

Court documents state that the city of Peosta, Iowa, issued a $9 million senior living revenue bond in 2016 on behalf of Luther Manor, serving as a “conduit” between the nonprofit and MidWestOne Bank. The city of Sageville, Iowa, issued two similar bonds to Luther Manor for about $4.5 million each in 2016 and 2017.

Those bonds were to be used to fund the construction and remodel of the Grand Meadows campus in Asbury. In all three cases, Luther Manor received the proceeds of the bond under a loan agreement and then was required to pay the bank directly.

By August 2023, court documents state Luther Manor owed MidWestOne and other creditors upward of $15.7 million. Most, if not all, of that debt should be repaid through the sale of the properties, Flanagan said.

Flanagan said this week that he couldn’t speak to the specifics of why Luther Manor was unable to pay back its loan aside from the fact that senior living facilities nationwide have struggled financially in recent years.

“I really haven’t spent a lot of time going back to the what-ifs or whys,” he said. “I’ve been focused on the future of these properties and figuring out what’s next.”