A winning bidder has been identified for one of the nation’s largest nonprofit continuing care retirement communities, which had declared bankruptcy in June, citing effects of the COVID-19 pandemic.
Encore Healthcare Services of New York was revealed as the “stalking horse” bidder in the auction of Evangelical Retirement Homes of Greater Chicago, doing business as Friendship Village of Schaumburg, according to The Daily Herald. The prevailing bidder is expected to be announced officially on Nov. 8, with a closing date on the purchase expected within 60 days.
Last month, a company now identified as Encore was announced as a potential buyer with a planned minimum bid of $83.1 million, which since has increased to $114.8 million. As part of the pending agreement, Encore committed to spending $15 million for capital improvements, $50,000 for charitable contributions and $35,000 annually for employee educational assistance, according to the media outlet.
The company also committed to improving the entrance fee reimbursement schedule for current residents. Former residents seeking repayments would split $2 million, whereas current residents would be able to collect their share over time from $76.6 million of what Friendship will receive in the sale. Only 25% of the entrance fee payments for current residents would be repaid within three years, whereas more than half would be made within 10 years, with all repayments being made within 16 years.
Citing financial losses related to the pandemic, Evangelical Retirement Homes of Greater Chicago filed for Chapter 11 bankruptcy protection in the US Bankruptcy Court for the Northern District of Illinois, Eastern Division, in June after defaulting on more than $125 million in debt. The 815-unit community sits on 70 acres and is part of the Friendship Senior Options system.
President and CEO Michael Flynn said then that occupancy had dropped significantly after tours fell off during the pandemic. Occupancy at the CCRC fell to 78% in September 2020, for instance. Although the community had obtained a Paycheck Protection Program loan, it still had to spend half of its cash reserve at the time to make up for lost revenue.
Friendship Village of Schaumburg, which opened in 1977, is ranked as the No. 24 largest individual campus among the nation’s 200 largest not-for-profit senior living communities in the nation on the 2023 LeadingAge-Ziegler 200 list. It is Illinois’ largest CCRC.
The CCRC had not responded to a request for comment from McKnight’s Senior Living as of the production deadline.
