Schaumburg retirement community files for bankruptcy

Illinois’ largest nonprofit retirement community filed for bankruptcy last week after failing to recover from the pandemic.

Friendship Village of Schaumburg, an 815-unit complex at 350 West Schaumburg Road, defaulted on more than $125 million in debt and on Friday filed a Chapter 11 petition, Crain’s reported.

The nonprofit last year hired both investment bank B.C. Ziegler and then a broker of senior living properties to land a buyer to take over the asset, but a deal never came together. Now, the company has turned to the bankruptcy system in hopes a court-supervised sale process brings a stronger result.

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Like many retirement communities, Friendship Village relies on entrance fees — the one-time payments residents make upon moving in — as its main source of revenue. So when the pandemic hit and demand for the property’s units evaporated, sales plummeted.

“Without the ability to tour prospects for nearly a year, occupancy dropped significantly, leaving Friendship Village with the financial hardships that are being resolved through this debt restructuring process,” Friendship Village president and CEO Michael Flynn told the outlet in a statement.

Previously, the community took in entrance fees for eight to 10 units each month. That was nearly wiped away by the coronavirus. Friendship Village now owes $131 million, including unpaid interest, to investors that own bonds used to finance the property, the outlet reported.

As a continuing care retirement community, with independent living, assisted-living and a nursing home all in the same property, Friendship Village is far from the only asset in the class struggling to bounce back from the pandemic.

Senior housing on average hasn’t fully recovered in terms of occupancy levels. Occupancy in independent living fell from 91 percent when the pandemic began in the first quarter of 2020 to 84 percent by the first quarter of 2021, according to a January report by JLL. Nursing care fell from 87 percent to 74 percent in the same timeframe. Since then, occupancy rates have risen to 87 percent and 80 percent, respectively.

A buyer emerged during the marketing process for Friendship Village, but it later informed the seller that it preferred to buy the property out of bankruptcy. An auction is slated for Oct. 3, and the nonprofit aims to have a sale finalized by December.