The fate of the financially troubled Friendship Village of Schaumburg retirement community is taking shape as a bankruptcy auction approaches.
A potential buyer — a Delaware limited liability company called IL CCRC, whose manager and ownership is shielded from public records — will offer a minimum bid of $83.1 million in an Oct. 20 auction, the Daily Herald reported. Friendship Village, an 815-unit complex at 350 West Schaumburg Road, filed for Chapter 11 bankruptcy protection in June after it defaulted on more than $125 million in debt.
Friendship Village President and CEO Mike Flynn expressed confidence in the buyer, citing what he called its proven reliability in closing multifamily deals. In addition, the company has committed to investing $15 million in capital improvements if its bid is successful.
Other potential bidders have the opportunity to join the auction, with a deadline to register two days before the event. The winner is expected to be announced on Nov. 1st, with the goal of completing the sale within 60 days. A backup closing date of Feb. 9 has also been established.
Friendship Village leaders attributed their decision to seek bankruptcy protection to the adverse impacts of the pandemic, which disrupted community tours and led to a decrease in sales. Despite operating as a nonprofit, interest from for-profit companies has dominated the bidding process. The expectation is that increasing residency figures will restore profitability.
Under the terms of the LLC’s bid, former residents seeking repayment of refundable entrance fees would receive a combined payment of $2 million they’d divvy up, while current residents would receive their share over time from a $50 million portion of the purchase price. This arrangement includes gradual repayments over a span of up to 15 years.
Sudden dropoff of new entrance fee revenue during the pandemic — when far fewer senior living and communal care entries were made — contributed to the property’s struggles that forced its owner to seek bankruptcy protection.
Only a fifth of entrance fee repayments to current residents would be refunded within three years of the real estate sale closing, while half of the repayments would be made within nine years, the newspaper reported.
Friendship Village is Illinois’ largest continuing care retirement community, with accommodations of up to 1,000 tenants.
— Quinn Donoghue
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