Crest Hill senior housing takes hit in $20M sale

The seller of a senior housing property in Chicago’s southwest suburbs took a haircut on a deal with investor Max Stesel’s Skokie-based firm, Eden Senior Living, as the niche real estate sector’s recovery hits speed bumps.

The 188-unit property known as Willow Falls in Crest Hill was sold by an affiliate of Omaha, Nebraska-based Dial Retirement Communities for $20 million, or about $106,000 per unit, according to Will County property records.

Neither Dial nor Synovus returned requests for comment.

It’s a smaller value than the most recent mortgage borrowed on the property, reflecting the senior housing downturn since the pandemic and interest rate hikes have respectively reduced tenant demand and property values for assisted living and memory care units.

Dial took ownership in 2016, when it bought the property from Greg and Renee Wolf for $17 million, using a $21 million loan from Georgia-based Synovus Bank. Dial refinanced with another loan from Synovus in 2021, for $20.5 million.

It’s unclear how Stesel’s firm was able to negotiate its acquisition price for less than the previous debt, although such financial hits haven’t been isolated to Chicagoland senior housing properties.

The total balance of delinquent loans for senior housing rose by 50 percent in the third quarter of 2023 to its highest level since at least 2016, according to a February report by the National Investment Center for Seniors Housing & Care industry group. 

Senior housing transaction volume in 2023 totaled $2.9 billion as of the third quarter, amounting to just 44 percent of the deal flow in 2022 as financing proved challenging and pricing gaps widened between buyers and sellers in the market, the industry group found.

Still, signs of a recovery are starting to emerge. The volume of new permanent loans closed for senior housing surged to $1.43 billion in the third quarter, marking a 150 percent increase from the prior quarter, the industry group said. Some lenders and borrowers are adjusting to changing capital market and credit conditions, even as the loan volume remained low compared to peaks achieved before 2020.

Eden used a $16.7 million mortgage loan from an affiliate of Greystone to buy the Willow Falls property, which was split between 112 assisted living and 76 independent living units when Dial bought it.

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