The highest bid is not always deemed the best bid in a real estate auction (see: Signature Bank loan book). That was the case for a retirement facility in Port Washington, on Long Island.
Last week, Life Care Services Communities won an auction for the 329-unit senior housing development, The Harborside, with a bid of $63 million – chosen by a judge over another bidder who offered well over double that price, Newsday reported.
The Harborside filed for bankruptcy for a third time in nine years last spring, and the auction unfolded in the early fall.
The Des Moines-based LCS was declared victor of the auction, even though an undisclosed party bid $178 million to take over the property. The judge disapproved of the larger bid, because it would have resulted in the facility being shuttered and residents being forced out. The judge determined LCS’ bid as least disruptive to the 200-plus Harborside residents.
Not surprisingly, the facility’s debtholder, Kansas City-based UMB Bank, is not thrilled and has appealed the judge’s ruling.
Shuttering the facility is a complicated choice, given that residents own their homes in the community. The entrance fee for Harborside can cost up to $2.2 million; part of the fee is refunded after the resident dies.
LCS manages 143 communities across the country with 40,000 total residents. It will still need approval from the Nassau County Industrial Development Agency, which was involved in both the facility’s construction as well as its two previous bankruptcies.
— Holden Walter-Warner