The Claire, a luxury senior living facility targeting baby boomers has defaulted on municipal bonds used to finance the 53 story high rise that opened in December 2008 in Chicago’s Gold Coast Neighborhood.
The project was being financed by the Franciscan Sisters of Chicago, a charitable arm that initially looked to be a huge success. With entrance fees that start at about $540,000 for a one bedroom, the project was roughly 85% under contract before the opening. As the real estate market continued to decline, many buyers were forced to cancel because they were unable to sell their home.
The weak economy and a housing-market slump for the past three years led to challenges that kept occupancy rates and revenue below projections, Judy Amiano, president and chief executive officer of the Franciscan group, said in a statement. The group said it elected not to make a scheduled debt payment due Sept. 1, which triggered a default notice. The outstanding debt on the Clare is $216.5 million.
“This is the first step in a process of working collaboratively with our lenders to identify a permanent solution for the structure of the Clare’s debt in the future,” said the nonprofit.
A spokeswoman for the Clare says about two-thirds of the building’s 248 units remain unsold. The news was first reported by Bloomberg News, which says it is the largest municipal bond default this year.
Written by John Yedinak