New York retirement community developer Senior Care Development, LLC has agreed to pay more than $86 million for the Clare at Water Tower, a luxury senior living residence located in Chicago’s Gold Coast that filed for bankruptcy protection last November, reports Crain’s.
Harrison, N.Y.-based Senior Care Development, LLC would pay $29.5 million in cash for most of the development’s assets and assume liabilities including about $57 million in resident deposits, according to documents filed last week in U.S. Bankruptcy Court in Chicago.
That is a fraction of the $272 million cost to put up the 248-unit building at 55 E. Pearson St., which was financed with $229 million in debt. Developed by [Greystone Communities with not-for-profit sponsor] the Homewood-based Franciscan Sisters of Chicago, the Clare was completed in December 2008, in the depths of the global financial crisis, which severely depressed sales of units in the building.
Just 83 units in the Clare, or 34 percent of the total, were occupied at the end of 2011, according to a court document. Sales in the building suffered in part because many prospective residents had their money locked up in existing homes they couldn’t sell, says Tracy Cross, president of Schaumburg-based consulting firm Tracy Cross & Associates Inc.
Senior Care Development was chosen as the so-called stalking-horse bidder, or preferred buyer, in an upcoming bankruptcy auction, which means a superior bid can be accepted up until the April 10 bid deadline. A competing bid must be at least $1.85 million more, which would include a $1.6 million breakup fee. If a better offer is received, an auction would be conducted April 12 to sell the building’s assets.
If the development company does purchase the Clare, it will change the residence’s refund structure, according to Senior Care Development’s CEO, David Reis.
Right now, 90% of the entrance fee (which starts at $600,000) is refunded when a resident moves away or dies—but not until other unoccupied units are sold. And with low occupancy rates, many families are “stuck on a long waiting list for refunds,” reports Crain’s. But Senior Care Development sees this as an “impediment to future sales,” according to the article, and would arrange to give refunds directly following the sale of a departing resident’s unit.
Read the full Crain’s article here.
(Editor’s note: The original Crain’s article lists the Franciscan sisters as The Clare’s developers, but in fact Greystone Communities developed the building.)
Written by Alyssa Gerace