A high-profile continuing care retirement community (CCRC) in Chicago that rebounded after financial and operational difficulties years ago has been sold for a reported $105 million.
Des Moines, Iowa-based senior living company LCS and Harrison, New York-based Senior Care Development have bought private-equity firm Fundamental Advisors’ 75% stake in the 334-unit community in Chicago’s Gold Coast neighborhood, called The Clare. The sale reportedly valued the community at $105 million, which is more than double the community’s 2012 purchase price, according to the Wall Street Journal, which was the first to report on the deal.
“We are thrilled to have worked with Fundamental and LCS on our third successful CCRC together over the past decade to revitalize The Clare, creating the vibrant community it is today,” stated Senior Care Development CEO David Reis CEO in a press release about the sale. “Together with the team of professionals at Fundamental and LCS, we have positioned The Clare for long-term sustainable success. The SCD team is pleased to have a continuing role in the community’s operations as well as a minority investment moving forward.”
Going forward, the community will be led by LCS as majority owner and Senior Care Development as a minority investor. BMO Harris is providing debt financing for the transaction.
“The Clare is a premier asset that is a natural fit with our existing portfolio,” Joel Nelson, president and CEO of LCS, said in a statement to Senior Housing News. “Reinvesting in the community also aligns nicely with our principle of keeping a long-term perspective. We are looking forward to serving the residents for many years to come.”
Fundamental originally led an investment group — that also included Senior Care Development and LCS — which acquired the community in 2012 out of bankruptcy for $53.5 million. The original owners, the Franciscan Sisters of Chicago, defaulted on municipal bonds a year earlier amid rising debt and plummeting occupancy rates near 35%.
In the years that followed, The Clare underwent an extensive turnaround that included operational changes and a multi-million dollar renovation that occurred in 2015. On average, new residents at The Clare currently pay entrance fees of about $800,000 and monthly fees of about $5,500, the Wall Street Journal reported.
The community has maintained a roughly 100% occupancy in recent years on strong economic tailwinds, Executive Director Kyle Exline told Senior Housing News.
“I think when you see a strong economy and a strong housing market, you tend to see the CCRC model be more attractive,” Exline told SHN in 2017.
Exline will remain as executive director at The Clare, he confirmed to SHN on Tuesday. The rest of the community’s leadership team will also stay in place, LCS told SHN.
Developers and ownership groups are also making big bets on upscale urban senior living communities elsewhere.
For example, Louisville-based Atria Senior Living and New York City-based Related Cos. are working through a planned $3 billion pipeline of urban senior living communities in several large U.S. metro markets. Toledo, Ohio-based real estate investment trust Welltower (NYSE: WELL) is planning two high-profile developments in Manhattan. And, Westport, Connecticut-based Maplewood Senior Living is also building a $300 million senior living highrise in Manhattan as the first entrant in its Inspir pipeline.
Meanwhile, Fundamental and Senior Care Development in 2018 embarked on a joint venture with a goal of eventually acquiring $1 billion in skilled nursing assets.