A nearly 50-year-old CCRC that has become one of the largest in the nation could become a for-profit provider under the reported terms of a recent bankruptcy auction.
Friendship Village of Schaumburg in Illinois will seek court approval for its $114.8 million deal on Nov. 8. Local media identified the buyer as Encore Healthcare Services of New York, an existing operator of senior living communities.
Encore has reportedly agreed to make $15 million in capital improvements to Friendship Village in addition to the initial purchase agreement. The Illinois community provides a full range of living arrangements for up to 1,000 residents, including 250 Medicare-certified skilled nursing beds. It is the largest CCRC in the state.
President & CEO Mike Flynn told the Daily Herald that residents’ anxiety about the sale has been alleviated by news of the sale, which could close as soon as Jan. 8.
For its part, Friendship Village officials said shutdowns related to the COVID-19 pandemic led leaders to seek bankruptcy protection. Restrictions limited tours for nearly a year and suppressed contracts and move-ins.
The pending deal would help resolve ongoing concerns about entrance fee reimbursement for the CCRC. That became an issue when Friendship Village announced its bankruptcy in June. Families owed entry fee or deposit refunds were among the communities’ main debtors, with most owed between $100,000 and $500,000.
An Illinois lawmaker introduced a bill that would have created a sequence by which residents or their families would be repaid, a system that LeadingAge Illinois said at the time could cause major disruption and cash flow problems.
Under the pending agreement, former residents seeking repayment of entrance fees would split a $2 million payment. Current residents would receive payment later from a different pot of money set aside as part of the purchase price.
Friendship Village is currently a nonprofit operation, but it attracted the most bids from for-profit companies, officials told local media. Encore is a for-profit provider.
“The founders are seasoned in the senior care sector and have completed several acquisitions in the past,” Friendship Village’s Flynn told McKnight’s Long-Term Care News in an email Tuesday morning. “Friendship Village will be the first acquisition under the Encore name. We are pleased that Encore was selected as the new owner. They have demonstrated a strong commitment to the senior sector and plan to invest in the Friendship Village Community while sustaining the core values of our community.”
Encore reportedly has committed to $50,000 in annual charitable contributions and $25,000 per year for an employee educational assistance fund.
Editor’s note: This article was updated to include information on Encore’s for-profit status.
