Potential buyer bids $83.1 million for Friendship Village of Schaumburg, ahead of auction
A potential buyer of the Friendship Village of Schaumburg retirement community will offer an $83.1 million minimum bid in an Oct. 20 auction planned as part of an ongoing bankruptcy process.
The bidder is a limited liability company identified only as IL CCRC LLC in court documents but has a proven record of reliability in the industry, according to Friendship Village President & CEO Mike Flynn.
With its bid, the company will fulfill the role of "stalking horse" at the auction to ensure the 60-acre Friendship Village campus is sold for at least that amount.
Just as Friendship Village will seek the highest and best offer on Oct. 20, the same criteria was used to establish the bidder as the stalking horse among the proposals received so far, Flynn said.
"We wanted to look at their history," he added. "That's critical."
Beyond its bid, the company has committed to $15 million in capital improvements if it ends up purchasing Friendship Village, Flynn said.
Other bidders can come forward as late as two days before the auction. That's the minimum time required to assess what they bring to the table.
The winner of the auction is expected to be named on Nov. 1, with the hope a closing on the 46-year-old community could occur within 60 days. Documents establish Feb. 9 as a backup closing date if circumstances require it.
Establishing a stalking horse bidder keeps the process on its intended schedule to close by the end of the year, Flynn said.
"I think we're in real good shape at this point," he said.
Friendship Village officials have blamed the COVID-19 pandemic for their decision to seek bankruptcy protection. The pandemic halted tours of the community for nearly a year, causing a dip in the typical rate of 8 to 10 sales per month, they said.
While Friendship Village has operated under a nonprofit model, much of the bidding interest has come from for-profit companies, Flynn said.
Their expectation is that getting the community's residency numbers up again can quickly restore its profitability, he added. Friendship Village is the largest continuing care retirement community in the state and can accommodate up to 1,000 residents.
The stalking horse would receive a breakup fee of just over $1 million for the work already done if a another bidder buys Friendship Village.
Under its bid, former residents seeking repayment of entrance fees would split a payment of $2 million while current residents would be able to collect on their share over time from $50.1 million of the purchase price.
For current residents, 20% of their entrance fee would be repaid within 3 years of the closing, 35% within 6 years, 50% by 9 years, 70% by 12 years, 85% before 15 years and 100% only after 15 years.