When Fundamental Advisors and Senior Care Development, together with the manager Life Care Services, purchased The Clare in downtown Chicago out of bankruptcy in 2012 (then known as The Clare at Water Tower), it looked like a risky bet for some people. After all, its reputation was sullied a bit with the bankruptcy, occupancy was low, and there were still people questioning the entrance-fee model of CCRCs. As usual, hindsight is 20-20.
With some changes instituted by the buyers, The Clare soon thrived, with occupancy reaching 98% to 99% with a wait list prior to the pandemic. But then census dipped by 400 to 500 basis points during COVID. Other providers should have been so lucky. Occupancy is back up in the high 90’s across the board. For those of you who may have forgotten, CCRCs (LPCs) faired better than every other type of senior living environment during the pandemic, except perhaps for active adult.
What better time to recapitalize The Clare, which has 248 independent living units, 26 assisted living units, 14 memory care units and 50 skilled nursing beds? BMO Healthcare Real Estate Finance announced they were the administrative agent for a two-bank recap of The Clare for $88.0 million. That comes to about $260,000 per unit.
Chicago may have its problems, but The Clare is located one block from the “Miracle Mile” in downtown Chicago and is sought after by those retirees who still want to experience the best that the city has to offer.
When Fundamental and Senior Care Development sold The Clare to LCS back in 2019, with SCD keeping a minority position, the IRR for Fundamental made it the highest yielding single investment in their Fund III. SCD’s CEO, David Reis, just loves this property and gave us a great tour several years ago. The price they sold it for was the second highest ever for a CCRC. Not too shabby for a formerly busted bond deal.
