After New York State torpedoed the sale of a long-struggling CCRC in Port Washington, New York, to LCS in October, citing “a lack of required financial transparency” among other objections, the property has a new buyer. The Harborside, formerly Amsterdam of Harborside, opened in 2010 as a 329-unit, not-for-profit community and filed for bankruptcy in 2014 and again in 2021. It was roughly half occupied and owed millions of entrance fee refunds to the families of deceased residents.
Under the terms of LCS’s bid, the company would pay $63 million to the bondholders and an unknown amount of entrance fee refunds. Another $40.8 million in refund payments would also come from the planned sale of the Amsterdam Nursing Home in Manhattan, bringing the total bids above $100 million. The proposed deal was originally approved by a judge of the Eastern District of New York at the end of 2023 before the state Department of Health rejected the sale “in its current state” in October 2024. LCS then backed out of its pursuit of the community.
Now, after the debtor received several non-binding term sheets post-LCS, SR HSG Acquisitions LLC and Focus Healthcare Partners submitted a letter of intent to purchase the community for $80 million, or $242,400 per unit. Another payment of up to $4.0 million to cover the seller’s allowed administrative claims was also part of the consideration. In addition, according to the letter of intent, “the property and related assets shall also be conveyed to buyer free and clear of all existing and former resident contracts and contractual obligations, including but not limited to entrance fee obligations, obligations for future reduced rental rates upon change of resident acuity, and obligations for future lifecare/skilled nursing benefits.”
Going forward, all independent living residents will be offered a rental agreement, and if fewer than 45 IL residents sign a rental agreement, then Focus would receive a $5 million credit toward the purchase price. In order to allow for expedited closing, Focus will also not apply for assisted living, memory care and skilled nursing licenses prior to closing, meaning the property would sell without any operating AL, MC or SN beds. However, Focus does intend to apply for licensure after closing. But the community stays open (the IL portion at least), and Focus agreed to keep annual rental rate increases capped at 5%.
Dave Kliewer and Jay Jordan of Continuum Advisors are handling the transaction, which still requires court approval and DOH approval of the closure of AL/MC/SN beds. The end of a long and arduous bankruptcy process could be in sight for this community, but for the residents and their families who expected a refund of their entrance fees, the state (after blowing up the LCS deal) may have to answer to them.
