On the heels of announcing its planned purchase of a distressed CCRC on Long Island, Focus Healthcare Partners announced an acquisition of another struggling CCRC, this time in Bartlett, Illinois, near Chicago. Built in 2007 at a cost of approximately $130 million, The Oaks at Bartlett features a 154-unit independent living building and a 124-unit assisted living/memory care/skilled nursing building on 37 acres. They are both of steel and concrete construction. There are also 10 cottage homes.
It was originally developed as an entrance-fee CCRC but is now a rental property. This was another case of a large entrance-fee CCRC opening up at the onset of the Great Financial Crisis and experiencing an incredibly difficult lease-up period, with so few seniors being able to sell their homes at the prices needed to afford the entrance fees. The campus filed for bankruptcy multiple times over the years and had a restructuring plan approved in 2020, which brought in ER Senior Management IL LLC as the new operator and left the community with almost $50 million in municipal bond debt (as opposed to more than $80 million in debt). However, in the Spring of 2023, Clare Oaks defaulted on an interest payment and entered into a forbearance agreement.
Its financial situation did not improve, with liabilities climbing, including tens of millions owed in entrance fees. So, the bond trustee, UMB Bank, filed a motion to appoint a receiver in September 2024, that being Michael Flanagan of Flanagan & Associates, LLC. Continuum Advisors’ Dave Kliewer and Jay Jordan ran the sale process. After the community defaulted on its bond obligations, Minneapolis-based Certus Living was brought in to operate and quickly turned the campus around to positive NOI. This improvement was essential in providing liquidity runway and maximizing value for all stakeholders in the sale.
Focus Healthcare Partners paid $42 million, or $145,800 per unit, for the community and brought on Life Care Services to assume operations at acquisition. Occupancy was around 78%, with most of the vacant units being independent living as it shifts to a rental model. Focus is planning an approximate $20 million renovation to bring the community up to Class-A quality.
