Senior living nonprofit Covenant Living has entered into a purchase agreement to buy a CCRC in New Hampshire that recently filed for Chapter 11 bankruptcy.
The organization behind the continuing care retirement community (CCRC), The Prospect-Woodward Home, filed for Chapter 11 bankruptcy protection in New Hampshire, where the community is located.
Covenant is seeking to become a stalking horse bidder in the community and participate in a court-supervised auction that could result in higher bids or offers, according to a press release from the Skokie, Illinois-based operator. Covenant is one of the largest senior living nonprofits in the United States with a portfolio of 18 communities in nine states.
Covenant would pay $33 million for the community under the agreement, court documents show.
The 222-unit CCRC, Hillside Village, came under financial duress last year amid restrictions to protect against the Covid-19 pandemic.
“All our efforts during the many months of mandated quarantine were directed to keeping residents safe from the devastating and contagious virus,” Nancy Crawford, who chairs Hillside Village’s board of trustees, said in a press release. “At the same time, the safety measures prevented us from opening the community to new residents … [and] as we faced the resulting financial challenges, we concluded that the community needed a new owner/sponsor who would honor our commitments to our residents and had additional capital to invest.”
Prospect-Woodward Home also discovered “significant construction defects” upon opening the community in 2019 that contributed to its financial hardship, according to its Chapter 11 bankruptcy filing.
The organization alleges the community’s original contractor performed “substandard and incomplete work,” and has engaged another contractor to complete approximately $570,000 of construction and remediation repairs to balconies at the community, court documents show.
The community’s estimated liabilities lie somewhere between $50 million and $100 million, with between only $10 million and $50 million in assets, according to the filing. Grandbridge Real Estate Capital is listed as conducting the stalking horse bidding process.
Hillside Village originally announced in February it was looking for a buyer and would likely file for Chapter 11 bankruptcy, according to local news publication The Keene Sentinel. Mired in Covid-fueled financial distress, the community also reportedly missed paying a $2 million bond payment last winter, and was the target of a lawsuit over unreturned entrance fees earlier this year.
Covenant has made growth a target in recent months, according to President and CEO Terri Cunliffe.
“We still are open to acquisitions and affiliations and our growth and expansion is still a big area of focus,” Cunliffe said during a Senior Housing News Changemakers interview earlier this year. “I think post-Covid, our consumer will be looking for a different product in health care.”
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