Friendship Village Declares bankruptcy

[Sunset]

Friendship Village filed for bankruptcy.

This is the largest retirement home in IL, and 22nd largest not-for-profit retirement home in USA.

We had gone there, went through the application process for FIL, but he went downhill faster than we could get him in. Lucky in a way.

They wanted approximately $500K deposit, plus the monthly fees. The deposit would be returned upon death.
There was no information about the deposit being held in escrow or separate from the general money.
I wonder if residents have just lost a large portion of their retirement ?

"In terms of addressing resident refund obligations, the company said it will address that area “after a successful realignment and outcome is reached.” Resident deposits received after April 17 will be held in escrow under an agreement to protect deposited funds as typical in life plan communities. "

https://seniorhousingnews.com/2023/06/09/largest-life-plan-community-in-illinois-files-for-ch-11-bankruptcy/

 

[W2R]

How awful! I never heard of Friendship Village, but it sounds very appealing. That's a big deposit though. You're right, it's lucky in a way that your FIL didn't get in.

 

[Sunset]

Friendship Village is a CCRC, so the appealing part is move in while able and live in an apt, then get extra help, then move to a nursing setting in the same complex, and even move to a locked memory ward if needed.

 

[jazz4cash]

Following the article there is a list of other CCRC’s in the same situation. One of them states their two biggest liabilities pertains to refund of deposits.

 

[Time2]

From the link, "Troubles from the pandemic and a decrease in move-ins and tours led to the community’s financial hardships."
If that is true, then their prime demographic died before they could move in.

"When fully occupied, the community can house up to 1,000 older adults."
I wonder how low the number of residents dropped, to put them into bankruptcy?


"In terms of addressing resident refund obligations, the company said it will address that area “after a successful realignment and outcome is reached.”

Seems like another way of saying we want to avoid discussing that.

That huge deposit and not knowing where it is, has me concerned, I hope it's not in big houses, fancy cars and fine wines for the people running the facility.

 

[latexman]

Does "not-for-profit" mean they take medicaid?

 

[athena53]

Wow- those are scary articles. My plan had been to move to a CCRC near DS and DDIL in Des Moines but I may instead look for a "one-stage" place that fits whatever needs I have at the time and seek LTC later and pay month-by-month if I get to that point.

 

[Telly]

I recognized the name right away, remember hearing about it in the late 1970s when I was in the area.

Reading that article, it mirrors the troubles of Edgemere, a luxury CCRC in Dallas. Edgemere, a fancy place, opened 2019 or so, IIRC. Never heard anything bad about it. But it opened into increasing CCRC competition, got hit with the same issues as in the article. They were unable to pay back deposits to the next of kin. Their agreement said that the deposit would be paid back after the unit of the deceased was re-sold. But occupancy fell to something like 70%, so no deposits coming back. And at only 70%, the costs to operate were too high.

Lawsuits ensued, as did a investigative multi-part series by the Dallas Morning News. Edgemere also stated that the landlord of their 55-year land lease, really wanted the property back, due to it's prime location, worth big $$$. Portrayed akin to vultures flocking overhead, waiting for death to swoop in. More lawsuits.
Filed for Chapter 11, and they are still going, seeing advertisements and advert-stories of very satisfied residents. Nonetheless, a cloud hovers for those considering.

I have not heard or read anything negative about their care, etc. Just seemed they opened at a bad time, on expensive property. Once one gets behind the financial 8-ball on the concept, I surely don't know of any "fix" other than getting a lot more prospective residents to put down big $ deposits to significantly boost occupancy.

A thrust of the DMN article was to check out possible places in great detail! Including financial.

I see advertisements for a place that has a good reputation for years here. The CCRC businesses needs an inflow of clients, have somewhat of a waiting list. Waiting list and length of life left seems like vectors in opposite directions! But I would think that any CCRC need to fill any vacancies ASAP!

I don't think the concept will ever die. But it may reduce/hold at a level of places that keep entrance and maintenance fees high for those who can afford it, and financial health (sort of like an AM Best rating for insurers). Being such a long-time-frame business, it's not the kind of thing that I would want to invest in, the stocks of CCRC companies. The "well everybody grows old" attraction has its issues in this case (understatement!).

 

[harllee]

I am moving into a CCRC here in NC next month. I did a through review of the financials, etc. A couple of advantages this CCRC has--there is a vey long waiting list (takes about 10 years to get in) and there is no refund of your deposit after 5 years.

 

[harllee]

Does "not-for-profit" mean they take medicaid?

Most non profit CCRCs do not take Medicaid but they have a trust fund that pays in case a resident runs out of money. My CCRC has several million dollars in a trust fund for residents who run out of money, 2 very elderly ladies (over age 100) are currently getting payments fro the trust fund.

 

[MichaelB]

I feel bad for the current residents. Their level of care is bound to suffer, at least in the short term, and the uncertainty regarding the deposits will cause serious distress.

 

[Teacher Terry]

When my friend needed assisted living we looked at places that had both independent and assisted living. None of the 6 places had a buy in fee but none had a nursing home either.

However, as his care needs escalated they just raised the fee and kept providing care. He was wearing diapers, couldn’t get out of a chair by himself but could feed himself. He was paying 8k/month but was able to stay in his studio apartment. One of the staff advised us to put him on hospice so they couldn’t make him leave and that’s what we did.

 

[ncbill]

Frankly, you should consider any deposit you put into a CCRC as non-refundable no matter what they tell you.

Because they sure as heck aren't going to bother to sequester those with an independent custodian.

Grandparents put down $75k non-refundable to get their 2BR/2BA cottage back in 1990.

Can't imagine what it would cost today.

 

[Sunset]

Frankly, you should consider any deposit you put into a CCRC as non-refundable no matter what they tell you.

Because they sure as heck aren't going to bother to sequester those with an independent custodian.

.....

Well they should really have it in some protected 'trust' fund, they would be allowed to take the income from it, but the principle should be returned.
Guess there is no law about it.

Imagine if real-estate agents operated the same way

 

[Sunset]

I am moving into a CCRC here in NC next month. I did a through review of the financials, etc. A couple of advantages this CCRC has--there is a vey long waiting list (takes about 10 years to get in) and there is no refund of your deposit after 5 years.

But your deposit was certainly small I would think

Friendship Village, told us how lucky we were, as a spot had recently opened up. But there were some other folks looking at it as well. They basically tried to generate the FOMO feeling.

Now I see , on the nextdoor site, regarding Friendship village, that people haven't gotten their money back for up to 3 years, and there is no shortage of available apartments/beds. Not really any waiting list, although that is not what the sales folks said..

 

[JoeWras]

This was close to where my parents lived. Dad simply didn't like Schaumburg so he took it off his list.

 

[Koolau]

The CCRC and lower level-of-care outfits have become BIG business. Big business has bought up lots of the smaller places. Lots of room for financial "issues" as everything gets sorted out due to paradigm shift in the business model. I don't know, but the loss of this particular place may simply be a bigger business tying off a leak in their profits.

It's hard for me to imagine ANY such business going under with the prices they charge, but I have no special insight on that. Care for "older" folks is without doubt a growth industry.

 

[harllee]

The CCRC and lower level-of-care outfits have become BIG business. Big business has bought up lots of the smaller places. Lots of room for financial "issues" as everything gets sorted out due to paradigm shift in the business model. I don't know, but the loss of this particular place may simply be a bigger business tying off a leak in their profits.

It's hard for me to imagine ANY such business going under with the prices they charge, but I have no special insight on that. Care for "older" folks is without doubt a growth industry.

I think their real problem was that they promised a refund if you moved out or died. In my area most CCRCs are dropping that model, no more refunds after first 5 years except for grandfathered people.

 

[athena53]

It's hard for me to imagine ANY such business going under with the prices they charge, but I have no special insight on that. Care for "older" folks is without doubt a growth industry.

If too many people transition to LTC, which is more labor-intensive and expensive for the facility, and they don't have a steady stream of income from the occupied apartments/condos, they can get into trouble. COVID and then the rumors that they weren't refunding deposits probably deterred people from moving in. I've also read of some facilities that moved their members elsewhere for LTC because their LTC facilities were full. Totally defeats the purpose of staying in a place where you KNOW what the LTC facilities are like and maybe people from the other units can visit.

 

[Koolau]

If too many people transition to LTC, which is more labor-intensive and expensive for the facility, and they don't have a steady stream of income from the occupied apartments/condos, they can get into trouble. COVID and then the rumors that they weren't refunding deposits probably deterred people from moving in. I've also read of some facilities that moved their members elsewhere for LTC because their LTC facilities were full. Totally defeats the purpose of staying in a place where you KNOW what the LTC facilities are like and maybe people from the other units can visit.

Yeah, when we toured a CCRC they gave us only a "peek" at the skilled care unit which was an isolated area away from anything else. It was 12 beds - all filled - but no staff around. Like a scene out of "Coma." Every person was "asleep" on their back with about 3 feet between beds. It was the very definition of "warehousing."

I asked if that was all the skilled nursing and they admitted that they "farmed" out others with different needs.

Cha-CHING. No sale.

 

[harllee]

Yeah, when we toured a CCRC they gave us only a "peek" at the skilled care unit which was an isolated area away from anything else. It was 12 beds - all filled - but no staff around. Like a scene out of "Coma." Every person was "asleep" on their back with about 3 feet between beds. It was the very definition of "warehousing."

I asked if that was all the skilled nursing and they admitted that they "farmed" out others with different needs.

Cha-CHING. No sale.

For sure, you want to take a close look at the assisted living, skilled nursing facilities and the memory care unit in any CCRC you are looking at.

 

[JoeWras]

Yeah, when we toured a CCRC they gave us only a "peek" at the skilled care unit which was an isolated area away from anything else. It was 12 beds - all filled - but no staff around. Like a scene out of "Coma." Every person was "asleep" on their back with about 3 feet between beds. It was the very definition of "warehousing."

I asked if that was all the skilled nursing and they admitted that they "farmed" out others with different needs.

Cha-CHING. No sale.

YIKES!

 

[ER Eddie]

Half a million as a deposit?! No thank you!

 

[Koolau]

Half a million as a deposit?! No thank you!

The one we looked at (with the "Coma" unit) wanted something less than $100K buy in (partially refundable.) They have various plans less than that but you pay more monthly IIRC. Anyway, there were "options." But, of course, you had to pass background checks, medical condition, financial status to get into CCRC.

If you already had CAD or Cancer or memory issues - fugidaboudit.

 

[harllee]

Half a million as a deposit?! No thank you!

The Class A Life Care CCRC I am moving into requires an admission fee of around $400,000 to $1,000,000 depending on the size of the residence. It is not a "deposit" because it is not refundable after the first 5 years. It is the best around with a waiting list of 7 to 17 years depending on the residence you want. A large portion of the admission fee (about 50%) is considered a medical expense, deductible on income taxes. This is the type of CCRC where your monthly cost does not increase when you move into a higher level of care. I consider the admission fee to be like a type of long term care insurance.