$86 million sale of The Harborside retirement community could close Tuesday

The investment group that’s buying The Harborside retirement community in Port Washington could take control of the property next week now that most of the creditors, including residents and families of deceased residents, have approved the $86 million sale, attorneys said on Wednesday.

Focus Healthcare Partners LLC and The Harborside want to complete the deal on Tuesday, the lawyers told a federal bankruptcy court judge in Central Islip.

The transaction allows The Harborside to exit bankruptcy for the third time in 10 years and preserves the homes of about 60 seniors, whose average age is 90. However, the transaction also has necessitated the closing of the facility’s nursing home, assisted living and dementia care unit and the relocation of more than 20 affected residents.

The proceeds from The Harborside sale won’t cover much of what is owed to bondholders, secured creditors and unsecured creditors, such as residents and their families. For example, the latter group would receive about 25% of the entrance fee refunds owed to them, which total between $400,000 and $1.8 million, records show.

Still, all 187 residents and families of deceased residents voted for the buyout. Together, they are owed $121.4 million, according to the election results presented to the judge on Wednesday.

The bondholders, who are owed $150 million, voted 104-2 for the deal.

The only group to vote down the buyout is The Harborside’s vendors and suppliers, who are owed $78,078, the tally shows.

“The plan has been accepted overwhelmingly,” said Judge Alan S. Trust. “This plan is something nobody liked but that everybody could live with.”

Focus Healthcare, which is based in Chicago, has hired Chelsea Senior Living to run The Harborside. Chelsea manages four other retirement communities on Long Island.

Focus has said it will initially only offer independent living apartments on the property but hopes to reopen the assisted living and dementia care unit once the necessary state approvals are obtained.

Most of the residents in independent living have signed rental agreements with Focus that call for increases of not more than 5% per year. The rents are below the market rate, according to Rachel Nanes, The Harborside’s attorney.

She also said 180 of the 210 residents and families of deceased residents who are owed entrance fee refunds have “opted in” to a plan for two rounds of payments. Additional outreach to the 30 who’ve not accepted the plan will take place in the next 90 days followed by the first distribution of funds, she said.

The second round of payments, which will be larger than the first, is subject to the pending sale of the Amsterdam Nursing Home on Manhattan's Upper West Side for an undisclosed amount. The nursing home's owner built The Harborside.

Melanie L. Cyganowski, the Amsterdam's attorney, said in court that she doesn't know how long it will take for state approval of the nursing home's sale. "It's a black hole," she said, adding regulators also would have to approve setting aside $36.5 million from the sale to help pay $42.5 million in Harborside entrance-fee refunds.

That amount should be stipulated in The Harborside plan to avoid future misunderstandings, the judge said. 

Residents of the independent living apartments watched the proceedings via a webcast.

“At this point, the purchase of The Harborside by Focus is the only hope for the residents in independent living,” Polly Gates, chairwoman of The Harborside Residents Council, wrote in a letter to the judge. “We want to remain in our apartments, be able to continue to enjoy friendships we have made over the years and participate in the growth of a new community.”

By James T. Madore

james.madore@newsday.comJamesTMadore

James T. Madore writes about Long Island business news including the economy, development, and the relationship between government and business. He previously served as Albany bureau chief.