Life Care Distress Means Senior Risk, Private Equity Opportunity

When 91-year-old Marilyn Sorensen moved into Houston’s Buckingham Senior Living Community, she said she was among many residents who felt they had been financially prudent and saved enough to afford the amenities of a life plan community.

Residents such as Sorensen had paid large upfront entrance fees that they understood would, eventually, be partially refunded to their families.

But the Buckingham is unlikely to pay many of those refunds now, following its bankruptcy filing last year.

“We had said to my son and his wife that you will be able to get part of this back when we we die,” Sorensen said, referring to herself and her husband, who died in 2014.

The Buckingham’s collapse illustrates how financial stress, private equity takeovers, and costly renovations can undermine life plan communities’ promises to return residents’ entrance fees—often their life savings—to their heirs. Cutting entrance fee refunds is no longer a third rail in senior care bankruptcies.

Sorensen said problems began with the construction of a high-rise tower that owners struggled to fill. The building was part of a $109.4 million expansion in 2017, including enhanced dining venues and a wellness center.

Move-ins lagged following Hurricane Harvey, which disrupted the Houston real estate market. High mortgage rates blocked prospective residents from selling their homes to afford the Buckingham’s entrance fees, which ranged from $160,000 to $1.2 million.

By 2020, the Buckingham filed its first Chapter 11. Last November, it filed again. A bankruptcy judge last month approved the sale of the 495-unit facility to Chicago-based private equity firm Focus Healthcare Partners in a bid valued at $133 million.

At least 215 residents must sign new living agreements with Focus for the deal to close. About 360 residents live at the community.

Seniors facing financial hardship, including nuns and clergy members, have 18 months after the sale closes to leave.

Under Focus, the Buckingham will abandon its life care model, which guaranteed residents fixed health-care rates for life, and switch to a rental model.

A $750,000 health-care discount program and $12 million resident rent rebate fund will provide partial relief to eligible residents. Those whose entrance fees weren’t escrowed will receive a fraction of what they were promised, while families owed $72 million are expected to receive nothing.

“It irritates the heck out of me,” Sorensen said. “And it makes me feel like the people who are who are in charge are not very well in charge.”

Life Plan Communities

The Buckingham is the latest of 24 life plan, or continuing care retirement community, bankruptcies filed since 2019, according to Gibbins Advisors. CCRCs are a subsector of the already distressed senior living industry, which saw an 18% rise in Chapter 11s in 2025, according to Gibbins.

The communities typically provide independent, assisted living, skilled nursing, and sometimes memory care or hospice at one campus.

Of about 2,000 life plan communities in the US, those with greater skilled nursing exposure face more strain from limited reimbursement, higher staffing costs, and less operational flexibility, said Gary Sokolow, a director at Fitch Ratings.

Entrance fees at some high-end facilities can be more than $5 million. The most expensive offer unlimited care, and many promise partial refunds to residents’ heirs when they leave or die.

The Buckingham historically allowed entrance fee refunds of up to 90%.

The sector is increasingly bifurcated between established, rated facilities and higher-risk, nonrated start-ups, Sokolow said.

When entrance fees aren’t safeguarded, Cooley LLP restructuring partner Eric Walker said, the funds are often put toward operations or construction debt, making refunds dependent on future admissions.

“The basic bargain of the life plan communities is it will be the final place residents will live, and in exchange for the entrance fee there’s a promise to receive care for the remainder of their lives at set rates residents know they can afford,” Walker said.

Michigan-based Henry Ford Village transitioned during its 2021 bankruptcy to a for-profit rental model following a sale. Estimated entrance fee recoveries topped out at 60% and were as low as 8%.

The increasing influence of institutional investors seeking short-term recoveries poses risks to CCRCs’ long-term viability, Walker said.

Focus has converted four other CCRCs to rental models, including facilities in Virginia, Illinois, and New York.

“Their promise of life care has been broken but also your life savings, that we were going to return to you, has been squandered,” Walker said.

Crossroads

It’s possible for some CCRCs to keep their entrance fee promises in bankruptcy.

Lutheran Life Communities, which operates four Midwest facilities, filed for bankruptcy last February with sale plans. It pivoted to a reorganization in October to exchange about $182 million in bonds, allowing it to make good on entrance fee refunds.

Still, the industry’s past problems linger. Covid-19 lockdowns prevented new move-ins while residents left or died, halting new entrance fees.

Additionally, labor and supply costs and interest rates rose, and many nonprofit operators remained burdened by development and construction, Walker said.

Distress in real estate, hospitality, or health care can destabilize a CCRC operation. Skilled nursing, in particular, is lower margin, higher acuity, and more regulated. Local market dynamics matter as much as national trends, said Clare Moylan, Gibbins’ co-founder.

“If the balance of CCRC capacity weighs too heavily on skilled nursing, it can result in margin pressure,” she said.

Older facilities struggle to remain competitive without significant upgrades, said Polsinelli restructuring head Chris Ward.

Lenders that are unwilling to cut debt, delay payments, or provide more capital make surviving even harder, he added.

“CCRCs are indeed at a crossroads,” Ward said.

Sorensen, the Buckingham resident, said she’s most concerned about people who will be forced to leave, some of whom have been at the facility since it opened in 2005.

“It is a tough situation,” Sorensen said. “And especially if you’re promised that you will always be there.”