Rose Villa’s Pillars of Financial Stability
Some of you may be aware of a couple of CCRCs that got into trouble in Florida, which has prompted consumer calls for even more restriction on senior living operations in that state (already one of the strictest). I thought it might be a good time to be sure everyone understands the major ways in which Rose Villa differs from those two unfortunate stories.
The Glenmoor, in Jacksonville, FL (but technically and crucially in St Augustine) has been in trouble from its start in the early 2000s primarily due to a poorly located and poorly sized community. The property is located in a rural area, never succeeded in generating adequate demand (apparently the World Golf Hall of Fame nearby didn’t work its magic….), and opened with too much debt which was refinanced right before the 2008 recession. Ouch. Life Care Services of America recently bought it at auction.
University Village in Tampa is far more straightforward. Although a not for profit, as is the Glenmoor, these operators appear to be unscrupulous. They did not follow state law, did not make required state filings, did not maintain the building, and one of the operators had already driven a Nebraska CCRC into bankruptcy. It’s hard to stay solvent when your license has been revoked and the news is out that your operators are shady. They went into bankruptcy in 2016.
Stricter rules will not save a company if the people running it aren’t paying any attention to the rules. Regulations will also not save a company that has a bad marketing or finance plan. These examples could not be farther removed from how Rose Villa operates.
In addition, Oregon is one of the most consumer-oriented states in the nation with respect to CCRCs specifically. Our required disclosure statement is very detailed and includes information on our Board of Directors, the residency contracts we offer, the specific services we offer and how they are paid for, financial details concerning debt and reserves, audited financial statements, a resident rights statement, and more. We are required to hold three months’ worth of operating expenses in a reserve account that cannot be touched – currently that is just under $5 million. (And one of the things the University Village folks ignored.)
Beyond what is required, Rose Villa is in a sound and stable cash and operating position, exceeding all of our bond covenants. We have a LOT of people going through our financial underwear drawer on a regular basis – in addition to our own finance team and Board Committee, and our own auditors, we have national investors whose own money is now tied up in our project who review our marketing and financial progress on a conference call with myself and Diane, our CFO, every three months.
All of that is to say that through decades of good stewardship and hard work, we have a company to be proud of, as well as a community that is in a position to lead our field for decades to come.