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Loomis Communities see opportunity in Reeds Landing acquisition

Date: 5/13/2009

By Debbie Gardner

PRIME Editor



SOUTH HADLEY -- They searched the nation for a potential buyer, only to find the best fit was very close to home.

Matthew Leahey, executive director of Reeds Landing retirement community, called the May 5 announcement that The Loomis Communities entered into negotiations to purchase the Reeds Landing property "a perfect match."

"We looked at other organizations around the country and this is by far the best fit," Leahey told Reminder Publications.

Leahey said Reeds had an investment firm that specialized in the sale of retirement communities prepare and distribute information to for-profit and non-profit companies nationwide. Reeds received 45 active inquiries, including the offer from Loomis. The management at Reeds was impressed with the similarities the two organizations shared in philosophy and mission.

"[We] share a culture," Leahey said "There's a certain culture that goes with not-for-profit senior living. We have a similar philosophy on how we treat our staffs, which contributes to a good product for the people who live [in our communities]."



A good fit all around

According to Susan Moore, director of sales and marketing for The Loomis Communities, the opportunity to potentially acquire the financially ailing Reeds Landing retirement community came at the right time for her organization's long-range plans.

"We had just developed a five-year strategic plan [for Loomis] and one of the focus areas involved organizational growth," Moore told Reminder Publications. "We didn't know at the time when we developed the plan if we were talking about building a new community, acquiring a community or starting a new business that was different from the one that we were in."

The not-for-profit Loomis Communities currently owns and operates three senior living communities in Western Massachusetts -- Loomis House in Holyoke, Loomis Village in South Hadley and Applewood at Amherst. All three properties offer independent living residences. Loomis House and Loomis Village also offer assisted living apartments, and skilled nursing services are available at Loomis House.

Moore said The Loomis Communities contacted Reeds Landing, which she described as "the only retirement community in Western Massachusetts that has independent living, assisted living and skilled nursing all under one roof," shortly after the organization began advertising for a buyer. Loomis has been in steady contact with Reeds since January.

She said Reeds unique position as the only continuing lifecare community in the region makes its acquisition by Loomis "a very good fit and would meet that [growth] part of our strategic plan."

Though Moore said Reeds Landing had not discussed the possibility that it might file for Chapter 11 bankruptcy protection with Loomis prior to the May 5 announcement, she did not see this move as a stumbling block to her organizations potential acquisition of the facility.

"Bankruptcy was not part of our plan originally," Leahey said. "But given the [real estate] market depression, it made sense to reorganize the debt at the same time [as a sale]."

A Chapter 11 filing will offer Reeds Landing protection from its creditors while it reorganizes its current debt, reported to be $28 million owed to bondholders.

"The bankruptcy should not be seen as a bad thing," Moore said, pointing out that Chapter 11 protection is a tool which many other large corporations in America have employed of late to handle debt.

"The bankruptcy just allows us to restructure the debt so we can strengthen the organization," she said.



Adapting to fit the market

Moore said part of Loomis' plan to return the Reeds Landing property to financial health, should the acquisition proceed, involves adjusting pricing to better fit the Springfield market.

As Reeds Landing currently operates, potential residents are required to pay an upfront entrance fee and a monthly service fee. Moore said this is a common financial arrangement for continuing care retirement communities, and is similar to investing in a long-term care policy.

"The entrance fees, in many cases, were significantly higher than the average sale price for a home in Springfield," Moore said. "Our goal will be to restructure the pricing so that more of the Springfield market will find [the Reeds Landing facility] a product that they can afford."

Moore said Loomis researched the Springfield market prior to entering into talks with Reeds Landing and found "that there were a mass of people who could afford a retirement community at the price we hope it would be; there are plenty of age and income qualified people who would benefit from a product such as Reeds."

"I think if they come in and provide a contract with a lesser entrance fee, it will work better for this market," Leahey said.

And though Moore said the Loomis Communities are thrilled at the prospect of acquiring Reeds Landing, the agreement will not become formal until Loomis has completed 45 to 60 days of "due diligence."

"The due diligence will give us an opportunity to look at the physical plant, to analyze the contracts of existing residents and to make sure there isn't something we haven't already discovered that would have an impact on the financial aspect [of the takeover]," she said.

If all goes well, a newly formed subsidiary of The Loomis Communities will take over the Reeds Landing facility on or about Aug. 1.

"The reason for [the formation of the subsidiary] is to reassure the existing residents at Loomis Village, Loomis House and Applewood at Amherst that we are not putting them at financial risk," Moore said.

She also said that the new subsidiary plans to honor the lifecare contracts of all existing residents at Reeds Landing following the acquisition.

"[Reeds] is a lifecare product, it's like a long-term care product. That's what their expectation was when they signed their contract and because our mission is to serve seniors, we felt very strongly that unless we could honor that contract, we couldn't do this project," Moore said.

"That was one of the major criteria we had [in accepting an offer], and it was important to them too," Leahey said. "Coming into this, [Loomis] said that [honoring existing contracts] was consistent with their mission to serve seniors. That they wouldn't do anything else."

He also mentioned that Loomis' future plans include retaining many of the current staff at Reeds to maintain a sense of stability for its residents.

"I think this is a terrific win-win for everyone, especially for the people who live here," Leahey said of the pending agreement.