Hit or miss

By Eric Veronikis
Central Penn Business Journal
April 9, 2009

Regional assisted-living centers have taken investment hits on Wall Street and have grappled with increased food, energy and other costs over the past year, as have many other regional businesses.

Some facilities had to put on hold multimillion dollar renovation and expansion projects because of the sour economy.

Masonic Villages of the Grand Lodge of Pennsylvania postponed projects at multiple locations primarily because tenants are unsure about their finances, said Joseph Murphy, chief executive officer of Masonic Villages. Some prospective tenants are waiting to see what happens with the economy before they decide whether to move in, he said.

At other facilities, there is demand for expansion. In some cases, improvements are overdue, so
projects are moving forward, assisted-living executives said.

Most of the executives in that position said they were fortunate that construction planning and financing were sewed up before the credit market tightened. Yet, some said they still would go after financing in this market if they were starting the process today because there is demand.

Lancaster County's Landis Homes plans to start constructing cottages and houses this year.

Larry Zook, Landis' president, lacks solid construction prices to share because the project dates back three years, and material prices have dropped significantly since, he said. Landis plans to build about 140 houses in three phases.

"The economy at this point definitely is not holding us back with our plans. One reason we are moving ahead is because we have not expanded residential cottages in about 15 years," Zook said.

Financing was locked up for the project before the economy took a nosedive, and it helps to pursue construction in stages because Landis can spread out costs, Zook said.

"It's a good time to build, and we would (go after the project today) because of the demand," Zook said. "We have a strong prospect list."

Camp Hill's Golden Living Center has no plans on the books, but there is a strong demand for space at the facility, said Beverly Fry, executive director, in an e-mail.

Golden Living opened a $500,000 state-of-the-art, short-term rehabilitation unit in 2007, and executives are assessing renovation needs.

"The economy has not affected us much," Fry said. "Our living center is doing well, and our 40-bed rehabilitation unit is not only full, it also has a waiting list."

Lancaster County's Mennonite Home Communities is in the midst of a $13 million renovation it calls a skilled-nursing reinvention project.

The center is transforming its skilled-nursing floors so they resemble residences instead of hospital-style floors, said John Sauder, vice president of health services.

When you get off the elevator on the finished floors, you find a living room, dining room, parlor, spa and kitchen. There is no nursing station, charts or other features that remind you of a hospital. Those are concealed, and the floors under construction will look the same. Construction started in late 2007 and will finish in November. In the old model, there were 48 residents per floor. Then, there will be 16 to 22.

"We were fortunate that we had our finances in place before the economy took the nosedive," Sauder said. "We are feeling the impact. It is fair to say that we might have had a hard time getting the capital financing in place."

Last year, Masonic Villages of the Grand Lodge of Pennsylvania opened two apartment buildings at its Elizabethtown campus in West Donegal Township, and it has had more inquiries for others. But all other plans it has at its five facilities across the state had to be delayed, Murphy said.

"Anything we were looking at that would have come in during 2009, we have put on hold," Murphy said. "We're waiting to see what is going to happen with the economy before we undertake any new large projects."

Some multiphase projects were halted after the first phase was completed. The Masonic Villages had an expansion project in a premarketing position at its Montgomery County campus that was put on hold because of the market. Similar projects at its facilities in Lancaster and Luzerne counties also are in holding patterns.

But Masonic Villages is moving ahead with municipal approval processes so that as soon as the economy starts to change, construction can start. The business is interested in incorporating more green technologies. It already has an electrical co-generation plant at its Elizabethtown campus, he said.

"We have a comprehensive energy-management plan where we are trying to work on some green power with solar and wind power, and we are working with various contractors and developers so we will be ready to move forward with the money from the economic stimulus," Murphy said. "We're a nonprofit, and we provide $18 million to $19 million a year to charity, and that comes from charity and also from investments. That was affected."

View the article on the Central Penn Business Journal website. CPBJ Article

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