PEABODY — Brooksby Village's parent company is courting investors in hopes of raising desperately needed cash, but executives reassured residents yesterday the process would have little impact on them.
CEO John Erickson spoke to an overflowing room of Brooksby residents yesterday during a town hall-style meeting in which he tried to allay the fears of people whose life savings are tied up in the business.
Neicei Degan, who attended the meeting with a family member but is not a resident, described the mood as wildly divergent.
"What you felt in that room was deep, deep concern and great hope," she said. "These people are really older Americans. Some are very elderly."
As of yesterday afternoon, the company had not filed for federal bankruptcy protection, although a financial summary of the company indicated portions of Erickson's business expected to file for Chapter 11.
The CEO — flanked by his wife, two sons and company executives — spoke about his commitment to residents, Degan said.
Company officials said they would return to Brooksby Village in 60 days to update them on Erickson's status.
"We put our trust in him," Degan said. "We hope in 60 days all will be well, but we really don't know yet."
State Rep. Joyce Spiliotis, D-Peabody, who attended the meeting, said she didn't leave with any concerns yet.
"They basically explained how they're going to restructure the company," she said. "It really wouldn't have any effect on Brooksby Village because they're a mature community and built out."
Spiliotis said she was still trying to "digest" what executives shared at the meeting and wanted to withhold judgment until their return.
"I think we'll just have to wait and see what happens," she said.
Living the life
Brooksby Village opened to wide acclaim in June 2000 and has since grown to house nearly 2,000 residents in 10 buildings on the 90-acre campus.
Residents sell their houses before they move in, and Brooksby takes the money from the sale and invests it for as long the seller lives there. During that period, Brooksby keeps whatever interest the sale money earns, and the resident pays a monthly fee between $1,300 and $2,400. When the resident departs, the price of the house is refunded to them or their heirs.
Now, with 98 percent occupancy, Brooksby is one of nine so-called "mature" Erickson communities, leaving it largely unaffected by the restructuring process, company officials said at yesterday's meeting.
"These communities operate without financial assistance from (Erickson Retirement Communities) and have their own permanent bond financing that is not affiliated with (Erickson)," according to a six-page financial restructuring summary from Erickson.
But Erickson's 10 other communities, including Linden Ponds in Hingham, don't have similar assurances.
Those campuses have been described by the company as "developing" and are burdened under significant debt tied to construction. As such, they will be subject to various degrees of debt restructuring.
Executives explained that Erickson oversees multiple businesses that fall into two branches: management and development.
The management side, which oversees the daily operation of its 19 campuses, is stable and healthy.
But the development arm was hard hit when the capital market dried up, leaving it unable to secure bonds for its projects. When banks stopped lending, Erickson was forced to halt construction.
"We continue to work with our lenders to restructure our debt, extend our loans and adjust the financial standards by which we are measured so they reflect the realities of today's challenged economy," Erickson spokesman Mel Tansill said in a statement. "Erickson is confident that by restructuring our finances and engaging an equity investor we will become stronger and better able to achieve our mission."
The company just did not foresee "the magnitude or duration of the economic crisis that hit us and all of America," Tansill said.
A promise made
Degan worried about the financial relationship of one retirement community to another and how that might affect residents. She said residents gave as much as $300,000 from the sale of their houses to live at Brooksby Village and trusted Erickson to shepherd their investment.
Degan said Erickson gave his personal assurance that he would protect their interests.
"I hope they find people with money to do good," Degan said of potential investors. "It's really sad."
She said executives told residents repeatedly that their style of living would go unchanged.
"It was hard to swallow because so much has been swallowed nationally," she said. "We're living in an environment of failure, and when you're old you worry."