by Jack Wachtman
Finance Liaison, Resident Advisory Council
The new 2017 RAC finance committee, consisting of Carolyn Compton, Edward Hanrahan, George Hunter, Thomas Kelley, Maggie Kinnaman, James Torri, John “Jack” Wachtman (Chair), and Susan Wynne, held its monthly meeting on March 27. As usual, they met with finance director Mark Embley and members of his staff to review the last month’s financial reports and to discuss the economic status of Riderwood and related financial matters.
Riderwood completed a very successful year in December 2016 with an independent living occupancy of 96.1%, an annual operating margin (operating income divided by operating revenue) of 17.8% and with cash and cash equivalents totaling $106.7 million. Total debt was about $96.4 million. The debt service ratio was 5.29 which considerably exceeds the minimum required value of 1.10.
Operations through February 2017 are close to budget. The operating margin remains more than satisfactory at 20.0% although occupancy has decreased slightly to 95.6% in the slow winter sales season. Independent living occupancy should pick up again in coming months. Cost control is a key consideration. Monthly financial committee meetings include a review of revenue and costs by individual departments of Riderwood and by natural expense categories such as wages, benefits, utilities, and local taxes.
Riderwood is in the midst of a period of implementing the long-range plan to enhance fitness and wellness, to enhance competitiveness, and to improve the quality of life. Refurbishing, use of new technology and construction of new facilities are being emphasized. Progress includes upgrades to the building management system, installation of automatic external door openers, and implementation of new magnetic resident identification cards for future use in door entry and financial transactions. New construction in advanced planning stages includes refurbishment of Town Center, installation of a new elevator in Calvert Landing, and construction of a new wellness center with large swimming pool. Arrangements for financing these improvements have been made.
Riderwood is in sound financial shape and has effective plans for the future in my opinion.