New affiliation, reduced debt, leadership change for The Kenney

(File photo)
It’s been a long journey for The Kenney (WSB sponsor) over the past six years, including starting and canceling a major overhaul plan. Today, a big announcement – The Kenney is affiliating with New York-based Heritage Ministries and reducing its debt. Here’s the announcement:

The Kenney senior living community of West Seattle has signed a letter of intent to affiliate with Heritage Ministries, a nonprofit, faith-based organization. Through this planned affiliation, The Kenney has also signed a purchase agreement with its current lender to purchase its outstanding debt at a 50% discount.

Heritage Ministries has roots in the Free Methodist Church with sister organizations, such as Seattle Pacific University, in the Seattle area. Heritage Ministries and The Kenney intend to affiliate and to maintain the mission of serving seniors in West Seattle. The Kenney will remain a nonprofit organization and will continue to have a board of volunteer directors. Resident agreements will be honored and the benevolent care fund for residents will continue.

The level of debt incurred by The Kenney was the result of construction of a new assisted living and community space in the 2000s. The construction and loans had occurred prior to the economic downturn and current operations could not sustain that level of debt. The Kenney worked with its lender, Sovereign Bank, for several years to maintain operations and to continue to service the needs of The Kenney’s residents. Ontrac Management Services was brought in to work with The Kenney in summer 2012 after the organization had defaulted on its loan.

In Spring 2014, Sovereign Bank sold The Kenney’s loan to a private lender who agreed to honor the resident contracts and allowed the organization to continue its nonprofit status. In October 2014, the same lender notified The Kenney that it needed to sell the debt before the end of the year. Ontrac Management Services was asked by The Kenney board of directors to find a lender and/or other nonprofit organization to assist with the debt purchase.

With the affiliation plan for Heritage Ministries and The Kenney moving ahead, Ontrac Management will step out of its interim role in December. Larry Foss is being named Executive Director of The Kenney. Mr. Foss joined The Kenney in the finance department and as the licensed nursing home administrator in June 2014. He has more than a decade of experience working in senior living communities as a chief financial officer, executive director and as a nursing home administrator. Mr. Foss is also the current Chair of LeadingAge Washington, which is the nonprofit trade association for senior living and healthcare organizations.

“It has been a privilege to support The Kenney as interim management during the last two years. Our role is now coming to an end. We see that the future is bright for The Kenney in its affiliation with Heritage Ministries,” said Moraine Byrne, President of Ontrac Management Services.

In an October news release, The Kenney said the 50 percent debt reduction would bring its debt down to $10.5 million. It pursued a $150 million redevelopment project between 2008 to 2011, in the end settling on smaller changes such as creation of a Memory Unit. We asked Byrne for a little more elaboration on what “affiliation” means; she replied, “The Kenney will continue to be a 501(c)3 charitable organization. Affiliation means that the corporate member in the bylaws is Heritage Ministries and that The Kenney will continue to be governed by a volunteer board of directors. Heritage Ministries will provide management oversight too.”

4 Replies to "New affiliation, reduced debt, leadership change for The Kenney"

  • Vincent Dakotah Langley November 19, 2014 (3:55 pm)

    …If I remember right, the Kenney used to be run by the Presbytarians (SP?). Anyway, I personally wish all of you at the Kenney the brightest of a future with your new association with Heritage Ministries!
    Peace be with you all — and also with all of yours!

  • Maggie November 19, 2014 (8:03 pm)

    “Incorporated on June 20, 1901, the Samuel and Jessie Kenney Presbyterian Retirement Home housed its first residents in various locations owned by the Kenney estate, primarily in what is now downtown Seattle.”

    http://www.thekenney.org/about/history/

  • Pibal November 20, 2014 (7:05 am)

    If I read this correctly, Seattle Healthcare Investors, LLC absorbed a $10.5 million loss on a debt investment of $21 million in just 8 months time. Ouch!
    I’d like to understand that better. Was it looking for a short-term writeoff?

  • Moraine Byrne November 20, 2014 (7:50 am)

    The bank sold the loan to Seattle Healthcare Investors (SHI) in March 2014. SHI offered to sell the note for 50% of the value to The Kenney, stating that they had a tax advantage to close the loan by the end of 2014.

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