The client
In 2019, the Sisters of St. Benedict made the difficult decision to sell their not-for-profit senior living campus, St. Paul Hermitage, which included independent living, assisted living, and skilled nursing offerings. Selling was a decision they knew would be right for the following reasons:
- The increased complexity of healthcare since the facility’s beginning in 1961 to present day complicated the practice of running the facility.
- St. Paul Hermitage faced many challenges as a stand-alone facility, especially with additional pressures and cost of the pandemic.
- There were a number of sisters still employed by the facility who wished to exit their care roles.
- The residents of the facility would benefit from the experience and resources a qualified buyer would bring as the new owner/operator.
- A new owner/operator could operate the facility much more efficiently and position the operation for the long term, which will preserve the Sisters’ legacy in the community.
To help them navigate the process, the Sisters of St. Benedict engaged Plante Moran Realpoint (PMR), formerly Plante Moran REIA. PMR had been a trusted advisor to the sisters for many years prior as they discerned the future of their mission and charism. PMR’s in-house team consists of consultants with extensive experience helping both religious institutions and senior living providers with their business and real estate needs.
The challenges
As it turned out, PMR’s experience was necessary to overcome a variety of challenges and bring the project to a successful conclusion.
The COVID-19 pandemic was the most disruptive challenge, in that it added additional pressures to the facility’s operations and slowed down the market for senior living and care acquisitions. Postponing the disposition process until the economy improved was ultimately the best choice for the go-to-market strategy.
Other challenges stemmed from the uniqueness of St. Paul Hermitage itself. With 72 units, an atypical mix of acuity levels, and deferred maintenance, the facility was too small to benefit from economies of scale and would need strategic capital investment. In the offering memorandum, PMR presented the asset’s strengths and why its excellent reputation for high-quality care provided a new owner/operator with an opportunity for growth in top-line revenue, EBITDAR, and operating margin.
The solution
PMR’s proven process for dispositions begins with understanding our clients’ goals. For the Sisters of St. Benedict, their driving goal was to find a buyer who shared their values of providing quality care for the residents and excellent place to work for staff.
PMR initiated marketing efforts by identifying and presenting the unique characteristics of the facility to a prequalified universe of potential buyers, beginning with Catholic skilled nursing facility operators. We ultimately broadened outreach efforts to all accredited national investor and operator groups. Our team’s knowledge of the state’s complex regulatory environment and reimbursement programs — as well as the strengths of the facility itself and its local market — enabled us to be unmatched in our ability to guide interested buyers through questions.
As offers came in, PMR helped the sisters conduct a buyer suitability screening process to choose the buyer best aligned with their values. Once chosen, we advocated for deal terms often overlooked in Letter of Intent (LOI) negotiations that would benefit the sisters both financially and in closing the transaction quickly. Before the sale concluded, PMR facilitated a smooth transition to the new owners by coordinating replacement staff members as the sisters on staff phased out of their positions.
The benefit
The disposition process was not easy for the Sisters of St. Benedict given its many challenges. It took perseverance, determination, and the expert guidance from PMR to maneuver through a variety of obstacles to a successful close.
Fortunately, our many years of experience means PMR employs a well-developed disposition methodology with all our clients who wish to sell their operating business and real estate assets. This collaborative process confirms a strategy that aligns with their goals and needs. It ensures we offer white-glove service to position the facility for sale, manage communications between parties, and negotiate favorable terms. And through closing, it can help minimize surprises, reduce risk, and optimize outcomes.
PMR’s broad internal resources have multiple decades serving religious senior care and living clients with their operational, regulatory, development, and disposition needs. If you’re considering the selling your seniors housing business or another owned property, have us be your first call. We’ll help you through the process every step of the way.
