Following the pandemic, we have seen many mom & pop’s exit the senior care industry for a variety of reasons, but we also speculated that smaller not-for-profit organizations would be forced to sell their communities after staffing costs significantly brought down their already-thin operating margins. For many, their missions could be better served by pivoting to other services, and Lument has recently helped a couple of not-for-profits divest their only senior care assets. And the proceeds received from those sales far exceeded the organizations’ highest expectations, putting them in a stronger financial position to continue their work by other means.
The most recent transaction saw Lument serve as exclusive financial advisor to the board of directors of the not-for-profit Epworth Village Retirement Community in Hialeah, Florida (Miami MSA), to sell the campus to a private joint venture partnership. Managing Director and Head of M&A Laca Wong-Hammond and Associate Director Dominic Porretta led the transaction for Lument Securities.
Originally founded in 1948 as The Biscayne Home for Women and expanded over the years, the campus includes Epworth Village, a 290-unit community with about 60% of the units for assisted living and the remainder for independent living, and the Susanna Wesley Health Center, a 120-bed skilled nursing facility that is five-star rated by the Centers for Medicare & Medicaid Services. The SNF had a strong operation, including the boast that it never had to utilize agency staffing, but the seniors housing portion was operating close to breakeven. However, there was an opportunity for some immediate revenue capture through rent increases. In addition, the seller had invested more than $7 million in the campus in the last four years.
The solid performance, continuum of care and recent renovations certainly helped increase the property’s appeal to buyers, but its location in the high barrier-to-entry market of Miami drove interest and pricing the most. The highly competitive sale process produced nine letters of intent, two back-up bids and one eventual buyer, which was a partnership between two private owner/operators.
The final purchase price significantly exceeded the seller’s highest expectations for the sale and will allow them to use the proceeds to form a charitable health plan to help subsidize patients’ and residents’ care in and around the community going forward, thereby continuing its mission.
That was similar to the single-asset, not-for-profit seller of Saunders House in late 2022, which Lument also advised on the sale. In that deal, the Philadelphia property also generated a lot of interest for its desirable location, resulting in nearly a dozen offers and a final purchase price that far exceeded the seller’s expectations. With the proceeds, the seller also formed a health plan to help provide senior care services to those in need. That is the silver lining in making the sometimes-difficult decision to sell, in order to further their mission. Of course, it helps to collect sale proceeds that exceeded initial expectations, too.
