Ziegler facilitated the sale of three transactions on behalf of not-for-profit sellers. First, a skilled nursing portfolio in Northern Ohio was sold to a for-profit buyer. Next, in a two-part transaction, a not-for-profit in Tennessee sold two CCRCs to another not-for-profit (through an affiliation) and divested the SNF portion of one campus to a for-profit buyer.
The seller of the skilled nursing portfolio in Northern Ohio was a not-for-profit dedicated to providing affordable housing, healthcare and supportive services. This was its only healthcare asset in the state. The portfolio comprised three buildings consisting of 182 skilled nursing beds and 24 behavioral health beds.
One of the buildings was built in 2015 and features 24 behavioral and 20 skilled nursing beds near a hospital campus in Tiffin, Ohio. Occupancy was hovering around 60% and the facility was not performing despite the likely high per-patient-day rates commanded by the behavioral beds. The other two assets were built in the late 1970s and also were not performing. One of the properties features 79 beds, with the other comprising 90 beds (although it was not operating at 90 beds). Both were around 85% occupied.
Ziegler identified a pool of qualified buyers, with the ultimate buyer being a privately held, for-profit owner/operator based in Englewood Cliffs, New Jersey. The buyer intends to convert one of the campuses into a behavioral hospital. The acquisition was valued at approximately $13.4 million, or $65,000 per bed. Nick Glaisner handled the transaction, noting part of the mission was finding a buyer that would continue the legacy of quality of care and uphold the standards that the not-for-profit has built over the years.
Glaisner was additionally involved in the closing of two separate Tennessee transactions, along with Stephen Johnson, Marie Carlson and Ryan Anders. Ziegler’s initial role was to search for an affiliation partner for Presbyterian Homes of Tennessee (PHOT), which operates two CCRCs that offer independent living, assisted living and skilled nursing: Shannondale of Knoxville (Knoxville) and Shannondale of Maryville (Maryville). The Knoxville campus features 83 IL cottages, a 90-unit IL apartment building that was constructed in 2019, a small assisted living portion, a shuttered IL building and the two skilled nursing facilities that were divested, consisting of a ten-year-old short-term rehab facility and a 176-bed, five-story traditional SNF. Maryville, meanwhile, features 154 IL units, 39 AL units and 44 skilled nursing beds. Both Knoxville and Maryville featured modest entrance fees and monthly rent, which new ownership could increase closer to market levels.
Ziegler collaborated with Healthcare Management Partners, a management and consulting firm engaged by PHOT in 2023. HMP suggested it sell the skilled nursing facilities on the Knoxville campus in a transaction separate from the affiliation, as they would not attract much interest from potential not-for-profit acquirers. With this, Ziegler ran an accelerated concurrent affiliation and sales process while re-parceling the SNF portion of the Knoxville campus.
PHOT received proposals from multiple not-for-profit senior living organizations, with Covenant Living Communities & Services being selected as the affiliation partner of choice. Covenant Living is the eighth largest not-for-profit senior living provider according to the 2023 LeadingAge-Ziegler 200 ranking and currently operates in 10 states. This affiliation marks its first foray into the Tennessee market.
Following HMP’s recommendation, the PHOT Board approved the divestiture of its two skilled nursing facilities located on the Knoxville campus, totaling 206 beds. They comprised a ten-year-old, 30-unit rehab facility and a 176-bed, five-story traditional SNF. Skilled nursing beds at Maryville will still be available to residents of both campuses. American Health Partners was identified as the eventual buyer for the skilled nursing assets, given its operating history in the state. The SNF sale was valued at around $14.01 million, or $68,000 per bed.
When Ziegler began the process, there was around $60 million in debt held by both the Knoxville and Maryville CCRCs. Proceeds from the skilled nursing sale were used to pay down some of the debt and Covenant Living paid off the remaining obligation with cash.
