Last week, Retirement Unlimited Inc. (RUI), announced that its President, Doris-Ellie Sullivan, had stepped down “to pursue other opportunities.” That is usually a signal that the person did not leave without getting pushed out. Given what we heard about the poor performance of the company since its acquisition of Brandywine Living, we have to believe that it finally caught up to her.
In late 2023, RUI purchased the Brandywine Living management company, which nearly doubled the number of communities operated by RUI to more than 70. Welltower (NYSE: WELL) owned the real estate of the Brandywine portfolio. Brandywine operated very high-end assisted living communities in top markets in New Jersey, Connecticut, Delaware, Maryland, Pennsylvania and New York. Their reputation was top-notch, and the founder and previous CEO, Brenda Bacon, had developed an extraordinary team and culture that produced some of the highest margins in the industry. And produced a very stable and loyal employee base, especially at the Executive Director level.
There is one thing that good operators know as a requirement post-acquisition (actually, there are many things), and that is do not mess with the culture of the target company, unless it has a troubled culture that needs to be fixed. This was not the case at Brandywine. Our suspicion is that Ms. Sullivan may have been a little jealous of Ms. Bacon’s reputation, both among her industry peers as well as among the company’s employees. After all, she was recently installed into the Seniors Housing Hall of Fame, one of just a few women to get the nod. And the stories we have heard from employees and competitors made it sound like the entire culture developed by Bacon was being thrown out the door so that Sullivan could strut her stuff.
One leading industry participant described her as being as huggable as a porcupine. A cultural clash soon began as new rules were laid down, EDs were required to punch in and punch out, and turnover began to rise. Competitors in Brandywine’s markets quickly began to poach EDs and others, citing their strong leadership abilities. They were basically poaching some of the best-trained people in the region who knew how to drive performance. We heard through the grapevine that the census started to drop, and that operational performance began to suffer. The story was that Sullivan tried to run it like a military organization (she had an army background), and that did not go over too well with the staff.
We do not know how much Welltower knew about what was actually going on at RUI post the acquisition. They may not have cared because the relationship was structured as a lease, not RIDEA, so as long as they received the lease payments, it did not impact WELL’s bottom line. Still, you don’t want to see a major tenant get a bad reputation, especially after it had had such a good one. Lesson learned, and it is all about people.
