Skilled nursing deals in West Virginia seem to attract a lot of attention, since it is a highly desirable state to operate SNFs and the small pool of facilities in the state simply means that they rarely come up for sale. But the governor, Patrick Morrisey, just announced that West Virginia has agreed to sell four state-owned skilled nursing facilities totaling 511 licensed beds that were losing around $6 million a year, according to the governor’s office.
The prospective buyer is Marx Development Group, a New York-based real estate developer and manager that is focused on several real estate sectors, including hospitality, residential, commercial and healthcare facilities. The deal appears to be a coup for both the state and for MDG, which has also agreed to build between three and five new facilities to replace the aging facilities while sourcing labor and materials within the state.
The acquired facilities will also receive renovations and expansions, with the quality of care hopefully improving for patients, too. Plus, the state is relieved of covering the operating losses at these facilities while receiving some sale proceeds at the same time. The governor stated that the facilities were purchased for $60 million, or $117,400 per bed, but given that per-bed prices for West Virginia have been as high as $315,000 per bed (for profitable operations) and that low bed supply is met with high investor demand in the state, we suspect that the total consideration may have been much higher than $60 million.
We knew the deal was in the works for at least a year, since the state announced in July 2024 that it had engaged Lument Securities to assist the Department of Health Facilities in “facilitating a sustainable long-term care strategy, leveraging private capital to revitalize the state’s nursing facilities.” That plan included the sale and license transfer of the four facilities, which included Jackie Withrow Hospital in Beckley, John Manchin Sr. Health Care Center in Fairmont, Hopemont Hospital in Terra Alta, and Lakin Hospital in West Columbia. The deal would also ensure uninterrupted care throughout the transition and “channel millions of dollars into facility modernization, upgrades and expansions.”
The transaction process was kicked off by an extensive marketing campaign from Lument to engage qualified investor groups with operational expertise, and it continued through a change in governorship, although not a change in party control. We believe the bidding environment was very strong and active, with the governor saying that over 140 parties contacted the state with interest, 62 NDAs were signed and over eight letters of intent were received before Marx Development Group was ultimately selected. The governor stated that the firm “brings to the table a remarkable breadth of resources and extensive experience in renovating and improving healthcare facilities that are in need of thoughtful investment.” Indeed, Marx is a vertically integrated developer (capable of building the new facilities) and operator. According to MDG’s website, it is affiliated with the skilled nursing operator Majestic Care, which operates over 40 facilities in Ohio, Indiana and Michigan. The state’s announcement referenced MDG owning and operating 55 senior care properties with over 5,000 licensed beds in Indiana, Michigan, New York, Ohio and Kentucky.
The deal is set to close either at the end of September or the end of October.
