Funds advised by Lee Equity Partners and Coastwood Senior Housing Partners have signed an agreement to invest in Bonita Springs, FL-based Discovery Senior Living. The recapitalization will fund Discovery’s strategic expansion and operational platform enhancements.
“We have a saying around here about not drinking your own Kool-Aid, so we wanted to make sure we had folks in the room as partners as we scale our business,” Richard J. Hutchinson, CEO of Discovery Senior Living, told the McKnight’s Business Daily. “We wanted to make sure we have some different perspectives.”
He said he was looking for partners that would “do more than just write checks, that can just add value in different ways.”
With this partnership, Discovery aims to scale its services to a management structure by employing regional brand management companies, Hutchinson said.
“The best operator that gets the best results in senior living is the regional operator. That completely conflicts with scaling nationally,” he said. “The key is to regionally manage.”
The regional management companies will work within their own brands with “support from a mother ship rather than all directions coming from the mothership,” Hutchinson said.
The partnership with Lee Equity Partners and Coastwood Senior Housing Partners also will allow Discovery to build on its experiential living operating programs. Discovery is constructing new communities that are tailored to residents’ interests and needs.
It’s all about customization rather than the “common denominator approach,” according to Hutchinson, and the company has been working on this approach for about three years. For a long time, he said, the senior living industry was focused on providing essential but one-size-fits-all services.
“And the problem with that is that every senior is an individual with unique likes, dislikes and desires for how they want to live,” Hutchinson said.
Occupancy among Discovery properties has improved by about 12% year-over-year, according to the executive. Weighted occupancy is between 82 and 83%, he said, with spot occupancy around 85%. Hutchinson said that Discovery occupancy is gaining between 60 and 80 basis points per month.
“Demand is very strong,” he said. “Our demand is through the roof.”
“We believe the partnership among Discovery, Coastwood and Lee Equity will be unique in the senior living industry. Discovery contributes its highly scalable platform and best-in-class senior living operations,” Dan Decker, chairman of Coastwood Senior Housing Partners, said in a statement. “Coastwood contributes decades of senior living investment and operating experience. Lee Equity contributes its expertise in business and healthcare services along with its buy-and-build experience,” he added.
Decker will become chairman of the board of directors of Discovery Senior Living upon closing of the financing, which is anticipated to happen in the fourth quarter.
The family of companies in the agreement include Discovery Management Group, Morada Senior Living, TerraBella Senior Living, Discovery Development Group, Discovery Design Concepts, Discovery Marketing Group and Discovery At Home, a Medicare-certified home healthcare company.
