Summary

This Ohio-based intellectual and developmental (I/DD) & behavioral health non-profit provider benefits from increased flexibility toThis state-based intellectual and developmental (I/DD) & behavioral health non-profit benefits from increased flexibility and more predictable cash flow following a 15 home sale/leaseback with CapGrow.

Provider Priorities

• Offload debt carried by 15 intermediate care facilities (ICFs)
• Managing unpredictable, expensive operation-impacting maintenance
• Mitigating state reimbursement delays during challenging times
• Partnering with a housing partner who knows mission-based behavioral health

Partnership Experience

Eight years after their first introduction, the provider contacted CapGrow to discuss a sale/leaseback partnership. They most wanted to work with a partner who understood I/DD support services and who had brought strategic success to other non-profit providers in the past.
Upon collaboration, the provider shared their existing concerns with CapGrow. They had heavy debt holdings and unpredictable, often expensive maintenance costs for their residential ICF homes. The provider also wanted to ensure that the individuals currently living within the homes would be able to remain there in the long-term despite an ownership change in the real estate.
Drawing from industry experience, CapGrow partnered with the provider to take on their real estate debt and structured a lease to help absorb the high maintenance costs. The influx of money from the sale of the ICFs provided the non-profit with cash to invest in programmatic improvements while additional funds could be used for their other behavioral healthcare programs and operational needs. Also, the lease provided flexibility to address the unknown; they could adjust their plan when it came time for renewal with shorter terms (getting more frequent opportunities to re-purchase their ICF’s), or opt for longer-term leasing for peace of mind, or even renew the lease terms as-is. Through every step, the provider was empowered to be in control of their strategy.

Conclusion

Thanks to their relationship with CapGrow Partners, the non-profit enjoys an improved balance sheet with greater cash flow transparency and financial flexibility. The provider’s CFO says of the experience, "I think what gave us comfort about giving up the ownership (of those properties) was not just the length of the lease, but the length of the renewals of the lease. In essence, that made it still feel like these are our properties just with a partner who's helping cover those bigger expenses when they come up. We ultimately could predict our cashflow better." Today, CapGrow continues to maintain a collaborative partnership with the provider as they grow.