Summary

This Ohio-based intellectual and developmental (I/DD) & behavioral health non-profit provider benefits from increased flexibility to stay ahead of state reimbursements in 15 ICF homes with a more predictable cash flown with a CapGrow sale/leaseback.

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Provider Priorities

• Offload debt carried by 15 ICFs
• Unpredictable, expensive operation-impacting maintenance
• Mitigating state reimbursement delays in a changing industry
• Partnering with an entity who knows mission-based behavioral health

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Partnership Experience

Eight (8) 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 the world of I/DD support services and had brought strategic success to their non-profit peers in the past.

Upon collaboration, the provider shared their existing concerns with CapGrow: they had heavy debt holdings in the real estate, compounding unpredictable and expensive maintenance costs of the properties, and worried about what it meant for the individuals in the 15 homes and their care in a long-term lease.

CapGrow's transparent sale/leaseback presented much needed flexibility to address the unknown; for example, both companies made a plan should the provider be required to vacate a property amid funding changes years after closing.

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 kind of those bigger expenses when they come up. We ultimately could predict our cashflow better."

CapGrow’s industry experience allowed them to build a deal to take on the provider’s real estate debt and create a lease structure to absorb high maintenance costs as a partner. In addition, the influx of capital from the sale of the ICFs distributed liquid funds for the provider to reinvest in the properties for programmatic improvements while additional funds could be used for operational needs at other sites and in other behavioral healthcare verticals.

(We expected) to have a partner who's working hand in hand with us along the way, not an adversary that's just trying to close a deal. CapGrow’s team as a whole was that partner for us.

– CEO, State I/DD Provider

Conclusion

Thanks to their relationship with CapGrow Partners, the company enjoys an improved balance sheet with greater cashflow transparency and financial flexibility. Today, CapGrow continues to maintain a friendly, supportive partnership with this national I/DD provider with further growth on the horizon.

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