Crazy things are happening at Merrill Gardens: new leadership, sale of more than half their properties . . . what does it mean for them, the industry, their residents and their staff?

Last week Merrill announced a new leadership team consisting of Tana Gall and Jason Childers.  I wrote about this yesterday (here). Then this afternoon I return from a road trip, open my email to find a new press release announcing the sale of 38 Merrill Garden communities to Emeritus.  (You can read the entire press release at the end of this article.)The math looks like this:

Merrill before the deal:         The New Merrill  
Operating Buildings 56      Operating Buildings 18
Buildings in Development   8      Buildings in Development   8
Total 64      Total 26

  Sixty-eight percent of the operating portfolio is gone.   This may not be quite as big as it sounds, because 80% of the equity in those buildings was already owned by Health Care REIT, Inc.  So Merrill’s part in those buildings was a 20% equity stake plus management fees.  After the transaction is complete, Health Care REIT, Inc. will own 100% of the buildings which will be leased to Emeritus.   So, I get why Emeritus wants this.  They are clearly in an empire building mode.  It represents more revenue and presumably more profits.  It also gives them a better mix of independent living to assisted living (and skilled nursing). What I didn’t quite get was what Merrill gets out of shrinking except maybe a little cash to do new development.   To the phone I went.  I spent about 20 minutes talking to Tana.  My first question was WHY?  Here is what I learned:

  • This will allow the New Merrill to develop better; technology based operating systems, which will includ employee systems and medical records.
  • They will continue to more or less maintain the same mix of independent living and assisted living.
  • Tana’s goal is to create better products for seniors that will continue to attach the emerging generation of seniors.  To create an environment that will make it attractive for more seniors to move from their single family homes, condo’s or traditional apartments into a senior community.  
  • She feels that with the right product there is a significant unmet need for independent living that will appeal to younger (perhaps even still working) seniors.

  Finally:  I am not a shill for Merrill Gardens and promise no more Merrill Gardens articles this month! So I have to ask .  .  .  .   What do you think:  Is this positive for Merrill or just spin?  Does this mean anything to the industry or just business as usual?  Any Merrill team members want to offer their thoughts?   Steve Moran

Merrill Gardens and Emeritus Release 6 27 13