Integral Senior Living (ISL) and Discovery Senior Living are now collaborating in a move that is in effect creating a new senior living operations heavyweight.
Funds advised by specialized investment firms Lee Equity Partners and Coastwood Senior Housing Partners are investing in ISL as part of a new recapitalization, the companies announced Tuesday.
They did not share an exact dollar amount for the investment. Blueprint Healthcare Real Estate Advisors worked with ISL on the recapitalization as an exclusive advisor.
With the investment, ISL has agreed to partner with Discovery Senior Living “to form the fifth largest senior housing operator in the United States,” according to the announcement.
The recapitalization of ISL comes just months after Lee Equity and Coastwood similarly invested in Discovery Senior Living. At the time, the operator planned to use the investment in part to fuel the “next stage” in its brand management structure.
Collette Gray is slated to keep her current title as ISL President and CEO. Discovery CEO Richard Hutchinson is also continuing on with his senior living leadership role, but he is also now leading the operators’ combined parent company.
“It is an honor to partner with the team at ISL to expand our capabilities to provide superior resident experiences throughout the United States,” Hutchinson said in the release, “Our combined companies’ resources and expertise will significantly improve the outcomes and experiences for our residents, capital partners, and employees.”
ISL Founder Sue Farrow noted she is “excited” to partner with Discovery, Lee Equity and Coastwood; while Gray said the new investment will give ISL more resources to improve operations and implement new tech.
“This recapitalization will allow us to continue to carry the ISL culture and ensure the very best service for our residents, associates and ownership groups,” Gray added.
The announcement added that the investment in ISL and Discovery from Lee Equity and Coastwood is expected to help “find synergies in systems and platforms that will allow the sister companies to better serve capital partners and residents.”.
“Teams at both companies will identify best practices with the intention of advancing the quality of operations in the senior living industry while maintaining their own unique cultures and programs,” the announcement continues.
The new arrangement carries significant national scale given that the two companies manage 27,000 senior living units in 36 states.
ISL and Discovery were not the only two companies that have recapitalized in recent memory. Early in 2022, Des Moines, Iowa-based LCS undertook a similar effort with Redwood Capital Investments, McCarthy Capital and employee shareholders.
‘Next phase of platform evolution’
Discovery CEO Hutchinson said that the recap will bring together two companies with similar mindsets, and crucially allow them to collaborate more closely.
Both companies have something to bring to the table. For example, Hutchinson noted that Discovery will share with ISL supportive services that the company has honed over time.
And ISL’s best practices will be assimilated into the various management companies that Discovery is currently operating, including Discovery Management Group, Morada Senior Living, TerraBella Senior Living, “as well as a couple other regional companies we will ‘stand up’ this year.”
“The combining of the platforms will also allow us to roll out our next phase of platform evolution — more to follow on that in the near future,” he added.
All of this fits into Hutchinson’s long-term vision to build out a national and regional brand management structure that will allow for what he has called sustainable scaling.
“In the short term, we will continue to evolve our platform and we will continue to pursue other combinations that allow us to enhance the overall platform,” he said. “But we will be exceptionally disciplined in who we bring into the Discovery platform and will be focused on truly creating an ‘all-star team’ of operators that allow us to execute our vision of creating a sophisticated world-class company.”