Surplus Property Disposition Case Study - Tenet Healthsystem Hospitals
THE ISSUE
Tenet Healthsytem had acquired NME Hospitals which owned and
operated Jo Ellen Smith Medical Center; a competing hospital in the New Orleans area with Tenet
owned Meadowcrest Hospital.
THE ASSIGNMENT
After closing down Jo Ellen Smith, Tenet engaged SRSA to sell
the closed acute care hospital, the adjacent psychiatric hospital and two related medical office
buildings all of which were situated on a 26 acre site. The complication was that Tenet would be
deed restricting the hospitals against any type of medical use that would compete with their other
hospitals. They also wanted a quick sale to one buyer.
THE SOLUTION
SRSA had been given the task of finding alternative uses of the
property other than medical and targeting buyers that could redevelop the site. Alternative uses
were identified as Senior Living (both assisted living and independent living), Alzheimer and Long
Term Acute care (LTAC), a satellite college campus with dormitories, and a geriatric psych hospital.
In addition we considered razing the buildings and developing the entire site as a combination of
single family and multi family residential.
We developed a marketing campaign that centered around a controlled bid process. Buyers that fell
into the categories listed above were identified and contacted via direct mail and by phone. A
comprehensive marketing package was developed that outlined the salient information with high level
graphics and sent via overnight or hand delivered to interested parties. Property tours were conducted
over a 2 week period and a bid deadline with a due diligence timeline and anticipated closing date was
set.
SRSA qualified the bidders and narrowed the field to three. Extensive personal interviews were
conducted with the Seller present and one was selected (a residential developer). Finally, a contract
was executed and after a 60 day due diligence period, the sale closed. Tenet Healthsystem was able to
remove this non-revenue producing asset from their books in a timely manner. For SRSA and Tenet this
was a true success story.
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