Surpass Senior Living Prepares For Growth Through Acquisition, Selective Development 

After selling its third-party management arm of the business in 2021, Surpass Senior Living is focusing on growth through ownership and potentially ground-up development.

Matt Johnson, founder of Surpass and managing partner of its ownership group, McFarlin Group, told Senior Housing News the decision to exit third party management came from the realization of the operator “not being a good owner without being an operator.”

“Third-party management in this industry is pretty tough unless your business is based around third-party management only,” Johnson said. “We don’t really do any third-party management unless it’s a deal that we’ve owned and sold and then continue to manage.”

Surpass leaders effectively relaunched the company in 2024 and now it owns and operates 10 communities in Texas, Florida, Tennessee and Oklahoma. Going into 2027, the Dallas-based operator is preparing again for growth, particularly around the Sun Belt region, with a clustered approach of three or four assets in a market to have a small scale of synergies, according to Johnson.

Surpass has an eye for distressed properties. While McFarlin Group has a development arm, it hasn’t been deployed as frequently since 2018 due to the fact that it’s still generally cheaper to buy than to build anew. Now, the company is selectively looking at starting development again in markets where it can achieve “top-tier rent” due to high construction costs. To achieve these goals, Johnson said the leadership team is focusing on aligning itself with capital partners through the remainder of this year and into early next.

“We think there’s a good market still to buy, aggregate and sell in five to seven years,” Johnson said. “We’re okay buying something that’s not necessarily brand-new vintage, because we think our options to exit and monetize for our investors can involve selling to a not-for-profit in this market as well.”

The Surpass leadership team also has sought to streamline staffing. To accomplish this, the company utilizes an offshore team to pull data out of time clocks daily and have information readily available for executive directors. That processhas created a proprietary labor data matrix to help manage teams. Part of the labor matrix includes tracking resident care levels daily to determine staffing needs are appropriate.

“How many pizzas someone orders for a happy hour doesn’t really matter, don’t even bother us with that,” Johnson said.

Staff follow a structured weekly meeting that “forces hard conversations” to help get to the root of issues that arise so they can quickly be remedied. Staff have been appreciative of the approach and turnover has begun to slow as retention improves.

“We want our people to go home and feel like they’ve been able to voice their concerns and they’ve been heard,” Johnson said. “We can’t always solve those issues, or we’re not going to agree with them, but at least they’re able to get it off their chest and they’ve been heard.”

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