Whanganui's Nazareth Rest Home had to close because it was running at a loss, the chairwoman of the trust board that owns it says.
But the other work of the Sisters of St Joseph of the Sacred Heart in Whanganui will continue as usual, Sister Ann Neven said.
The home is to close as soon as all its elderly residents have found other places to live. The closure was made known to them on March 15, and came as a shock to both the 41 residents and the 61 full and part-time staff.
The home is owned by the Sisters of St Joseph of the Sacred Heart (NZ) Trust Board, and Sister Ann is its chairwoman.
Nazareth could only break even when all its 46 beds were occupied, she said - and they were not. A lot of money had been spent on maintenance during the past year, and more would be needed into the foreseeable future.
Providing hospital-level care got more government funding than rest home level care, and Nazareth did some of that. Bigger elder care operators also made money by providing units and refurbishing and retenanting them - Nazareth had no separate units.
"It's really difficult for small facilities in an environment with bigger services."
The closure was a difficult decision, made after a lot of consideration.
"We are all very sad about it. It wasn't easy at all."
The order hasn't decided what to do with the Nazareth buildings. Sister Ann said they were taking business advice.
The rest home is on the same title as Mount St Joseph, the two-storeyed "foundation and heart-place" of the Sisters of St Joseph of Nazareth in New Zealand.
It will carry on being used as a conference and gathering centre, and the archives and wetland restoration also on the property will stay. Whanganui sisters will continue their work in counselling, visiting, crafts and ecology.
The Catholic order has had three aged care facilities in New Zealand, one in Auckland and two in Whanganui. The second Whanganui one, Quinlan Court, is for 20 residents capable of independent living. It breaks even and is staying open.
The three facilities have been managed by the holding company Mary MacKillop Care. Sister Ann said it was handling the closure of Nazareth very well.
"I think they're very clear on their responsibilities."
The New Zealand-based Sisters of St Joseph of Nazareth fused with their Australian counterparts in 2013, to become Sisters of St Joseph of the Sacred Heart. Since then their New Zealand headquarters have been in Auckland.
Their world headquarters are in Sydney. There are about 800 sisters worldwide, mostly in Australia. New Zealand has 80, with 20 of those in Whanganui.