A leading operator of senior living facilities made a trio of moves to further its strategy of owning more of the real estate it oversees.
Brookdale Senior Living struck a deal with healthcare and senior housing REIT Welltower to purchase 30 communities it leases for $290M. The acquisition, which comprises 1,152 assisted living and memory care units, will save Brookdale nearly $18M in rent payments next year. That total includes around $7M in financing rent that was going to mature in 2032.
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The Tennessee-based Brookdale also signed a four-year lease extension with Welltower for 39 communities that total 1,842 units. The deal allows Brookdale to exercise a fair-market-value purchase option on the portfolio at any time, rather than on a date tied to the lease's maturity.
Brookdale also closed on its previously announced $157M acquisition of 735 assisted living and memory care units across 17 communities.
Brookdale CEO Nick Stengle said the transactions are expected to add to the company's operational profitability and available cash.
“Ownership allows Brookdale to capture the full benefit of future operating growth, while reducing our long-term lease obligations,” Stengle said in a statement.
Brookdale operates 529 communities in 41 states. The senior living operator owns more than 75% of its communities, according to Senior Housing News.
Stengle told the outlet in June that Brookdale is seeking more potential growth targets as it aims to increase its regional density.
“We will go seek potential communities that may or may not be on the market, and we will attempt to purchase them if it makes sense at the right price and the right return,” Stengle told Senior Housing News.
However, the firm isn’t the only one hunting senior housing, as demand in the sector has attracted top investors.
BDT & MSD Partners acquired a majority stake in Sunrise Senior Living earlier this month from Canada’s Public Sector Pension Investment Board. Sunrise Senior Living has more than 230 communities in the U.S. and Canada.
The transaction’s financial terms weren’t disclosed, but The Wall Street Journal reported that “the buyer values the deal” at more than $1B.
Last month, American Healthcare REIT announced plans to spend more than $1.5B across a pair of transactions to acquire 16 senior housing facilities.
As the first wave of baby boomers reaches their 80s this year, U.S. senior housing development has slowed significantly.
Senior housing occupancy hit 90% in August, but to maintain that level of availability, more than $1T would need to be spent by 2050. NIC Map predicted 13 million more people will be in the market for senior housing within the next 15 years.
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