Brookdale, HCP announce $849M deal to acquire senior housing portfolio

Brookdale Senior Living and HCP will acquire a portfolio of 5,025 units in 35 private-pay senior housing communities from Chartwell Retirement Residences for $849 million under the terms of an agreement announced today.

HCP will own 90 percent and Brookdale will own 10 percent of the communities, which Brookdale has operated since 2011 after acquiring Horizon Bay. After the closing of the acquisition, expected in the third quarter, Brookdale will continue to manage the communities under a long-term management agreement.

“This transaction is consistent with Brookdale’s strategy of acquiring managed communities when possible given the company’s elevated understanding of the operations, minimal transition costs and time, the ability to leverage in-place overhead, and the opportunity to exchange a vulnerable third-party management arrangement with a stable RIDEA joint venture structure,” Andy Smith, Brookdale’s CEO, said in a statement.

The properties are located in eight states, with concentrations in Florida, Texas and Colorado. The portfolio includes:

• 33 senior housing properties representing 4,792 units with a care mix of 46 percent assisted living, 45 percent independent living, 5 percent memory care and 4 percent skilled nursing; and
• leasehold interests in two communities, the properties of which are wholly owned by HCP, representing 233 units and including purchase option rights exercisable in 2017.

The majority of the units are located within the nation’s top 31 metropolitan statistical areas. They are 89 percent occupied with an average monthly rate of $3,425.

“Building upon our strategic transactions executed last year in collaboration with Andy and his team, this portfolio acquisition provides attractive risk-adjusted returns for our shareholders, and also creates value for our operating partner through a real estate driven transaction,” Lauralee Martin, president and CEO of HCP, said in a statement. “Brookdale’s familiarity with this portfolio will be a tremendous asset as we avoid any transition issues and immediately implement capital investment plans to generate future growth above traditional triple-net escalators,” she added.

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