Ventas In Talks to Buy Part or All of Brookdale Senior Living -- Update

By Dana Mattioli and Dana Cimilluca

Healthcare-facility owner Ventas Inc. is in talks to acquire part or all of Brookdale Senior Living Inc. after another big suitor cooled on its bid for the nation's largest operator of senior-living centers.

Ventas is vying for Brookdale after another leading contender to make a deal with the company, private-equity firm Blackstone Group LP, lost interest, according to people familiar with the matter. Brookdale had a market value of nearly $3 billion Thursday afternoon as well as nearly $6 billion in long-term debt and lease obligations as of the end of last year.

In January, The Wall Street Journal reported that Brentwood, Tenn.-based Brookdale was holding talks with Blackstone and others about a sale. When Brookdale reported earnings this week, the company confirmed that it's exploring a possible deal. "I can report that our board and management team working together with our legal and financial advisers are in a process of exploring options and alternatives to create and enhance shareholder value," Executive Chairman Dan Decker said on a conference call with analysts and investors.

It isn't clear if there are other suitors, and Blackstone could still re-enter the fray. The talks are complicated by the fact that much of Brookdale's real estate is owned by other parties, including Ventas, who may need to sign off on a deal, and it's possible there won't be any transaction.

Ventas, based in Chicago, is one of the biggest U.S. health care-focused real-estate investment trusts, with almost 1,300 senior housing and health-care properties in the U.S. Canada and U.K. It had a market value of a $22 billion Thursday.

Brookdale is a big tenant of Ventas, with 140 properties leased or managed as of the end of last year, representing about 5% of revenue, according to Ventas's annual report. That could help put Ventas in a better position to do a deal with Brookdale.

Ventas is an acquisitive company. Last year, it bought $1.5 billion worth of properties from Blackstone. In 2015, it paid $1.75 billion to buy a hospital operator known as Ardent Medical Services, spinning off most of the post-acute and skilled-nursing properties into Care Capital Properties Inc.

Brookdale has been under pressure from two separate activist hedge funds in the past two years that have urged it to take steps including selling or spinning off its real-estate portfolio to reverse a decline in the shares.

In the fourth quarter, Brookdale reported revenue of $1.21 billion, a 2.4% decrease from the year-earlier period. The company reported a net loss of $268.6 million compared with a net loss of $174.3 million in the fourth quarter of 2015. "We are operating in a difficult environment with intense supply pressure and a competitive labor market," Brookdale's chief executive said in the company's earnings release.

Even after rebounding lately amid deal speculation, Brookdale shares closed Thursday at $15.38, down from nearly $40 two years ago. Shares of Brookdale fell 2.5% after hours on Thursday.

Brookdale was founded in 1986 and has grown through a number of mergers, including its $1.4 billion purchase in 2014 of Emeritus Corp., which has weighed on the company's performance. It has more than 1,000 communities spread across the U.S., with more than 100,000 residents. It also offers services such as outpatient therapy, hospice care and assisted living.

Brookdale's property alone could be worth as much as $7 billion, one of the hedge funds, Land and Buildings Investment Management LLC, has said in a letter urging a sale of the real estate. In 2015, Sandell Asset Management launched a proxy fight and urged Brookdale to spin off its real-estate portfolio. It settled for a seat on the board. Sandell has since sold its stake.

David Benoit contributed to this article

Write to Dana Mattioli at dana.mattioli@wsj.com and Dana Cimilluca at dana.cimilluca@wsj.com

(END) Dow Jones Newswires

February 16, 2017 16:58 ET (21:58 GMT)

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