NASHVILLE, Tenn., June 27, 2018 /PRNewswire/ -- Brookdale
Senior Living Inc. (NYSE: BKD) ("Brookdale" or the "Company") today
announced that it has entered into definitive agreements with
lessor and joint venture partner, Welltower Inc. ("Welltower"). The
parties have agreed to early termination of Brookdale's triple-net
lease obligations on 37 communities (4,095 units) effective
June 30, 2018, and Brookdale has
agreed to sell its 20% equity interest in its existing RIDEA joint
venture with Welltower. In addition, Brookdale has elected not to
renew two master leases with Welltower scheduled to mature on
September 30, 2018 (11 communities;
1,128 units). After conclusion of such transactions, Brookdale will
continue to operate 74 communities (3,688 units) under triple-net
leases with Welltower.
Lucinda ("Cindy") Baier, Brookdale's President and CEO, said,
"We are excited to announce a second significant lease
restructuring this year. We have now entered into
mutually-beneficial transactions with three of our largest REIT
partners, which have restructured our leased portfolios and will
provide us with improved strategic flexibility. The transactions
with Welltower will improve our ongoing cash flows and overall
lease coverage, reduce our lease exposure, streamline our
portfolio, provide us with greater transactional flexibility, and
offer long-term stability for the remaining portfolio. We are
grateful to Tom DeRosa and the
Welltower team for their creativeness and focus on completing this
win-win transaction, which strengthens our long-term relationship
with Welltower and is another important step in our turnaround
strategy."
The transactions include:
- Lease Terminations – Brookdale and Welltower have agreed
to early termination of Brookdale's triple-net lease obligations on
37 communities effective June 30,
2018. The two lease portfolios, which had current and
projected negative cash flows, were due to mature in 2028 (27
communities; 3,175 units) and 2020 (10 communities; 920 units).
Brookdale has agreed to pay Welltower an aggregate lease
termination fee of approximately $58
million and will continue to operate the communities until
the communities are transitioned to new operators.
- Future Lease Terminations – The parties separately
agreed to allow Brookdale to terminate leases with respect to, and
to remove from the remaining Welltower leased portfolio, a number
of communities with annual aggregate base rent up to $5 million upon Welltower's sale of such
communities, with Brookdale to receive a corresponding 6.25% rent
credit on Welltower's disposition proceeds.
- RIDEA Restructuring – Brookdale has agreed to sell its
20% equity interest in its existing Welltower RIDEA joint venture
to Welltower, effective June 30,
2018, for net proceeds of approximately $35 million. Brookdale currently provides
management services to the 15 joint venture communities (1,970
units), and will continue to manage the communities until the
communities are transitioned by Welltower to new managers.
As noted above, Brookdale has also elected not to renew two
master leases with Welltower scheduled to mature on September 30, 2018. Following completion of the
foregoing transactions, Brookdale's remaining lease agreements with
Welltower will contain an objective change of control standard,
which would allow Brookdale to engage in certain change of control
and other transactions without the need to obtain Welltower's
consent, subject to the satisfaction of certain conditions.
About Brookdale Senior Living
Brookdale Senior Living Inc. is the leading operator of senior
living communities throughout the United States. The Company
is committed to providing senior living solutions primarily within
properties that are designed, purpose-built and operated to provide
the highest-quality service, care and living accommodations for
residents. Brookdale operates independent living, assisted living,
and dementia-care communities and continuing care retirement
centers, with approximately 1,010 communities in 46 states and the
ability to serve approximately 99,000 residents as of March 31, 2018. Through its ancillary services
program, the Company also offers a range of home health, hospice
and outpatient therapy services. Brookdale's stock is traded
on the New York Stock Exchange under the ticker symbol BKD.
Safe Harbor
Certain statements in this press release may constitute
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. These forward-looking
statements are subject to various risks and uncertainties and
include all statements that are not historical statements of fact
and those regarding our intent, belief or expectations, including,
but not limited to, statements relating to our expectations
regarding the lease restructuring transactions with Welltower and
our other REIT partners, reducing our lease exposure, improving our
cash flows, strengthening our lease coverage, providing long-term
stability for our leased portfolio, and improving our strategic
flexibility. Forward-looking statements are generally identifiable
by use of forward-looking terminology such as "may," "will,"
"should," "could," "would," "potential," "intend," "expect,"
"endeavor," "seek," "anticipate," "estimate," "overestimate,"
"underestimate," "believe," "project," "predict," "continue,"
"plan," "target" or other similar words or expressions. These
forward-looking statements are based on certain assumptions and
expectations, and our ability to predict results or the actual
effect of future plans or strategies is inherently uncertain.
Although we believe that expectations reflected in any
forward-looking statements are based on reasonable assumptions, we
can give no assurance that our expectations will be attained and
actual results and performance could differ materially from those
projected. Factors which could have a material adverse effect on
our operations and future prospects or which could cause events or
circumstances to differ from the forward-looking statements
include, but are not limited to, the risk associated with the
current global economic situation and its impact upon capital
markets and liquidity; changes in governmental reimbursement
programs; the risk of overbuilding, new supply and new competition;
our inability to extend (or refinance) debt (including our credit
and letter of credit facilities) as it matures; the risk that we
may not be able to satisfy the conditions precedent to exercising
the extension options associated with certain of our debt
agreements; events which adversely affect the ability of seniors to
afford our resident fees or entrance fees; the conditions of
housing markets in certain geographic areas; our ability to
generate sufficient cash flow to cover required interest and
long-term lease payments and to fund our planned capital projects;
risks related to the implementation of our redefined strategy,
including initiatives undertaken to execute on our strategic
priorities and their effect on our results; the effect of our
indebtedness and long-term leases on our liquidity; the effect of
our non-compliance with any of our debt or lease agreements
(including the financial covenants contained therein) and the risk
of lenders or lessors declaring a cross default in the event of our
non-compliance with any such agreements; the risk of loss of
property pursuant to our mortgage debt and long-term lease
obligations; the possibilities that changes in the capital markets,
including changes in interest rates and/or credit spreads, or other
factors could make financing more expensive or unavailable to us;
our determination from time to time to purchase any shares under
our share repurchase program; our ability to fund any repurchases;
our ability to effectively manage our growth; our ability to
maintain consistent quality control; delays in obtaining regulatory
approvals; the risk that we may not be able to expand, redevelop
and reposition our communities in accordance with our plans; our
ability to complete acquisition, disposition, lease restructuring
and termination, financing, re-financing and venture transactions
on agreed upon terms or at all, including in respect of the
satisfaction of closing conditions, the risk that regulatory
approvals are not obtained or are subject to unanticipated
conditions, and uncertainties as to the timing of closing, and our
ability to identify and pursue any such opportunities in the
future; our ability to successfully integrate acquisitions;
competition for the acquisition of assets; our ability to obtain
additional capital on terms acceptable to us; a decrease in the
overall demand for senior housing; our vulnerability to economic
downturns; acts of nature in certain geographic areas; terminations
of our resident agreements and vacancies in the living spaces we
lease; early terminations or non-renewal of management agreements;
increased competition for skilled personnel; increased wage
pressure and union activity; departure of our key officers and
potential disruption caused by changes in management; increases in
market interest rates; environmental contamination at any of our
communities; failure to comply with existing environmental laws; an
adverse determination or resolution of complaints filed against us;
the cost and difficulty of complying with increasing and evolving
regulation; unanticipated costs to comply with legislative or
regulatory developments, including requirements to obtain emergency
power generators for our communities; as well as other risks
detailed from time to time in our filings with the Securities and
Exchange Commission, including those contained in our Annual Report
on Form 10-K and Quarterly Reports on Form 10-Q. When considering
forward-looking statements, you should keep in mind the risk
factors and other cautionary statements in such SEC filings.
Readers are cautioned not to place undue reliance on any of these
forward-looking statements, which reflect our management's views as
of the date of this press release. We cannot guarantee future
results, levels of activity, performance or achievements, and we
expressly disclaim any obligation to release publicly any updates
or revisions to any of these forward-looking statements to reflect
any change in our expectations with regard thereto or change in
events, conditions or circumstances on which any statement is
based.
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SOURCE Brookdale Senior Living Inc.