Brookdale Senior Living to Buy Horizon Bay

Brookdale Senior Living to Buy Horizon Bay NASHVILLE, TN - Brookdale Senior Living Inc. announced that it has entered into a definitive agreement to acquire 100% of the equity interests in Horizon Bay Realty, L.L.C. ("Horizon Bay"), the ninth largest operator of senior living communities in the United States. Upon completion of the Horizon Bay transaction, the Company will add to its portfolio 90 communities with over 16,000 units in 19 states.

In connection with the transaction, the Company has entered into definitive agreements to restructure Horizon Bay's existing relationship with HCP, Inc. (NYSE: HCP) relating to 33 communities that Horizon Bay currently leases from HCP. In particular, the Company will (i) form a joint venture with HCP to own and operate 21 communities, and (ii) lease the remaining 12 communities from HCP. The joint venture with HCP will utilize a RIDEA structure with Brookdale acquiring a 10% interest. Brookdale will manage the communities under a ten-year management agreement with 4 five-year renewal options and will retain all ancillary services operations. The 21-community portfolio has a total of 5,070 units (approximately 4,252 independent living, 736 assisted living, and 82 Alzheimer's/dementia care) and is primarily located in Florida, Texas, Illinois and Rhode Island.

Brookdale will lease 12 communities from HCP subject to long term, triple net leases. The leased portfolio has a total of 1,547 units (approximately 588 independent living, 578 assisted living, 225 Alzheimer's/dementia care and 156 skilled nursing units) and is primarily located in Texas and Rhode Island. In addition, Horizon Bay leases an additional community from HCP pursuant to a triple net lease and subleases that community to a third-party operator.

Horizon Bay provides management services to the remaining 57 Horizon Bay communities, which contain approximately 9,548 units, consisting of 5,445 independent living units, 3,011 assisted living units, 567 Alzheimer's/dementia care units and 525 skilled nursing beds in 15 states. Horizon Bay's primary third party management relationships are with Chartwell Seniors Housing Real Estate Investment Trust ("Chartwell") (45 communities, 6,420 units) and AEW Capital Management (three communities and 1,690 units, excluding two additional communities transitioning to Horizon Bay in the near term). As part of the transactions, the Company and Chartwell expect to simplify and restructure Horizon Bay's existing management relationships with Chartwell.

"Acquiring Horizon Bay represents a significant opportunity for Brookdale to further build our scale, operating platform and market concentrations. Many of these communities are in markets where we have either built or are building a network continuum. Consistent with our long-term strategy, we believe that the transaction may also ultimately provide an opportunity for us to own an interest in the real estate associated with certain of the managed communities. More importantly, this transaction adds to our organization a highly-respected management team whose complementary systems and programs will ultimately bring even better outcomes for both companies' residents. In a field where highly-experienced human capital is a critical element, we are pleased to welcome Thilo Best and his team to the Brookdale family. We also look forward to establishing relationships with Chartwell and AEW," said Bill Sheriff, Brookdale's Chief Executive Officer.

"We are pleased to partner with HCP and appreciate the confidence that they have shown in our abilities by selecting us to be a part of their first RIDEA venture. We believe there is significant upside potential in these 21 assets, which will further benefit from the implementation of our Program Max capabilities. The venture combines our strengths with the proper capital structure to enable Brookdale and HCP to jointly maximize the portfolio's potential. The structure of the HCP joint venture includes elements that align our interests very closely. We look forward to building on the success of these communities and to continuing to provide them with high-quality care and services," Mr. Sheriff continued.

"We are pleased to join Brookdale Senior Living. It is exciting to contemplate what the combination of our two organizations can achieve as we work together to provide the highest quality products and services to the senior market. We look forward to becoming a part of the Brookdale team to further strengthen the Company's industry leading position," said Thilo Best, Horizon Bay's Chairman and Chief Executive Officer. Mr. Best will be joining Brookdale as Executive Vice President and Chief Investment Officer and will serve as a member of its senior management Executive Committee.

"These transactions will provide very attractive returns on invested equity, along with significant opportunities for future co-investment in the managed assets. In total, we expect to invest approximately $47 million in the first year of operation, including acquisition consideration, capital contributions to the HCP joint venture, integration costs, transaction expenses and capital expenditures related to the rollout of our ancillary services programs. Brookdale expects return on invested capital to average approximately 35% to 40% per year over the first three years. These transactions will be slightly accretive to our 2011 Cash From Facility Operations, excluding integration and transactions costs, and are expected to add approximately $0.09 to $0.11 per share to 2012 CFFO and approximately $0.15 to $0.17 per share to 2013 CFFO," commented Mark Ohlendorf, Co-President and Chief Financial Officer of Brookdale.

Brookdale Senior Living Inc. is a leading owner and operator of senior living communities throughout the United States. The Company is committed to providing an exceptional living experience through properties that are designed, purpose-built and operated to provide the highest-quality service, care and living accommodations for residents. Currently the Company owns and operates independent living, assisted living, and dementia-care communities and continuing care retirement centers, with 558 communities in 33 states and the ability to serve over 51,000 residents. After giving effect to the transactions, the Company will operate approximately 648 communities in 36 states with the ability to serve over 67,000 residents.
Source: Brookdale Senior Living

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