IRVINE, CA - Brookdale Senior Living Inc. and HCP, Inc. announced that they have entered into a definitive agreement to acquire from Chartwell Retirement Residences a portfolio of 35 private pay senior housing communities representing 5,025 units for $849 million. The Portfolio will be acquired using a RIDEA joint venture structure with HCP and Brookdale owning 90% and 10%, respectively. Brookdale has operated these communities since 2011 after its acquisition of Horizon Bay, and will continue to manage the communities post-closing under a long-term management agreement.
Located in eight states with concentrations in Florida, Texas and Colorado, the Portfolio is comprised of: 33 senior housing properties representing 4,792 units with a diversified care mix of 46% assisted living, 45% independent living, 5% memory care and 4% skilled nursing; and leasehold interests in two communities, which properties are wholly-owned by HCP, representing 233 units including purchase option rights exercisable in 2017. The majority of the units are located within the nation’s top 31 Metropolitan Statistical Areas (MSAs). Currently 89% occupied with an average monthly rate of $3,425, the Portfolio is expected to be acquired unencumbered by third party debt, and is projected to generate a first year cash yield of approximately 6.6%.
“We are pleased to further expand our investment portfolio with Brookdale, the nation’s largest senior living operator and a terrific long-term partner of HCP,” said Lauralee Martin, President and CEO of HCP. “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. 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.”
Andy Smith, Brookdale’s Chief Executive Officer, said, “We are excited to continue expanding our relationship with HCP through this portfolio acquisition, which combines the capital strength of HCP with Brookdale’s operating platform. 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.”
The closing of this acquisition, expected in the third quarter of 2015, is subject to regulatory approvals and other customary closing conditions. There can be no assurance that the acquisition will close or, if it does, when the closing will occur.