Brookdale, HCP Close $1.2 Billion CCRC Joint Venture

Brookdale Senior Living (NYSE: BKD) and HCP, Inc. (NYSE: HCP) announced Tuesday the companies have closed on their previously announced series of deals, which included the $1.2 billion formation of a joint venture to own and operate continuing care retirement communities (CCRCs).

The deal’s closing arrives nearly five months after its April announcement, in which the companies first stated their strategic joint venture would initially own a portfolio of 14 entry-fee CCRCs—the largest healthcare REIT platform to operate and acquire these asset types.

As previously announced, HCP invested $324 million of cash into the CCRC joint venture, which was used to acquire four communities that represent four of the 14 campuses that constitute the initial portfolio.

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“Working together, we expect the entry fee CCRC joint venture to become a pre-eminent owner and operator of first-class entry-fee communities,” said Brookdale CEO Andy Smith in a written statement.

The transaction also included amendments to the triple-net leases on 202 senior housing communities owned by HCP that were formerly operated by Emeritus prior to the company’s merger agreement with Brookdale in February.

The modifications of the Emeritus leases resulted in the creation of a 49-property RIDEA portfolio and a 153-property triple-net lease portfolio.

“In addition, the modifications to the Emeritus leases, including the creation of a 49-community RIDEA joint venture, are expected to improve the benefits of our merger by increasing accretion and reducing lease leverage,” Smith stated.

The new joint ventures creates an opportunity for Brookdale to consolidate the CCRC space, especially with the backing of a capital partner like HCP, according to analysts’ comments on the transaction back in April.

“Brookdale has been a terrific long-term partner to HCP, and we are delighted to have strengthened and expanded our relationship with this best-in-class operator,” stated HCP President and CEO Lauralee Martin. “This transaction results in improved lease coverage, the elimination of purchase options and two new joint venture platforms with significant growth potential.”

Written by Jason Oliva

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