Could Brookdale Be Target for Chinese Firm with $2 Billion to Invest?

A Chinese firm is looking to invest $2 billion in U.S. senior housing in 2017—and it’s not far fetched to think Brookdale Senior Living (NYSE: BKD) could be one of its targets, according to one expert.

Beijing, China-based Cindat Capital Management Ltd. is considering two investments of approximately $1 billion each into U.S. senior housing this year, Bloomberg reported Wednesday.

The Chinese investment firm already has a toehold in the U.S. senior housing market; in November 2016, Cindat partnered with China-based Union Life Insurance Co. Ltd. to purchase a 75% stake in a portfolio of 11 senior housing properties owned by Brookdale Senior Living, along with 28 long-term/post-acute assets, for $930 million.

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It’s becoming more common for Chinese companies to inquire into U.S. senior housing, according to Matthew Whitlock, vice chairman in the national senior housing group at CBRE, a commercial real estate services and investment firm.

“CBRE has noticed a dramatic increase in the number of inquiries regarding available senior housing properties by Chinese-related entities,” Whitlock told Senior Housing News.

In general, Chinese buyers are interested in newer, higher-end senior housing communities located in high-barrier-to-entry markets like Los Angeles, Boston and New York, he explained. Chinese firms also frequently want to make large-scale investments, meaning they’re likelier to purchase assets from bigger senior housing players.

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It’s not just the prospect of owning real estate that draws Chinese investors to U.S. senior housing, however.

“Many foreign institutional investors, especially those in China, are interested in acquiring both the real estate and the operations for the real estate,” Whitlock said.

The companies seek to use the senior housing operating platform “as a means to expatriate information technology (IT) and operating systems regarding seniors housing to China, and also as a platform for teaching Chinese workers how to operate senior housing communities,” he added.

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So, does this mean Brookdalewhich is rumored to be looking for a buyer—could be a potential target for Chinese investors, including Cindat Capital Management? It does, Whitlock said.

“There are several things about Brookdale that make the platform attractive to the Chinese,” he said. With about 1,100 properties, the senior housing giant is just that—giant—and it has luxury communities in high-barrier-to-entry markets, including in New York City and Chicago. Brookdale, additionally, is “amongst the most recognizable names” in the industry.

“It certainly is possible,” Whitlock concluded of Brookdale being purchased by Cindat Capital Management. “But it’s possible that there are several other Chinese entities interested in buying Brookdale and have the capacity to do so.”

Cindat Capital Management had not responded to Senior Housing News’ requests for comment as of press time.

Written by Mary Kate Nelson

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