A Chinese international conglomerate and investment company has joined a small group of shareholders that own a 5% or greater stake in Brookdale Senior Living (NYSE: BKD).
Shanghai, China-based Fosun International Limited recently reported a 5.11% stake in the Brentwood, Tennessee-based senior housing giant, joining six other companies—Glenview Capital Management, The Vanguard Group, BlackRock Inc., Senator Investment Group LP, Invesco Ltd. and Brookfield Asset Management Inc.—that each owned at least 5% of Brookdale as of August 1, 2017.
There remains an “intense appetite” among Chinese capital providers for U.S. senior housing assets, John Stasinos, managing director-healthcare at private equity firm Cindat Capital Management, recently said. Cindat was founded to guide and safeguard Chinese capital in foreign investments, as well as to advise and help manage foreign capital with respect to their investments in China.
The Chinese interest is driven in part by the fact that Chinese companies are attempting to determine how to best go about building senior housing in their own country as the population there rapidly ages. By 2050, there’s expected to be about 330 million people over 65 in China, according to the United Nations.
As such, the U.S. senior housing market may see an influx of Chinese capital in the years to come. Already, Chinese firms have been prominent in recent senior living transactions, including in 2016, when New York-based NorthStar Realty Finance Corp. (NYSE: NRF) entered into a definitive agreement to sell a joint venture interest in its health care real estate portfolio to Chinese insurance company Taikang Insurance Group. Also in 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, along with 28 long-term/post-acute assets, for $930 million.
“Long-term, there will be no shortage of Chinese capital coming into the marketplace,” Stasinos said at the National Investment Center for Seniors Housing & Care (NIC) Spring Investment Forum in Dallas in early March.
It’s believed that Brookdale has been targeted by Chinese corporations in the past—and that Chinese companies were reportedly interested in owning the behemoth provider outright, as Brookdale was actively exploring strategic alternatives in the face of cratering market value and operational challenges.
Analysts speculated as recently as late last year that Chinese firms were interested in buying Brookdale; in fact, an acquisition reportedly stalled in August when Beijing-based real estate and leisure firm Zhonghong Zhuoye Group Co Ltd had trouble securing financing for the deal.
Fosun bought into the company following its recent announcement that it would no longer be actively courting a sale. Instead, it installed a new CEO—Cindy Baier—and committed to improving its operational performance.
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Written by Mary Kate Nelson