Transactions & Financings: Brookdale’s $1B Mixed Shelf Filing; Fitch Revises Outlooks on 3 CCRCs

Fitch Ratings revises outlooks on 3 CCRCs

Fitch ratings announced ratings outlooks updates on the following continuing care retirement communities:

  • The ratings agency placed the series 2016 senior living revenue bonds issued by the Industrial Development Authority of the City of Glendale, Arizona on behalf of Royal Oaks Life Care Community, operating as Royal Oaks, on rating watch negative. Among the key drivers behind the announcement: Royal Oaks is expected to move forward on Phase I of a 20-year campus master plan which will add 156 new independent living units and 60 new assisted living units. The costs and risks associated with the expansion would pressure the rating. Royal Oaks pre-sold 40% of its new ILUs (62 units) as of July 10.
  • Fitch affirmed the “BBB+” rating on approximately $104 million State of Connecticut Health & Educational Facilities Authority revenue and revenue refunding bonds, series 2016F that were issued on behalf of Masonicare Obligated Group (Masonicare). Fitch has also affirmed the ‘BBB+’ Issuer Default Rating (IDR) on Masonicare. Key drivers behind the announcement include Fitch’s expectation for Masonicare to achieve material operational improvement in Fiscal Year 2021 and beyond. Masonicare made strategic changes to its business model — including the sale or outsourcing of several unprofitable business lines and other cost-control measures in staffing — that are expected to materially improve operating profitability over the next several years. The rating outlook was revised to stable from negative.
  • Fitch Affirmed the “A” rating on $91.4 million in Series 2016A revenue bonds from the Maryland Health and Higher Educational Facilities Authority, issued on behalf of Charlestown Community Inc. (operating as Charlestown Retirement Community). The rating outlook was revised from stable to negative. This reflects reflects heightened execution risk given the community’s thinner financial profile at the current rating level and the potential added disruption from the coronavirus as it nears the final phase of its multi-year campus repositioning project. Most of Charlestown’s metrics are currently below “A” category medians, but are expected to improve in 2021 and 2022 as capital spending eases and operating income from the projects improves cash flow. The effect of coronavirus, including a delay in renovating turned over independent living units, has added to the execution risk of improving the performance over the next two years.

Brookdale files for $1B mixed shelf offering

Brookdale Senior Living (NYSE: BKD) filed a prospectus with the Securities and Exchange Commission (SEC) for a $1 billion mixed shelf offering, as well as the sale of up to 16.3 million shares of stock from a current investor.

The mixed shelf will include a blend of common stock, preferred stock and debt securities, on terms to be determined at the time of offering. A shelf offering is an SEC provision which allows the issuer to register a new issue of securities without having to sell the entire offering at once.

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Blueprint advises on sale of California senior housing community

Blueprint Healthcare Real Estate Advisors Executive Managing Director and co-founder Jacob Gehl, along with Managing Director Humair Sabir, were the sole brokers in the sale of a 72-unit senior housing community in Sacramento, California, offering independent living, assisted living and memory care services. The buyer retained the current operator, Northstar Senior Living.

Preservation of Affordable Housing acquires Chicago senior apartment building

Preservation of Affordable Senior Housing (POAH) acquired Archer Avenue Senior Apartments, a 55-unit affordable senior housing community on Chicago’s South Side. The acquisition was part of a larger five-property, 247-unit portfolio deal. The seller was Chicago Community Development Corporation (CCDC).

Twelve Oaks Senior Living, Episcopal Communities affiliate

Twelve Oaks Foundation, the parent organization of Twelve Oaks Senior Living, and Episcopal Communities & Services (ECS) announced an affiliation, which will further fulfill ECS’s mission regarding moderate income seniors.

Under the terms of the agreement, Twelve Oaks will establish a benevolence fund for the purpose of purpose of assisting Twelve Oaks residents whose financial circumstances change and to establish programs to serve the senior community in Twelve Oaks’ general vicinity of Montrose, California.

Twelve Oaks current management, provided by Northstar Senior Living, will work with ECS management to provide administrative support for the foreseeable future. ECS is committed to retaining team members currently working at Twelve Oaks. These team members will enjoy the benefits and opportunities ECS offers. Corporate services, including executive leadership, marketing, risk management, human resources, information technology, accounting pastoral care, fund development and business development will be performed by ECS management personnel.

Pennsylvania 55-plus community sells out

Larken Associates sold out Horizons at the Village at Maidencreek, a 55-plus senior living community in Blandon, Pennsylvania. The final Brandywine model featuring two bedrooms and two baths sold for $172,990.

Horizons at the Village at Maidencreek consists of 110 townhomes in one-, two- and three-bedroom plans.

Grace Management assumes operations of Florida community

Grace Management assumed management of Sumter Senior Living, a 298-unit senior housing community owned by Kayne Anderson Real Estate and located within The Villages master-planned development in central Florida.

Sumter Senior Living offers independent living, assisted living and memory care. Residents will continue to receive a full range of services, as well as maintain access to The Villages amenities.

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