Brookdale CEO: We Expect Q2 Occupancy Growth ‘Better Than Last Year’

Executives with Brookdale Senior Living (NYSE: BKD) expect this year’s second-quarter occupancy growth will likely outdo last year, giving them even more confidence that the company’s ongoing recovery is on track.

Speaking at the RBC Capital Markets Global Healthcare Conference Wednesday, CEO Cindy Baier said she has “a lot of confidence” that the company will get back to its pre-pandemic occupancy levels in the foreseeable future, although exactly when is unclear.

Brentwood, Tennessee-based Brookdale carried momentum into the first quarter of this year, with the best first-quarter sequential occupancy change in a decade. As of the end of April, Brookdale’s occupancy was at 75.3%.


“We’re building off a very strong base,” Baier said, noting that the company added 420 basis points of occupancy growth last year between March and the end of December. “We’re well on the road to recovery.”

In July 2021, Brookdale sold 80% of its home health, hospice and outpatient therapy service line to HCA Healthcare (NYSE: HCA) for a little over $300 million. As a result, Brookdale improved its bottom line by cutting down on general and administrative expenses.

While Baier said Brookdale “hasn’t seen [the service line] grow yet,” she is optimistic about the future in that regard.


“As we recover occupancy, as we grow revenue, we’ll get much more leverage out of our platform,” Baier said. “Because we have a G&A platform that will support revenue growth without increasing costs by a material amount.”

Last week, Welltower CEO Shankh Mitra said the REIT was readying a “coiled spring” recovery and growth strategy. And Baier sees Brookdale on the verge of uncoiling its own spring, given the fact that the company’s general and administrative expenses are trending down while revenue per available room (RevPAR) and occupancy are trending up.

“I do think a coiled spring is a good analogy, and I’ve heard one of the REIT CEOs use that exact analogy,” Baier said.

While the industry faces historic labor pressures along with broader economic inflation, Baier sees opportunity in the fact that construction costs are not going down for most other operators.

“Inflation, as it relates to new construction, is actually a benefit,” Baier said. “The fact that our existing communities are at a substantial discount to that new construction is something that is a big benefit for us.”

Looking ahead, Brookdale’s “first priority is to own our communities because that gives us ultimate flexibility,” Baier said.

Over the last five years, Brookdale has shifted its strategy and now owns more of the 679 communities it operates compared with leases. But, the company is in no hurry, instead opting for opportunistic ownership opportunities.

“If the opportunity presents itself, of course, we’d love to own more of the assets that we lease, but if not, we’ll look at the financial return from the lease and make appropriate decisions,” Baier said.

Brookdale’s CapEx spend is typically between $2,000 to $2,500 per unit, according to Baier. But, as cost pressures for materials and construction labor rise, that number may need further tweaking. 

“We’ll evaluate that as we go to the future,” Baier said. “But we think that’s an appropriate rate and we’re excited that we’re deploying capital to … support that high move-in growth that we’ve had, and also to refresh our communities.”

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