LTC Plans Transitions, Possible Sales for 35-Community Portfolio After Brookdale Declines Lease Renewal

Brookdale Senior Living (NYSE: BKD) has elected not to renew a lease on its portfolio of 35 properties with LTC Properties (NYSE: LTC), appearing to end collaboration between the two companies for now.

The Brentwood, Tennessee-based operator chose not to renew its lease with LTC, the Westlake Village, California real estate investment trust (REIT) announced Monday. Brookdale will as outlined under its lease pay rent through the end of December.

Under Brookdale’s master lease with LTC, the company had three renewal options for two, five and 10 years, according to a recent supplemental investor document from the REIT. The first option was due to expire Feb. 28.


Now that Brookdale has not elected to renew the lease, LTC Chairman and CEO Wendy Simpson said the REIT plans to transition and possibly sell some of the properties. to diversify the portfolio.

Simpson noted that the relationship with Brookdale has been “one of mutual respect and support.”

LTC is prepared with its asset management program and will have contingency plans in place should issues arise, Simpson said in a news release.


“We believe LTC is in an excellent position to reduce operator concentration through diversification, and look forward to working with strong regional operators to drive long-term growth and success for us and for them,” Simpson said.

LTC invested over $170 million in 2022, its highest level of investment since 2015, with the company having funded $7 million of capital improvements in Brookdale-managed properties over the last two years, Simpson noted.

The company recently transitioned a dozen senior living communities to operating partner ALG Senior, with LTC also transitioning 11 properties to Texas-based HMG Healthcare.

Occupancy for the REIT’s senior housing portfolio currently registers at 79%. Chief Financial Officer Pam Kessler said during the company’s fourth-quarter earnings call LTC would like to be able to “set more permanent rent on the transition portfolio” moving forward.

Kessler also noted that no annual guidance would be issued by LTC until its transitioned portfolio is more stabilized.

“So I don’t see us giving annual guidance until those uncertainties are resolved, which hopefully will be later in the year. But at this point, we don’t have visibility into that,” Kessler said, with LTC still planning its next move for the transitioned portfolio to either rent or sell the properties.

LTC has 215 properties in 29 states with 31 operating partners; half of which operate senior living communities, with the other half skilled nursing.

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