Brookdale Senior Living (NYSE: BKD) is acquiring 41 communities currently managed under triple-net leases for $610 million, the company announced Monday.

The acquisition totals 2,789 units in three different portfolios of communities. Among the companies involved in the transaction are real estate investment trusts (REITs) Welltower (NYSE: WELL) and Diversified Healthcare Trust (NYSE: DHC) .

The communities carry occupancy rates above the company’s average, and with positive lease coverage the deal “enables Brookdale to fully capitalize on the unprecedented multi-year senior living growth opportunity,” the company noted in a press release.

Brentwood, Tennessee-based Brookdale is funding the acquisition through debt, net proceeds from the sale of convertible senior notes, non-recourse mortgage financing and cash it has on hand. The company undertook acquisition ​​with financing led by Deerfield Management.

With the move, Brookdale has increased its share of owned communities by five percentage points, and the operator now owns 66% of the consolidated units it manages. According to Brookdale President and CEO Cindy Baier, the move has “a myriad of benefits” as the operator looks to increase its share of owned communities.

“These transactions allow us to replace a high and escalating cost of capital with a lower cost interest,” Baier told Senior Housing News. “Through ownership, we have flexibility to modify the portfolio based upon what is strategically the right decision for Brookdale and our shareholders. This flexibility doesn’t exist when communities are locked within a leased structure.”

Looking ahead, Brookdale will continue to seek to grow the number of communities it both owns and manages.

“Our largest opportunity remains capturing the meaningful organic growth that we expect from the communities that we operate today,” Baier said.

Agreement spread across multiple transactions

Brookdale facilitated the owned community expansion through a series of privately negotiated, off-market transactions.

Among them were two agreements involving Welltower: One to acquire 11 communities from the REIT and its joint venture partners, and another to acquire five communities from the REIT alone.

In the first transaction, Welltower and its JV partners agreed to sell 11 communities to Brookdale for $300 million. Brookdale is as part of the transaction taking out a $195 million fixed rate agency loan that is scheduled to mature in 2027.

The communities are primarily located in markets on the West Coast, including in Seattle and in the San Francisco Bay Area. The deal comprises 470 independent living units, 723 assisted living units and 36 memory care units carrying an average occupancy rate of about 80%, with room to grow to the portfolio’s 88% pre-pandemic occupancy average in the years ahead, Brookdale noted.

Brookdale also for $175 million acquired from Welltower five other communities in markets including Nashville, Tennessee; Overland Park, Kansas; and Denver. The communities comprise 270 independent living units, 170 assisted living units, 152 memory care units and 94 skilled nursing units, and carry an average occupancy rate of 90%, according to Brookdale.

From Diversified Healthcare Trust, the operator acquired 25 communities for $135 million. The communities range in size from 19 units to 92 units, and include 556 assisted living units and 319 memory care units. The portfolio’s average occupancy is about 80%.

“We appreciate Welltower, their JV partners and DHC for their partnership on these transactions as they highlight the importance of maintaining collaborative relationships with our REIT partners as we continually strive to further enhance shareholder value,” Baier said in the press release.

To help fund the transaction, Brookdale entered into privately negotiated agreements to exchange senior notes totaling an aggregate of approximately $207 million due in 2026 for newly issued series notes due in 2029. The operator also entered into a private transaction with Deerfield Management and Flat Footed, LLC, to sell $150 million of 2029 senior notes.

“We are also grateful to Deerfield and Flat Footed, who have been strong supporters of Brookdale for years, for their continued confidence in Brookdale and our long-term growth outlook,” Baier said in the press release. “With the demonstrated commitment from these and other shareholders, we proactively addressed a significant portion of our 2026 debt maturities and secured funding for value-creating acquisitions at an attractive rate.”

Brookdale additionally received $182 million in agency financing and repaid $197 million of debt scheduled to mature in about a year in 2025.

‘Myriad of benefits’

Baier noted that Brookdale sees “a myriad of benefits” in acquiring the 41 communities.

Chief among them is the fact that Brookdale is boosting its cash flow and earnings, “as we are replacing a higher and escalating capital structure with a lower-cost fixed capital structure,” she said.

The move also gives Brookdale more ability to benefit from the current “powerful growth outlook” for both the company and industry by not sharing future value creation with a landlord as is typical under a triple net lease arrangement, Baier said.

“Also, we are reducing our long-term lease obligations and providing optionality that doesn’t otherwise exist in a lease structure,” she added.

The transactions took different amounts of time to achieve – and “great transactions often take time,” Baier said.

“I’m incredibly grateful to the Brookdale team for the work that went into simultaneously executing a number of collectively accretive transactions,” she said. “Also, I’m appreciative of the various counterparties involved in the acquisitions and financings which will generate meaningful near-term and long-term value creation for Brookdale and our shareholders.”

Looking ahead, Brookdale’s biggest initiative will remain growing its HealthPlus, through which the operator helps manage resident health outcomes by coordinating their care. The company is on track to expand the program to 130 communities by the end of November.

Brookdale has focused on expanding the program since it was first unveiled in 2023. The company has previously touted how communities using HealthPlus have 78% fewer urgent care visits, 36% fewer resident hospitalizations and 63% more completed annual resident wellness visits than communities that do not.

“HealthPlus communities have more move-ins, higher associate retention, and improved resident satisfaction, which meet several of our key operational focus areas,” Baier said.

As Baier has noted in the past, the company has an ongoing mission “to get every available unit in service at the best profitable rate; to attract, engage, develop, and retain the best associates, and to earn resident and family trust and satisfaction by providing high-quality care.”

“These have provided the roadmap to our success, and I believe they will support the meaningful growth I see ahead,” she said. “Regarding the state of the industry, I couldn’t be more excited for the senior living growth opportunity that has more potential for positive momentum than at any point in the last decade.”