Brookdale Senior Living (NYSE: BKD) is taking ownership of more than two dozen communities in a sizable new deal with Welltower (NYSE: WELL).
On Tuesday, the Brentwood, Tennesee-based senior living operator announced it had agreed to acquire 30 communities it leases and operates from real estate investment trust (REIT) Welltower for $290 million. The 30 communities total 1,152 units spread across 13 states.
With the move, Brookdale leaders expect to reduce cash rent payments for 2027 by about $17.8 million. The communities are covered under a lease between the operator and the REIT that is otherwise due to expire in 2032. Brookdale expects to close the deal during the fourth quarter of this year.
The operator manages 529 communities across 41 states.
Brookdale also inked separate lease for a 39-community segment totaling 1,842 units, extending it by four years to June 2036 with annual cash rent payments of aboout $36.6 million in 2027. Brookdale is under the agreement free to purchase the communities at fair-market value at any time as opposed to a date tied to the lease’s maturity.
The operator’s leaders announced the agreement along with news that the company had closed on its previously publicized bid to acquire 17 communities for $157 million. Together, the two acquisitions “represent another significant step forward in our strategy to own more of the real estate we currently operate,” said CEO Nick Stengle.
“Ownership allows Brookdale to capture the full benefit of future operating growth, while reducing our long-term lease obligations. These transactions are expected to be accretive to Adjusted EBITDA and cash flow,” Stengle said in a press release. “The Welltower lease amendment also will provide valuable flexibility by giving Brookdale the right to exercise a fair market value purchase option at any time during the term of the lease, subject to a pre-negotiated floor.”
As Stengle noted, Brookdale is engaged in a strategy that is tilted toward owning communities. The operator owns more than three-fourths of the company’s community count, according to its latest financial disclosure, and Stengle said he and the company’s other leaders are on the lookout for more potential growth targets to bolster its regional density in the near future.
“We will go seek potential communities that may or may not be on the market, and we will attempt to purchase them if it makes sense at the right price and the right return,” Stengle told Senior Housing News in June during an SHN+ TALKS appearance.
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