BRENTWOOD, Tenn. — Zhonghong Zhuoye Group Co. Ltd., a Chinese real estate investor, has reportedly offered approximately $3 billion for the acquisition of Brookdale Senior Living (NYSE: BKD), according to a report by news agency Reuters, which cited people familiar with the matter.
Negotiations are private and ongoing, which is why the sources requested anonymity, according to Reuters. The sources also noted that Brookdale has previously received other offers for a buyout, but all “valued [Brookdale] substantially below” the Zhonghong offer.
Just last month Zhonghong completed another major U.S. deal, buying a 21 percent stake in theme park chain SeaWorld from Blackstone for approximately $450 million. If the Brookdale deal were completed as reported, it would be by far the largest Chinese investment in U.S. seniors housing to date.
Chinese investors started making significant investments in North American seniors housing last year. For example, in November, a joint venture between Chinese firms Cindat Capital Management and Union Life Insurance paid $930 million for a 75 percent stake in a 39-property portfolio owned by Welltower.
The proposed Brookdale deal would be “a key test of the U.S. government's openness to Chinese investments in key healthcare services industries,” requiring approval by the Committee on Foreign Investment in the United States (CFIUS), which scrutinizes corporate acquisitions for potential national security risks, according to Reuters.
Chinese investment firms have made major waves in other U.S. real estate sectors, as well. Most notably, China’s Anbang Insurance Group severely complicated Marriott International’s 2016 attempt to acquire Starwood Hotels & Resorts Worldwide, starting a bidding war that increased the final offer by nearly $2 billion before Anbang backed out.
Headquartered in Brentwood, Brookdale is by far the largest owner and operator of seniors housing in the United States. Its operational portfolio includes 1,052 properties and 103,00 units, according to the company’s first-quarter report, which is nearly triple the size of the next largest competitor.
However, the company has struggled since its $2.8 billion acquisition of fellow seniors housing giant Emeritus in 2014. After initially experiencing a lift in the months following the merger, Brookdale’s stock price fell from $38.16 on March 2, 2015, to $11.80 on Feb. 8, 2016. Rumors of a sale of the company have swirled for months.
Following the Reuters report on Tuesday, Brookdale’s stock price saw a brief lift of 6 percent to as high as $15.18 per share, but quickly fell back down to a close of $14.07. As markets prepared to open this morning, however, Google Finance predicted that overnight trading gave the stock a 10 percent lift to approximately $15.50.
— Jeff Shaw