HCP and Brookdale Complete $847M Acquisition of Private Pay Portfolio

by Jeff Shaw

BRENTWOOD, TENN. AND IRVINE, CALIF. — Brookdale Senior Living (NYSE: BKD) and HCP Inc. (NYSE: HCP) have arranged the closing of their previously announced portfolio acquisition of 35 private pay seniors housing communities, representing 5,025 units, for $847 million from Chartwell Retirement Residences.

Brookdale has operated the portfolio since 2011 after its acquisition of Horizon Bay and will continue to manage the communities under a RIDEA joint venture structure with HCP and Brookdale owning 90 percent and 10 percent, respectively. The portfolio is currently 89 percent occupied with an average monthly rate of $3,425.

It was acquired unencumbered by third party debt and is projected to generate a first-year cash yield of approximately 6.6 percent.

Located in eight states including Florida, Texas and Colorado, the portfolio consists of 5,025 units and is comprised of 33 seniors housing properties representing 4,792 units, with a mix of 46 percent assisted living, 45 percent independent living, 5 percent memory care and 4 percent skilled nursing.

The portfolio also includes leasehold interests in two communities, which are wholly owned by HCP, representing 233 units with purchase-option rights exercisable in 2017.

“This portfolio acquisition provides attractive risk-adjusted returns for our shareholders, and also creates value for our operating partner through a real estate-driven transaction,” said Lauralee Martin, president and CEO of HCP, when the deal was first announced.

“Brookdale’s familiarity with this portfolio will be a tremendous asset as we avoid any transition issues and immediately implement capital investment plans to generate future growth above traditional triple-net rent escalators,” she added.

Brentwood, Tenn.-based Brookdale Senior Living Inc. is an operator of senior living communities throughout the United States. The company operates independent living, assisted living and memory care communities along with continuing care retirement centers, with 1,150 communities in 47 states and the ability to serve 111,000 residents.

HCP Inc. is a real estate investment trust (REIT) that invests primarily in real estate serving the health care industry in the United States. The company’s portfolio of assets includes seniors housing, post-acute/skilled nursing, life science, medical office and hospital.

HCP’s stock price closed at $36.47 per share on Tuesday, June 30, down from $41.38 one year ago. Brookdale’s stock price closed at $36.47 on June 30, up from $33.34 one year ago.

— Haisten Willis

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