Welltower, Brandywine Move 27-Property Portfolio to RIDEA Lease Structure

by Jeff Shaw

TOLEDO, Ohio, and MOUNT LAUREL, N.J. — Toledo-based healthcare REIT giant Welltower (NYSE: WELL) and Mount Laurel-based operator Brandywine Living have announced the conversion of the companies’ master lease from a triple-net structure to a RIDEA structure.

The portfolio includes 27 Welltower-owned, Brandywine-operated communities in Connecticut, Delaware, New Jersey, New York, Pennsylvania and Virginia. Although the specific properties were not named, Brandywine only lists 29 communities on its website.

Under the former triple-net lease, Brandywine essentially paid a pre-set rent payment to Welltower. RIDEA leases — named for the REIT Investment Diversification and Empowerment Act — allows rent to be based on net operating income, meaning the owner and operator share in both profits and losses. Welltower described the new agreement as “an incentive-based management contract.”

“Brandywine operates a high-quality portfolio of newly built communities with an average age of 13 years, primarily in Northeast MSAs, that represent some of the highest demographic scores in our portfolio,” according to Welltower’s second-quarter earnings release. “We believe this structure aligns our interest, as well as Brandywine’s, to benefit from strong growth from this great real estate in the long term.”

“Brandywine and Welltower have worked hard to develop a structure that works for both of us for the future,” says Brenda Bacon, Brandywine’s president and CEO. “We are aligned on the growth and success of Brandywine. There is substantial upside for the shareholders of both companies, from day one.”

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