Brookdale Senior Living announced it is acquiring 17 senior living communities it currently operates under lease agreements for approximately $157 million while refinancing $244 million in mortgage debt due in 2027.
The 17-community portfolio contains 735 units spread across four states. By purchasing rather than leasing these properties, Brookdale will increase its owned real estate footprint to approximately 77% of its consolidated units following the closing.
At roughly $214,000 per unit, Brookdale characterized the acquisition price as "below replacement cost." The company said ownership will provide "greater long-term portfolio flexibility" and allow it to capture future operating gains.
Brookdale secured $249 million in financing at a fixed rate of 6.16% maturing in 2031 through Fannie Mae. The proceeds will be used to eliminate the $244 million of debt originally scheduled to mature in 2027.
The refinancing extends Brookdale's debt maturities, which now do not begin until 2028. The company carries $179 million due in 2031 and $340 million due in 2032, totaling more than $700 million in debt obligations maturing within a six-year window.
Brookdale operates approximately 46,000 resident beds across 541 communities in 41 states. After the acquisition closes, the company will have only four long-term lease agreements remaining in its portfolio.
The company said its remaining leased portfolio is "producing positive cash flow." Brookdale projected improved adjusted EBITDA and cash flow from ownership of the properties, though specific figures were not disclosed.
The lease-to-own conversion strategy suggests that operational margins in senior living may justify the additional capital requirements of property ownership. The company expects to improve operations at the 17 communities and capture those gains rather than sharing them with landlords.
Brookdale's decision to deploy capital for real estate acquisitions signals management confidence in sustained demand and operational stability in the sector, which has shown recovery following pandemic-related occupancy and operational challenges.
