Brookdale Agrees to $290M Purchase of Welltower Communities

Brookdale Senior Living Inc. (NYSE: BKD) has announced a number of transactions tied to a corporate strategy to further increase its real estate ownership and reduce its long-term lease obligations. The deals include:

• Brookdale completed the previously announced acquisition of 17 communities (735 units) for a purchase price of approximately $157 million, eliminating approximately $11 million of annual cash rent in 2027.

• Brookdale entered into a definitive agreement with Welltower Inc. to acquire 30 currently leased communities (1,152 units) for a purchase price of $290 million. The Company expects this transaction to reduce 2027 annual cash rent payments by approximately $17.8 million, and the lease would have otherwise matured in 2032.

• Contingent upon closing the 30-community acquisition, a separate 39-community (1,842 units) cash flow positive lease with Welltower would be extended by four years to June 2036 with 2027 annual cash rent payments of approximately $36.6 million. In connection with the amendment, the lease's existing fair market value purchase option would become exercisable at any time at Brookdale's election, rather than only in connection with the lease's maturity, subject to a floor of a 6.5 percent yield on in-place rent.

"The completed acquisition of 17 communities and the agreement to acquire 30 communities from Welltower together represent another significant step forward in our strategy to own more of the real estate we currently operate. 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," said Nick Stengle, Brookdale CEO.

17-Community Portfolio Completion

Also, on Sept. 30, Brookdale completed the previously announced acquisition of 17 formerly leased senior living communities for a purchase price of approximately $157 million. The portfolio is comprised of 735 assisted living and memory care units in Colorado, Kansas, Ohio, and Texas. The transaction increases Brookdale's owned share of consolidated units to approximately 77 percent and eliminates approximately $11 million of annual cash rent in 2027.

The acquisition was funded with cash on hand and $108 million of non-recourse mortgage financing. The debt bears interest at a variable rate based on SOFR plus a margin of 215 basis points and has an initial term of five years with extension options for two additional years, the company said.

Welltower Portfolio Purchase Breakdown

Brookdale said it recently entered into a definitive agreement with Welltower to acquire the real estate of 30 senior living communities Brookdale currently leases and operates for a purchase price of $290 million. The leased portfolio of 1,152 assisted living and memory care units in 13 states with approximately $17.8 million of annual cash rent for 2027, including approximately $11 million of operating rent and approximately $7 million of financing rent, would have otherwise matured in 2032.

The transaction is expected to close during the fourth quarter of 2026, subject to customary closing conditions, and to be funded with cash on hand and non-recourse mortgage debt. Upon closing, the acquisition will further reduce Brookdale's annual cash rent, increase the company's consolidated share of owned units to nearly 80 percent, and is expected to increase Adjusted EBITDA and Adjusted Free Cash Flow.

One More Transaction

In addition, Brookdale and Welltower also agreed to amend a cashflow positive lease for 39 communities. The amendment, contingent upon closing the Welltower portfolio acquisition, would extend the lease through June 2036 from its current maturity in June 2032 and would be Brookdale's only remaining lease with Welltower. In connection with the extended term, Brookdale's existing fair market value purchase option would become exercisable, subject to a pre-negotiated floor, at any time during the lease. Currently, the purchase option is only available immediately prior to the 2032 existing maturity. All other terms of the lease will remain unchanged.

Comments or questions? Contact Patrick Connole at pconnole@parkplacelive.com.