Brookdale Senior Living Grabs Nine Properties for $121.3M

By Barbra Murray, Contributing Writer

Nashville, Fla.—Brookdale Senior Living continues to expand its holdings by adding over a thousand units in one fell swoop. Five months after completing the acquisition of Horizon Bay Realty and its 91 properties, the company has added 1,298 units to its collection with the purchase of nine assets in a transaction $121.3 million.

Brookdale, both an owner and operator of senior living communities, is no stranger to the assets it just snapped up, as the company had been operating the properties under long-term lease agreements. Financing for the purchase took the form of a $77.9 million first mortgage facility, 75 percent of which bears interest at a fixed rate, and a $15 million, fixed-rate mortgage loan.

With the closing of the deal, Brookdale has announced plans to renovate and reposition the properties, and those upgrades may very well go beyond the cosmetic. “By owning these assets outright, we will capture the assets’ entire value creation potential and preserve important optionality with respect to these assets, including the ability to expand some of these communities if we decide to do so,” Bill Sheriff, CEO of Brookdale, noted in a prepared statement.

Facelifts and the like will help shave points off the portfolio’s vacancy rate, but bigger assistance is on the way. As the years go by, the country’s aging senior set will certainly provide a boost in occupancy levels at independent and assisted living communities and skilled nursing facilities across the country. “A growing share of baby boomers entering retirement communities will sustain demand for seniors housing facilities over the long term,” according to a report by Marcus & Millichap Real Estate Investment Services. “Nationally, the 65-year-old-plus cohort is projected to expand by almost 18 million residents over the next 10 years and account for 17 percent of the U.S. population, up from an estimated 13 percent in 2011.

It appears that 2012 may prove to be a high-volume sales transaction year for seniors housing portfolios. One deal on track to close this quarter is CNL Healthcare Trust’s $84 million purchase of five properties from Primrose Retirement Communities LLC. “Low interest rates for proven operators and an overall lull in seniors housing construction activity will maintain healthy demand for state-of-the-art facilities,” as per the Marcus & Millichap report. “As such, many established operators are targeting portfolios with newer assets in an attempt to expand their reach in untapped markets already entering recovery.”