Earlier this year Brookdale Senior Living announced that it would acquire Emeritus Senior Living in a $2.8 billion deal that will make Brookdale the largest senior living company in the United States. The deal is expected to close in the third quarter and once it’s complete, Brookdale will own more than 112,000 units in 46 states, or approximately 10% of the market. After this deal was announced, industry insiders quickly began speculating about the next mega-deal that might take place. A number of different companies were thrown around, but having just entered into its deal with Emeritus, Brookdale wasn’t one of them. So it came as a bit of a surprise to some in the industry when Brookdale and the real estate investment trust HCP Inc. announced earlier this week that they will be entering into a joint venture together. However, once the surprise wore off and the deal was analyzed, it became clear that this is a good deal for both parties and makes sense for them to enter into. The growth and robustness of the senior housing industry is encouraging many providers to explore these and other kinds of transactions such as acquisitions and mergers. Senior living providers and others who are interested in entering into any of these transactions should continue to look to Cambridge Realty Capital and the many different financing options it offers for assistance in facilitating these deals.
The Brookdale and HCP joint venture (JV) will own and operate a $1.2 billion portfolio of continuing care retirement communities. These communities consist of roughly 7,000 units that are spread out over 14 campuses, most of which are in Florida. Of the 7,000 units that the JV will hold, 18% of them are skilled nursing units, 67% are independent living, 11% are assisted living, and 4% are memory care. With 51% ownership of the JV, Brookdale will be the majority owner and HCP will be the minority owner. As part of the deal, Brookdale and HCP also agreed to change the leases on 202 senior housing properties that are currently owned by HCP and operated by Emeritus. Furthermore, purchase options that Emeritus has with some HCP properties will also be cancelled. The JV is contingent on the successful closing of Brookdale’s purchase of Emeritus and regulatory approval. Both Brookdale and HCP are excited by this deal as evidenced by statements their management teams have put out. For example, Andy Smith, Brookdale’s CEO expressed his excitement about the deal with his statement that, “We are very excited about strengthening our relationship with HCP as we partner to create an industry leading entry fee CCRC joint venture.” Mr. Smith’s positive view of the deal was echoed by HCP’s CEO and President Lauralee Martin with her statement that, “We are pleased to partner with Brookdale and create the largest CCRC platform in the healthcare REIT sector providing attractive future growth opportunities.”
As Mr. Smith’s and Ms. Martin’s statements make clear, the senior leadership of both companies is clearly excited about the opportunities that their joint venture provides. As the senior housing industry continues to grow, similar opportunities should arise throughout the space. Providers, investors, and others who are interested in taking advantage of these opportunities by entering into a joint venture, merging with another company, or acquiring senior housing assets should continue to look to the successful financing firm Cambridge Realty Capital for assistance in facilitating these transactions.
