Blackstone and Brookdale Senior Living are in the news again. Working with KeyBank Real Estate Capital’s healthcare business, the joint venture received about $703 million in financing to fund Blackstone’s acquisition of 64 Brookdale-operated communities from HCP, Inc. A Fannie Mae credit facility makes up most the financing, which was arranged by Charlie Shoop of KeyBank and provides long-term, non-recourse, flexible financing. Meanwhile, KeyBank provided the balance from its balance sheet, in a transaction led by Peter Trazzera. The total financing represents about 62% of the $1.125 billion purchase price, which came out to approximately $188,500 per unit.
That was for 100% of the ownership, but Brookdale will pay Blackstone $170 million for a 15% ownership interest in the joint venture, in addition to operating the portfolio on behalf of the joint venture. Occupancy across the portfolio averaged 85%, and the EBITDAR-to-rent coverage was 0.81x for the trailing 12 months ended September 30, 2016. The transaction was certainly a win for HCP, which reduced its Brookdale concentration from 35% of its cash NOI plus interest income immediately post spin-off of Quality Care Properties to 27%. It also improves HCP’s lease coverage on its Brookdale triple-net portfolio to 1.21x on a trailing 12-month basis, from 1.02x. HCP’s estimated gain on the sale of the 64 properties of approximately $160 million was recorded at closing, which occurred on March 30.