60 Seconds with Steve

Brookdale and HCR ManorCare May Deal

Brookdale Senior Living is rumored to be in exclusive talks with a Chinese investor, and Carlyle Group may finally get out of its HCR ManorCare position.

A new rumor was out yesterday that China-based Zhonghong Zhuoye Group was in exclusive negotiations with Brookdale Senior Living after making an offer to buy the company for $3.0 billion, apparently higher than other offers. The problem is that the current market cap is just $2.8 billion, so not much of a premium being offered. Apparently, Brookdale wants to be convinced that the U.S. Committee on Foreign Investment in the U.S. would approve the deal as non-threatening to national security. Really? State secrets on maintaining census and staff retention? Is this Fake News? After an initial jump in price, shares fell on heavy volume.   

In the other story, since HCR ManorCare didn’t meet its rent obligations for June 1, not even close, landlord Quality Care Properties is looking to line up financing to take over the operating company that represents 94% of its revenues, well, 94% if the full rent is paid. I am sure The Carlyle Group would like to throw in the towel at this point, but I would bet QCP will demand the DOJ investigation is settled, and paid, before moving ahead with any deal. And then there is that deferred compensation payment to management. Let Carlyle cut the check.



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