Brookdale Senior Living announced the closing of two portfolio acquisitions, completing the three-portfolio, 41-property acquisition plan initially announced in September 2024. Through ownership of these communities, including the 11-property portfolio acquisition completed in December 2024, Brookdale is coming closer to its year-end goal of owning more than 75% of its consolidated unit count.
In one deal, Brookdale acquired five communities (686 units) previously leased from Welltower for $175 million, or $255,100 per unit. Averaging around 25 years in age, the communities are primarily located in affluent or very affluent markets and together comprise 270 independent living units, 170 assisted living units, 152 memory care units, and 94 skilled nursing units with weighted average portfolio occupancy greater than 90%. The purchase price, including the benefit of a favorable purchase option discount originally signed 16 years ago, reflected a significant discount to Brookdale’s estimate of replacement cost. Welltower still achieved over a 10% unlevered IRR and 2.7x multiple on invested capital. The properties were generating annualized current cash rent payments of $13 million.
Next, Brookdale acquired 25 communities (875 units) previously leased from Diversified Healthcare Trust for $135 million, or $154,300 per unit. This portfolio is geographically diverse, includes certain communities with performance well-above the BKD average, and ranges in community size from 19 units to 92 units. The portfolio includes 556 assisted living units and 319 memory care units with weighted average portfolio occupancy of approximately 80%. Brookdale has operated them since 2003, and the communities generated annualized current cash rent payments of $10 million. The sale price reflected an in-place cap rate on the lease’s annualized income of 7.3%.
Brookdale funded the combined $310 million cost of the two acquisitions with $69 million of cash on hand and $241 million of mortgage debt financing sourced by CBRE National Senior Housing. The company also obtained $161 million of mortgage debt from Ally Bank, an existing Brookdale lender, including a combination of new loan proceeds and the refinancing of an existing loan. The loan has an initial three-year term and two one-year extension options, exercisable subject to certain performance criteria, with a final maturity date, including extension options, of February 2030. The debt is secured by first priority mortgages on 36 communities. At the time of closing, Brookdale repaid $50 million of Ally Bank debt on 11 communities, which held a final maturity date of February 2029.
Brookdale obtained an aggregate of $130 million in loans from CBRE National Senior Housing through its Freddie Mac Optigo® loan origination program. The non-recourse mortgage financing has a ten-year term and is secured by first priority mortgages on five communities. The debt bears interest at a fixed rate of 6.47% and is interest only for the first five years.
