Brookdale Stuns The Market

June 1, 2011. Early this morning, Brookdale Senior Living announced that it signed an agreement to acquire 100% of the equity interests in Horizon Bay Realty, LLC, and that upon completion of the transaction, Brookdale will be adding 90 communities with 16,165 units to its portfolio. This will increase the size of Brookdale by…

about 30% to 648 communities in 36 states with the ability to serve 67,000 residents. There will be no dispute as to who is the king of the seniors housing castle now.

The majority of the communities (45) involved in this transaction are owned by Chartwell Seniors Housing REIT, and Brookdale will renegotiate the management contracts on these, and 33 of the communities had been leased from HCP, Inc. Of these 33, 21 will go into a RIDEA-based structure with Brookdale owning a 10% interest and 12 will continue to be leased from HCP. The total cost to Brookdale, which includes the acquisition consideration, capital contributions to the HCP joint venture and integration and transition costs is about $47 miillion, which is low because the communities were all leased or managed. We are awaiting additional details and will have a full analysis in the June issue of The SeniorCare Investor. But an early analysis tells us this is a win-win for Brookdale with a lot of upside, and may be a win for both HCP and Chartwell.