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HCP reduces its reliance on Brookdale Senior Living

Oct. 01, 2019 7:28 AM ETHashiCorp, Inc. (HCP) Stock, BKD StockBKD, DOCBy: Liz Kiesche, SA News Editor4 Comments
  • HCP (NYSE:HCP) and Brookdale Senior Living (NYSE:BKD) agree to unwind their continuing care retirement community (CCRC) joint venture and enter agreements regarding triple-net leased properties.
  • The transactions are expected to reduce HCP's Brookdale concentration to 8% of cash NOI on a pro forma basis from 16%.
  • HCP will buy out Brookdale's 51% stake in 12 CCRCs with 5,641 units  for $510M, giving HCP full ownership of those communities.
  • HCP and Brookdale agree to terminate management agreements on the 12 CCRCs and HCP to transition management from Brookdale to Life Care Services (LCS).
  • HCP will pay $100M termination fee to Brookdale, ~5x the annual management fee, and reset management fee with LCS, which will result in ~$7M annual savings.
  • HCP and Brookdale will jointly market for sale to third parties the remaining CCRCs in the existing joint venture.
  • Under the triple-net transactions, Brookdale will acquire 18 properties from HCP for $405M; HCP and Brookdale will restructure the 24 remaining Brookdale triple-net leased properties into a single master lease with 2.4% annual escalators and a maturity date on Dec. 31, 2027; and HCP will provide up to $35M capital investment in remaining triple-net portfolio over a five-year term and receive a 7% initial return on invested capital.
  • HCP and Brookdale also agree to terminate agreements related to one Brookdale triple-net leased property with 1.0x rent coverage after management fee (to be converted to SHOP upon transition of management to LCS) and one SHOP property to be marketed for sale to third parties.

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