Brookdale Senior Living Inc. has paid $162 million for 12 senior living communities, properties previously leased, operated and now owned by the Nashville-based operator of senior living facilities.
The deal comprised 871-units located in the Midwest. Eleven of the facilities were acquired by existing lease purchase options that expired in December.
“These options were negotiated at the inception of the leases and helped align the interests of the tenant and the landlord,” Brookdale CEO Bill Sheriff said in a company statement.
“The economics of these communities built nicely over time and the purchase options gave us the opportunity to purchase these communities at a cap rate exceeding 9 percent, thus harvesting a portion of the improved value," Sheriff said. "By replacing escalating lease rates with mortgage financing at today's interest rates, the transaction is modestly accretive. Ownership of these communities also allows us to capture the communities' value creation potential going forward."
In a related transaction, Brookdale (Ticker: BKD) obtained a $171 million first mortgage loan secured by nine of the company's existing communities, including eight of the most recently acquired properties. Brookdale officials said they had repaid $37 million of mortgage loans scheduled to mature in 2013 and used the remaining loan proceeds to provide long-term financing for the acquisitions.
In an unrelated yet pertinent development, Sheriff announced his retirement from Brookdale last summer but agreed to stay in the CEO role until a successor is found. See the Nashvillepost.com’s coverage here.