Brookdale Senior Living enters lease amendment agreements with Ventas

Brookdale Senior Living (BKD) announced that it has entered into agreements with Ventas to amend its triple-net master lease arrangement. Following this lease amendment, the completed closing of the 11 community International JV / Welltower Portfolio, and the expected closings of the remaining previously-announced acquisition of 30 communities from two additional currently leased portfolios, the company has largely cleared its lease maturities through 2029. After giving effect to these transactions, Brookdale will own over 75% of its consolidated units. The company expects the Ventas lease amendment to provide a $15M+ improvement to the company’s 2025 cash flows. Beginning in 2026, the company expects additional cash flow improvement, including continued operating income growth, the benefit of continued appropriate expense management relative to the company’s portfolio size, partially offset by incremental rent expense. Beginning January 1, 2026, the company will continue to lease 65 high-performing communities, with a combined 4,055 units, for an annual base rent of $64M under a long-term operating lease. Extended the maturity from December 31, 2025 to December 31, 2035. Unit counts range from 26 to 225 with an average unit count of approximately 62. The annual rent escalator remains unchanged at fixed 3% per annum. Ventas has agreed to fund up to $35M of capital expenditures through 2027. The company decided not to renew the remaining 55 communities, with a combined 6,125 units. The company’s cash flows are expected to improve as a result of the sale or transition of communities in the lower-coverage non-renewal portfolio. For transition communities, allocated rent will terminate upon transition which will occur between September 1, 2025 and December 31, 2025. In all cases, allocated rent under the existing lease for the non-renewal portfolio will terminate no later than December 31, 2025. For the trailing twelve months ended September 30, the non-renewal portfolio generated approximately $31M of negative cash flow, after giving effect to rent, actual capital expenditures and allocated general and administrative expense.