Brookdale Senior Living Comments on Master Lease with Ventas
Brookdale Senior Living (NYSE: BKD) announced its decision not to renew a master lease with Ventas covering 120 communities, set to mature on December 31, 2025. The decision was based on the portfolio's historical and expected negative cash flow performance. The Ventas leased portfolio has generated significant losses, including over $50 million negative cash flow annually pre-pandemic and approximately $23 million negative cash flow for the trailing twelve months ended September 30, 2024.
The company deemed non-renewal more beneficial to shareholders, considering the potential 3% to 10% rent increase in 2026 under existing terms. Brookdale remains open to discussions with Ventas for mutually agreeable terms that would generate appropriate cash flow improvements.
Brookdale Senior Living (NYSE: BKD) ha annunciato la sua decisione di non rinnovare un contratto di locazione principale con Ventas che copre 120 comunità, con scadenza il 31 dicembre 2025. La decisione è stata presa sulla base delle performance storiche e attese di flusso di cassa negativo del portafoglio. Il portafoglio locato da Ventas ha generato perdite significative, incluse oltre 50 milioni di dollari di flusso di cassa negativo annuale pre-pandemia e circa 23 milioni di dollari di flusso di cassa negativo per i dodici mesi terminati il 30 settembre 2024.
L'azienda ha ritenuto che il non rinnovo sia più vantaggioso per gli azionisti, considerando il potenziale aumento dell'affitto dal 3% al 10% nel 2026 secondo i termini esistenti. Brookdale rimane aperta a discussioni con Ventas per trovare termini reciprocamente favorevoli che possano generare miglioramenti adeguati nel flusso di cassa.
Brookdale Senior Living (NYSE: BKD) anunció su decisión de no renovar un contrato de arrendamiento maestro con Ventas que abarca 120 comunidades, que vencerá el 31 de diciembre de 2025. La decisión se basó en el desempeño histórico y esperado del flujo de efectivo negativo del portafolio. El portafolio arrendado por Ventas ha generado pérdidas significativas, incluyendo más de 50 millones de dólares en flujo de efectivo negativo anualmente antes de la pandemia y aproximadamente 23 millones de dólares en flujo de efectivo negativo para los últimos doce meses hasta el 30 de septiembre de 2024.
La empresa consideró que la no renovación sería más beneficiosa para los accionistas, considerando el posible aumento del alquiler del 3% al 10% en 2026 bajo los términos existentes. Brookdale permanece abierta a discusiones con Ventas para términos mutuamente aceptables que generen mejoras adecuadas en el flujo de efectivo.
브룩데일 시니어 리빙 (NYSE: BKD)은 2025년 12월 31일 만료되는 120개의 커뮤니티를 포함하는 벤타스와의 마스터 리스를 갱신하지 않기로 결정했다고 발표했습니다. 이 결정은 포트폴리오의 역사적 및 예상되는 부정적인 현금 흐름 실적을 기반으로 했습니다. 벤타스 임대 포트폴리오는 상당한 손실을 발생시켰습니다, 팬데믹 이전에 연간 5천만 달러 이상의 부정적인 현금 흐름과 2024년 9월 30일로 종료된 최근 12개월 동안 약 2천3백만 달러의 부정적인 현금 흐름을 포함합니다.
회사는 기존 조건 하에 2026년 임대료가 3%에서 10% 증가할 수 있는 가능성을 고려할 때, 주주에게는 갱신하지 않는 것이 더 유리하다고 판단했습니다. 브룩데일은 벤타스와의 적절한 현금 흐름 개선을 위한 상호 합의 가능한 조건에 대한 논의에 열려 있습니다.
Brookdale Senior Living (NYSE: BKD) a annoncé sa décision de ne pas renouveler un contrat de bail principal avec Ventas couvrant 120 communautés, qui expirera le 31 décembre 2025. Cette décision a été prise en raison de la performance historique et attendue du flux de trésorerie négatif du portefeuille. Le portefeuille loué par Ventas a généré des pertes significatives, y compris plus de 50 millions de dollars de flux de trésorerie négatif par an avant la pandémie et environ 23 millions de dollars de flux de trésorerie négatif pour les douze mois se terminant le 30 septembre 2024.
L'entreprise a jugé que le non-renouvellement était plus avantageux pour les actionnaires, compte tenu de l'augmentation potentielle des loyers de 3 % à 10 % en 2026 dans le cadre des termes existants. Brookdale reste ouverte aux discussions avec Ventas pour des conditions mutuellement acceptables qui permettraient d'améliorer le flux de trésorerie.
Brookdale Senior Living (NYSE: BKD) gab bekannt, dass es sich entschieden hat, einen Hauptmietvertrag mit Ventas für 120 Gemeinschaften, der am 31. Dezember 2025 ausläuft, nicht zu verlängern. Die Entscheidung basierte auf der historischen und erwarteten negativen Cashflow-Performance des Portfolios. Das von Ventas angemietete Portfolio hat erhebliche Verluste generiert, darunter über 50 Millionen Dollar an negativem Cashflow jährlich vor der Pandemie und etwa 23 Millionen Dollar an negativem Cashflow für die letzten zwölf Monate bis zum 30. September 2024.
Das Unternehmen hielt es für vorteilhafter für die Aktionäre, die Verlängerung nicht vorzunehmen, da eine mögliche Mietsteigerung von 3% bis 10% im Jahr 2026 unter den bestehenden Bedingungen zu erwarten wäre. Brookdale bleibt offen für Gespräche mit Ventas über einvernehmbare Bedingungen, die zu angemessenen Cashflow-Verbesserungen führen könnten.
- Potential improvement in cash flow position starting 2026 through lease non-renewal
- Strategic flexibility to negotiate better terms before lease maturity
- $23 million negative cash flow from Ventas portfolio in trailing twelve months
- Historical negative cash flow exceeding $50 million annually pre-pandemic
- Portfolio underperformance even after 2020 lease restructuring
Insights
This is a highly significant development regarding Brookdale's lease portfolio management. The decision not to renew the Ventas master lease covering 120 communities stems from persistent negative cash flows - approximately
The lease maturity in December 2025 presents a strategic opportunity to improve cash flow starting 2026. The potential 3-10% rent increase under current terms would have further strained profitability. This decision aligns with sound financial management, as the portfolio's performance doesn't justify renewal under existing terms. However, the door remains open for renegotiation with Ventas, provided terms ensure positive cash flow contribution.
This move could significantly improve Brookdale's financial health by eliminating a major source of cash drain, though the transition strategy for these properties will be important to watch.
The non-renewal decision reflects broader dynamics in the senior living real estate sector. With 648 total communities across 41 states, Brookdale maintains significant operational scale even without these 120 properties. The company's strategic approach to lease management demonstrates a shift toward optimizing property-level economics rather than maintaining size at the expense of profitability.
The historical
"We have consistently said that we view lease maturities as an opportunity to position the Company for future success and to further drive shareholder value, depending on current and expected cash flow performance of the leased portfolio," said Lucinda ("Cindy") Baier, Brookdale's President and CEO. "In this case, given historical and expected future cash flow performance of this portfolio, we expect that non-renewal will be more positive to Brookdale from a cash flow standpoint beginning in 2026 and will be more beneficial to our shareholders."
When considering the potential
After giving effect to rent, capital expenditures and allocated general and administrative expense, the Ventas leased portfolio has historically generated significant negative cash flows. As an example, during the three years prior to the impact of the pandemic, at an approximate weighted average occupancy of
The Company has frequent discussions with many of its landlords, and has demonstrated its ability to create meaningful long-term value through successfully negotiated lease amendments and restructurings. The Company remains open to continuing discussions with Ventas for mutually agreeable terms prior to the maturity of the master lease, but any such terms would need to generate appropriate cash flow improvements for Brookdale.
ABOUT BROOKDALE SENIOR LIVING
Brookdale Senior Living Inc. is the nation's premier operator of senior living communities. The Company is committed to its mission of enriching the lives of the people it serves with compassion, respect, excellence, and integrity. The Company, through its affiliates, operates independent living, assisted living, memory care, and continuing care retirement communities. Through its comprehensive network, Brookdale helps to provide seniors with care, connection, and services in an environment that feels like home. The Company's expertise in healthcare, hospitality, and real estate provides residents with opportunities to improve wellness, pursue passions, make new friends, and stay connected with loved ones. Brookdale, through its affiliates, operates and manages 648 communities in 41 states as of September 30, 2024, with the ability to serve approximately 58,000 residents. Brookdale's stock trades on the New York Stock Exchange under the ticker symbol BKD. For more information, visit brookdale.com or connect with Brookdale on Facebook or YouTube.
SAFE HARBOR
Certain statements in this press release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to various risks and uncertainties and include all statements that are not historical statements of fact and those regarding the Company's intent, belief, or expectations. Forward-looking statements are generally identifiable by use of forward-looking terminology such as "may," "will," "should," "could," "would," "potential," "intend," "expect," "endeavor," "seek," "anticipate," "estimate," "believe," "project," "predict," "continue," "plan," "target," or other similar words or expressions, and include statements regarding the Company's expected financial and operational results. These forward-looking statements are based on certain assumptions and expectations, and the Company's ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Although the Company believes that expectations reflected in any forward-looking statements are based on reasonable assumptions, it can give no assurance that its assumptions or expectations will be attained and actual results and performance could differ materially from those projected. Factors which could have a material adverse effect on the Company's operations and future prospects or which could cause events or circumstances to differ from the forward-looking statements include, but are not limited to, events which adversely affect the ability of seniors to afford resident fees, including downturns in the economy, housing market, consumer confidence, or the equity markets and unemployment among resident family members; changes in reimbursement rates, methods, or timing under governmental reimbursement programs including the Medicare and Medicaid programs; the effects of senior housing construction and development, lower industry occupancy, and increased competition; conditions of housing markets, regulatory changes, acts of nature, and the effects of climate change in geographic areas where the Company is concentrated; terminations of the Company's resident agreements and vacancies in the living spaces it leases; failure to maintain the security and functionality of the Company's information systems, to prevent a cybersecurity attack or breach, or to comply with applicable privacy and consumer protection laws, including HIPAA; the Company's ability to complete its capital expenditures in accordance with its plans; the Company's ability to identify and pursue development, investment, and acquisition opportunities and its ability to successfully integrate acquisitions; competition for the acquisition of assets; the Company's ability to complete pending or expected disposition, acquisition, or other transactions on agreed upon terms or at all, including in respect of the satisfaction of closing conditions, the risk that regulatory approvals are not obtained or are subject to unanticipated conditions, and uncertainties as to the timing of closing, and the Company's ability to identify and pursue any such opportunities in the future; risks related to the implementation of the Company's strategy, including initiatives undertaken to execute on the Company's strategic priorities and their effect on its results; the impacts of the COVID-19 pandemic, including on the nation's economy and debt and equity markets and the local economies in our markets, and on us and our business, results of operations, cash flow, revenue, expenses, liquidity, and our strategic initiatives, including plans for future growth, which will depend on many factors, some of which cannot be foreseen, including the pace and consistency of recovery from the pandemic and any resurgence or variants of the disease; limits on the Company's ability to use net operating loss carryovers to reduce future tax payments; delays in obtaining regulatory approvals; disruptions in the financial markets or decreases in the appraised values or performance of the Company's communities that affect the Company's ability to obtain financing or extend or refinance debt as it matures and the Company's financing costs; the Company's ability to generate sufficient cash flow to cover required interest, principal, and long-term lease payments and to fund its planned capital projects; the effect of any non-compliance with any of the Company's debt or lease agreements (including the financial or other covenants contained therein), including the risk of lenders or lessors declaring a cross default in the event of the Company's non-compliance with any such agreements and the risk of loss of the Company's property securing leases and indebtedness due to any resulting lease terminations and foreclosure actions; the inability to renew, restructure, or extend leases, or exercise purchase options at or prior to the end of any existing lease term; the effect of the Company's indebtedness and long-term leases on the Company's liquidity and its ability to operate its business; increases in market interest rates that increase the costs of the Company's debt obligations; the Company's ability to obtain additional capital on terms acceptable to it; departures of key officers and potential disruption caused by changes in management; increased competition for, or a shortage of, associates (including due to general labor market conditions), wage pressures resulting from increased competition, low unemployment levels, minimum wage increases and changes in overtime laws, and union activity; environmental contamination at any of the Company's communities; failure to comply with existing environmental laws; an adverse determination or resolution of complaints filed against the Company, including putative class action complaints, and the frequency and magnitude of legal actions and liability claims that may arise due to COVID-19 or the Company's response efforts; negative publicity with respect to any lawsuits, claims, or other legal or regulatory proceedings; costs to respond to, and adverse determinations resulting from, government inquiries, reviews, audits, and investigations; the cost and difficulty of complying with increasing and evolving regulation, including new disclosure obligations; changes in, or its failure to comply with, employment-related laws and regulations; the risks associated with current global economic conditions and general economic factors on the Company and the Company's business partners such as inflation, commodity costs, fuel and other energy costs, competition in the labor market, costs of salaries, wages, benefits, and insurance, interest rates, tax rates, geopolitical tensions or conflicts, and uncertainty surrounding federal elections; the impact of seasonal contagious illness or an outbreak of COVID-19 or other contagious disease in the markets in which the Company operates; actions of activist stockholders, including a proxy contest; as well as other risks detailed from time to time in the Company's filings with the Securities and Exchange Commission, including those set forth in the Company's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements in such SEC filings. Readers are cautioned not to place undue reliance on any of these forward-looking statements, which reflect management's views as of the date of this press release. The Company cannot guarantee future results, levels of activity, performance or achievements, and, except as required by law, it expressly disclaims any obligation to release publicly any updates or revisions to any forward-looking statements contained in this press release to reflect any change in the Company's expectations with regard thereto or change in events, conditions, or circumstances on which any statement is based.
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SOURCE Brookdale Senior Living Inc.
FAQ
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