Replaces Unique Financial Covenant, Extends
Lease with Positive Coverage, and Further Improves
Brookdale's Cash Flow and Liquidity
NASHVILLE, Tenn., May 8, 2023
/PRNewswire/ -- Brookdale Senior Living Inc. (NYSE: BKD)
("Brookdale" or the "Company") today announced that it has entered
into revised agreements under each of its three triple-net leases
with Welltower Inc. (NYSE: WELL) ("Welltower") to eliminate a
unique financial covenant, provide up to $17
million of additional lessor-funded capital investments, and
extend a positive-covering lease.
"We are pleased to have reached a beneficial agreement to
improve several Brookdale leases," said Lucinda ("Cindy") Baier,
Brookdale's President and CEO. "Through the transaction that we are
announcing today, we have successfully replaced a unique financial
covenant, extended the term of a portfolio of positively-covering
communities and secured additional landlord-funded capital
expenditures to accelerate performance. I believe that these lease
amendments will support our efforts to create long-term shareholder
value, while further improving Brookdale's cash flow and bolstering
our liquidity over the next few years."
Terms and Benefits of Lease Amendments
The lease amendments include the following improvements:
- In each of the Welltower leases, the unique net worth covenant
provision was replaced with a consolidated tangible net worth
covenant that is calculated in a manner generally similar to the
tangible net worth covenants in certain of Brookdale's long-term
debt documents. This improves the alignment of provisions across
Brookdale's broader capital structure and eliminates a historical
covenant that did not fully reflect Brookdale's current strength
and financial position.
- Extended the maturity of one positively-covering lease (based
on 2023 first quarter annualized results) involving 39 communities
from December 31, 2026 to
June 30, 2032. The maturity dates of
the Company's lease of five communities and its lease of 30
communities with Welltower will both remain unchanged, maturing on
December 31, 2024 and June 30, 2032, respectively. The Company
maintained the existing payment terms of each of these leases,
including no impact to existing cash rent payments or annual lease
escalators, which supports an expectation for improving performance
as occupancy continues to recover.
- Made available a new pool of up to $17
million of lessor-funded capital expenditures to cover costs
associated with certain capital projects across 69 of the leased
communities. These investments are expected to further improve
these communities' performance, building on their success and
enhancing their competitiveness into the years to come. An initial
yield of SOFR (subject to a floor of 3%) plus a margin of 4% will
be applied to capital expenditures funded from the pool. These
funds will be available to Brookdale through December 31, 2026.
- Retained Brookdale's existing purchase options for all three
Welltower leases, including a favorable purchase option for the
lease involving five communities that may be exercised at 2024 year
end.
Additional information regarding these amendments has been made
available on Brookdale's Investor Relations website located at
brookdaleinvestors.com under the "Events and Presentations"
tab.
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
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
and stay connected with friends and loved ones. Brookdale, through
its affiliates, operates and manages 673 communities in 41 states
as of March 31, 2023, with the
ability to serve more than 60,000 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 Twitter.
Cautionary Statement Regarding Forward-Looking
Statements
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," "could,"
"potential," "intend," "expect," "estimate," "believe," "plan," 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, the impacts of the COVID-19 pandemic, including the
response efforts of federal, state, and local government
authorities, businesses, individuals, and the Company on the
Company's business, results of operations, cash flow, revenue,
expenses, liquidity, and its strategic initiatives, including plans
for future growth, which will depend on many factors, some of which
cannot be foreseen, including the duration, severity, and breadth
of the pandemic and any resurgence or variants of the disease, the
impact of COVID-19 on the nation's economy and debt and equity
markets and the local economies in the Company's markets, the
development, availability, utilization, and efficacy of COVID-19
testing, therapeutic agents, and vaccines and the prioritization of
such resources among businesses and demographic groups, government
financial and regulatory relief efforts that may become available
to business and individuals, including the Company's ability to
qualify for and satisfy the terms and conditions of financial
relief, perceptions regarding the safety of senior living
communities during and after the pandemic, changes in demand for
senior living communities and the Company's ability to adapt its
sales and marketing efforts to meet that demand, the impact of
COVID-19 on the Company's residents' and their families' ability to
afford its resident fees, including due to changes in unemployment
rates, consumer confidence, housing markets, and equity markets
caused by COVID-19, changes in the acuity levels of the Company's
new residents, the disproportionate impact of COVID-19 on seniors
generally and those residing in the Company's communities, the
duration and costs of the Company's response efforts, including
increased equipment, supplies, labor, litigation, testing,
vaccination clinic, health plan, and other expenses, greater use of
contract labor, overtime and other premium labor due to COVID-19
and general labor market conditions, the impact of COVID-19 on the
Company's ability to complete financings and refinancings of
various assets, or other transactions or to generate sufficient
cash flow to cover required debt, interest, and lease payments and
to satisfy financial and other covenants in its debt and lease
documents, increased regulatory requirements, including the costs
of unfunded, mandatory testing of residents and associates and
provision of test kits to the Company's health plan participants,
increased enforcement actions resulting from COVID-19, government
action that may limit the Company's collection or discharge efforts
for delinquent accounts, and the frequency and magnitude of legal
actions and liability claims that may arise due to COVID-19 or the
Company's response efforts; 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 (including due to the
pandemic), 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, including due to the
pandemic; 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; 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 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 the pandemic or
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; costs to
respond to, and adverse determinations resulting from, government
reviews, audits and investigations; the cost and difficulty of
complying with increasing and evolving regulation; changes in, or
its failure to comply with, employment- related laws and
regulations; unanticipated costs to comply with legislative or
regulatory developments; the risks associated with current global
economic conditions and general economic factors such as inflation,
the consumer price index, commodity costs, fuel and other energy
costs, competition in the labor market, costs of salaries, wages,
benefits, and insurance, interest rates, and tax rates; 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 to
reflect any change in its expectations with regard thereto or
change in events, conditions or circumstances on which any
statement is based.
View original content to download
multimedia:https://www.prnewswire.com/news-releases/brookdale-announces-favorable-lease-amendments-301818436.html
SOURCE Brookdale Senior Living Inc.