Ventas In Talks to Buy Part or All of Brookdale Senior Living -- Update
February 16 2017 - 5:13PM
Dow Jones News
By Dana Mattioli and Dana Cimilluca
Healthcare-facility owner Ventas Inc. is in talks to acquire
part or all of Brookdale Senior Living Inc. after another big
suitor cooled on its bid for the nation's largest operator of
senior-living centers.
Ventas is vying for Brookdale after another leading contender to
make a deal with the company, private-equity firm Blackstone Group
LP, lost interest, according to people familiar with the matter.
Brookdale had a market value of nearly $3 billion Thursday
afternoon as well as nearly $6 billion in long-term debt and lease
obligations as of the end of last year.
In January, The Wall Street Journal reported that Brentwood,
Tenn.-based Brookdale was holding talks with Blackstone and others
about a sale. When Brookdale reported earnings this week, the
company confirmed that it's exploring a possible deal. "I can
report that our board and management team working together with our
legal and financial advisers are in a process of exploring options
and alternatives to create and enhance shareholder value,"
Executive Chairman Dan Decker said on a conference call with
analysts and investors.
It isn't clear if there are other suitors, and Blackstone could
still re-enter the fray. The talks are complicated by the fact that
much of Brookdale's real estate is owned by other parties,
including Ventas, who may need to sign off on a deal, and it's
possible there won't be any transaction.
Ventas, based in Chicago, is one of the biggest U.S. health
care-focused real-estate investment trusts, with almost 1,300
senior housing and health-care properties in the U.S. Canada and
U.K. It had a market value of a $22 billion Thursday.
Brookdale is a big tenant of Ventas, with 140 properties leased
or managed as of the end of last year, representing about 5% of
revenue, according to Ventas's annual report. That could help put
Ventas in a better position to do a deal with Brookdale.
Ventas is an acquisitive company. Last year, it bought $1.5
billion worth of properties from Blackstone. In 2015, it paid $1.75
billion to buy a hospital operator known as Ardent Medical
Services, spinning off most of the post-acute and skilled-nursing
properties into Care Capital Properties Inc.
Brookdale has been under pressure from two separate activist
hedge funds in the past two years that have urged it to take steps
including selling or spinning off its real-estate portfolio to
reverse a decline in the shares.
In the fourth quarter, Brookdale reported revenue of $1.21
billion, a 2.4% decrease from the year-earlier period. The company
reported a net loss of $268.6 million compared with a net loss of
$174.3 million in the fourth quarter of 2015. "We are operating in
a difficult environment with intense supply pressure and a
competitive labor market," Brookdale's chief executive said in the
company's earnings release.
Even after rebounding lately amid deal speculation, Brookdale
shares closed Thursday at $15.38, down from nearly $40 two years
ago. Shares of Brookdale fell 2.5% after hours on Thursday.
Brookdale was founded in 1986 and has grown through a number of
mergers, including its $1.4 billion purchase in 2014 of Emeritus
Corp., which has weighed on the company's performance. It has more
than 1,000 communities spread across the U.S., with more than
100,000 residents. It also offers services such as outpatient
therapy, hospice care and assisted living.
Brookdale's property alone could be worth as much as $7 billion,
one of the hedge funds, Land and Buildings Investment Management
LLC, has said in a letter urging a sale of the real estate. In
2015, Sandell Asset Management launched a proxy fight and urged
Brookdale to spin off its real-estate portfolio. It settled for a
seat on the board. Sandell has since sold its stake.
David Benoit contributed to this article
Write to Dana Mattioli at dana.mattioli@wsj.com and Dana
Cimilluca at dana.cimilluca@wsj.com
(END) Dow Jones Newswires
February 16, 2017 16:58 ET (21:58 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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