Brookdale Ceo ‘hopeful’ Affordability In Senior Living Will Be Priority During Trump Transition 

While it’s still uncertain how the incoming administration of President-elect Donald Trump will impact the senior living industry, Brookdale CEO Cindy Baier is “hopeful” the industry can elevate the issue of affordability as the new administration settles in. 

During Trump’s first term, Brookdale (NYSE: BKD) worked “closely” with the previous administration throughout the Covid-19 pandemic, emphasizing the role the industry plays in the broader U.S. economy, Baier said during a panel at the Stephens Annual Investment Conference Wednesday.

Looking forward, Baier said she was “hopeful that we can continue to focus on affordability of senior housing” as Trump takes office for a second term early next year.

While flexible spending accounts (FSA) are not permitted to be used toward senior living currently, Baier said it “makes sense” that taxpayers who set aside health care dollars should be able to use those funds to directly pay for senior living services, including assisted living and memory care.

“That’s why we’d love to see a policy change in that regard,” Baier said. “We think ultimately it’s good for taxpayers and certainly good for our residents.”

President-elect Trump has vowed to declare a national state of emergency and use the U.S. military to deport migrants. Any mass deportation of migrants could also seriously complicate the senior living industry’s ability to hire new workers, not to mention carry dire human rights implications. Operators have for years looked to hiring U.S. immigrants as a way to meet the huge demand for senior living services ahead.

Still, Baier said she was “not sure” Trump’s proposed mass deportation effort of migrants would have a “big impact” on the pool of available workers sought by Brookdale in the future.

That’s due to the company’s efforts to support associates that seek citizenship and “upskilling our workforce,” Baier said.

“Everything that we do is focused on making sure that we’ve got the right workforce for our residents,” Baier said.

In September, Brookdale acquired 41 communities under its previous triple-net lease structure for $610 million, offering “flexibility” for the company moving forward. With a cap rate of 8% for the deal, Kussow said cap rates on the deal were higher than historical norms.

“We’re excited about the cap rate and the opportunity to improve returns through capital recycling and then also just the built in upside that’s there when you’re buying assets that are not at their historical occupancies and they’re acquired at a discount to replacement cost,” Baier said.

In 2025, Brookdale expects continued operating performance and increasing revenue, a trend that accelerated in the third quarter when the Brentwood, Tennessee-based senior living operator saw a 15% increase in earnings before interest, taxes, depreciation and Amortization (EBITDA) and 31% adjusted free cashflow growth, according to Brookdale Executive Vice President & Chief Financial Officer Dawn Kussow.

On rates in 2025, Baier said she expects resident rates “not quite as high as last year” but remain “generally higher” compared to five years ago.

“There’s a spread between the cost increase and rate increase our residents receive, and so we would expect there to be a margin that’s positive in the rate that we just passed along to our residents,” Baier said.

In regard to the master lease with Ventas (NYSE: VTR), Baier said the expiration of the agreement for 126 communities next year provides “optionality” for Brookdale, something that Ventas also noted during a recent VTR earnings call.

Earlier this month, Brookdale reported an increase in internal marketing efforts due to “softness” from two, third-party referral sources on move-ins. On Wednesday, Baier noted that October saw year-over-year growth during the month in regard to paid third-party referral move-ins.

“We’re going to continue to focus on it but I am very happy with the decision that we made to increase our internal marketing spend because it is generating value for our shareholders,” Baier said.

To get back to pre-pandemic occupancy, Kussow said Brookdale’s pace, currently at 79.4% as of the third quarter, was akin to “a walk and not a run,” noting the effort would take time to return to 84.5% occupancy, the company’s pre-pandemic high water mark.

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