Brookdale Declines To Renew Master Lease With Ventas Covering 120 Communities

Brookdale Senior Living (NYSE: BKD) will forgo a renewal option on a master lease with Ventas for 120 communities.

Brookdale did not exercise its right to extend the term of the master lease between both companies for a renewal that would have started in 2026, according to the Chicago-based real estate investment trust (REIT), which announced the move Tuesday morning. As a result, Brookdale “no longer has a right to extend the lease term for any assets currently covered by the master lease,” the company noted.

Brookdale will pay full contractual rent obligations through the master lease that expires at the end of 2025, with an annual cash rent under the master lease next year will be worth $113.6 million.

In the announcement, Ventas said it plans to deploy its Operational Insights data platform to “some or all” of the communities covered by the master lease in the company’s senior housing operating portfolio (SHOP) and seek new operators to manage the communities.

“Ventas’s plans are intended to maximize the performance and value of these communities and further expand the company’s SHOP footprint to increase Ventas’s future growth rate amid an unprecedented multiyear growth opportunity due to secular demand from a large and growing aging population,” the announcement states.

Ventas also has the option to sell, lease or take other actions for a portion of the 120 communities in the leased portfolio.

A representative for Ventas did not elaborate on the move when reached by Senior Housing News Tuesday morning, and a representative for Brookdale did not immediately respond to a request for more information.

The agreement first came in 2020, and company leadership at Ventas highlighted the uncertain nature of the master lease during the Ventas third quarter earnings call.

In October, Ventas Executive Vice President Justin Hutchens said there was a “variety of outcomes” from the master lease and its potential non-renewal or renewal by Brookdale. At the time, Ventas CEO Deborah Cafaro said the company would be “well-covered” from an earnings before interest, taxes, depreciation, amortization and restructuring or rent costs (EBITDAR) or net operating income (NOI) standpoint.

“That would have to be taken into account as you consider what the impact would be of a conversion of the whole Brookdale lease to SHOP and that’s a favorable pattern,” Cafaro said during the company’s third quarter earnings call. 

This is not the first time Brookdale has decided not to renew a master lease with a REIT. In March 2023, Brookdale announced plans to not renew a master lease agreement with LTC Properties (NYSE: LTC) regarding 35 properties. The following year, in January, Brookdale and LTC announced a new master lease for 17 communities, with other operators taking over management or completing transactions for the remaining communities.

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