Brookdale Senior Living Inc. (NYSE: BKD) announced that in a financing led by Deerfield Management, Brookdale is successfully addressing 83% of all 2026 debt maturities and is securing capital to support immediately accretive acquisition opportunities. Brookdale also announced the successful refinancing of its 2025 agency debt maturity at a favorable rate.
With aggregate weighted average occupancy above Brookdale’s average and positive trailing-twelve month lease coverage, ownership of acquired communities enables Brookdale to fully capitalize on the unprecedented multi-year senior living growth opportunity, and provides immediate value-creation through a more favorable capital structure.
Acquisitions are expected to be funded through an assumption of existing below-market rate debt, net proceeds from the sale of a newly issued series of convertible senior notes, proceeds from non-recourse mortgage financing on certain of the assets, and cash on hand.
Brookdale expects these transactions to reduce 2025 cash lease payments by $47 million, to improve 2025 Adjusted EBITDA1 by $33 million, and after giving effect to expected financings, to improve 2025 Adjusted Free Cash Flow1 by an estimated $15 million.
By acquiring these portfolios, Brookdale will realize predictable high-yield returns from improved capitalization terms. Subsequent to these transactions, Brookdale will own 66% of its consolidated units, marking another significant step in the Brookdale’s ongoing efforts to increase its owned real estate portfolio.
Brookdale has entered into privately negotiated agreements with certain of the holders of its Convertible Senior Notes due 2026 (the “2026 Notes”) to exchange an aggregate of approximately $207 million of its existing 2026 Notes for a newly issued series of 3.50% Convertible Senior Notes due 2029 (the “2029 New Notes”).
These agreements opportunistically extend a substantial portion of the 2026 debt maturities to 2029 with an approximate $9.00 conversion price for the 2029 New Notes compared to the approximate $8.10 conversion price for the 2026 Notes.
In a private transaction with Deerfield Management Company and Flat Footed, LLC, the Company will also sell $150 million principal amount of 2029 New Notes to partially fund the acquisition transactions set forth above.
This efficiently priced capital will support meaningful value-creating opportunities through these acquisitions. The Company completed a $182 million agency financing transaction and proactively repaid $197 million of debt which was scheduled to mature in September 2025.
The closing of this transaction will result in no remaining debt maturities without extension options through June 2026. The forward-twelve month annualized leverage impact from these transactions is not expected to be material.
“As a result of continued proactive management of our portfolio and capital structure, I am incredibly proud to announce our planned acquisition of 41 leased communities. The immediate and long-term benefits of these real estate transactions are wide-ranging, including future portfolio flexibility that comes through asset ownership, the opportunity to fully realize the long-term benefits of the powerful senior housing outlook, and following closing, the expected immediate improvement in Adjusted EBITDA and Adjusted Free Cash Flow from a lower-cost capital structure,” said Lucinda (“Cindy”) Baier, Brookdale’s President and CEO. “We appreciate Welltower, their JV partners, and DHC for their partnership on these transactions as they highlight the importance of maintaining collaborative relationships with our REIT partners as we continually strive to further enhance shareholder value.”
“We are also grateful to Deerfield and Flat Footed, who have been strong supporters of Brookdale for years, for their continued confidence in Brookdale and our long-term growth outlook. With the demonstrated commitment from these and other shareholders, we proactively addressed a significant portion of our 2026 debt maturities and secured funding for value-creating acquisitions at an attractive rate,” said Baier.
“Over the next decade, there will be an extraordinary rise in the number of people who are aged 80 or older while the supply of senior living communities continues to remain relatively static,” commented Vince Mellet, Partner at Deerfield. “The need for high-quality operators such as Brookdale Senior Living is apparent and its growth to support future demand is essential. We are pleased to be able to play a role in strengthening the company’s position.”
