x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 20-3068069 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
111 Westwood Place, Suite 400, Brentwood, Tennessee | 37027 |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer | x | Accelerated filer | ¨ | |||
Non-accelerated filer | ¨ | (Do not check if a smaller reporting company) | Smaller reporting company | ¨ | ||
Emerging growth company | ¨ |
PAGE | ||
PART I. | FINANCIAL INFORMATION | |
Item 1. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
PART II. | ||
Item 1. | ||
Item 1A. | ||
Item 2. | ||
Item 6. | ||
June 30, 2018 | December 31, 2017 | ||||||
Assets | (Unaudited) | ||||||
Current assets | |||||||
Cash and cash equivalents | $ | 126,637 | $ | 222,647 | |||
Marketable securities | 19,991 | 291,796 | |||||
Restricted cash | 39,015 | 37,189 | |||||
Accounts receivable, net | 118,005 | 128,961 | |||||
Assets held for sale | 141,104 | 106,435 | |||||
Prepaid expenses and other current assets, net | 106,394 | 114,844 | |||||
Total current assets | 551,146 | 901,872 | |||||
Property, plant and equipment and leasehold intangibles, net | 5,715,931 | 5,852,145 | |||||
Restricted cash | 25,010 | 22,710 | |||||
Investment in unconsolidated ventures | 32,018 | 129,794 | |||||
Goodwill | 154,131 | 505,783 | |||||
Other intangible assets, net | 59,817 | 67,977 | |||||
Other assets, net | 191,594 | 195,168 | |||||
Total assets | $ | 6,729,647 | $ | 7,675,449 | |||
Liabilities and Equity | |||||||
Current liabilities | |||||||
Current portion of long-term debt | $ | 250,906 | $ | 495,413 | |||
Current portion of capital and financing lease obligations | 27,942 | 107,088 | |||||
Trade accounts payable | 79,713 | 91,825 | |||||
Accrued expenses | 306,278 | 329,966 | |||||
Refundable entrance fees and deferred revenue | 68,508 | 68,358 | |||||
Tenant security deposits | 2,823 | 3,126 | |||||
Total current liabilities | 736,170 | 1,095,776 | |||||
Long-term debt, less current portion | 3,471,220 | 3,375,324 | |||||
Capital and financing lease obligations, less current portion | 1,066,236 | 1,164,466 | |||||
Deferred liabilities | 261,532 | 224,304 | |||||
Deferred tax liability | 69,749 | 70,644 | |||||
Other liabilities | 204,083 | 214,644 | |||||
Total liabilities | 5,808,990 | 6,145,158 | |||||
Preferred stock, $0.01 par value, 50,000,000 shares authorized at June 30, 2018 and December 31, 2017; no shares issued and outstanding | — | — | |||||
Common stock, $0.01 par value, 400,000,000 shares authorized at June 30, 2018 and December 31, 2017; 196,976,288 and 194,454,329 shares issued and 193,797,887 and 191,275,928 shares outstanding (including 6,145,795 and 4,770,097 unvested restricted shares), respectively | 1,938 | 1,913 | |||||
Additional paid-in-capital | 4,139,353 | 4,126,549 | |||||
Treasury stock, at cost; 3,178,401 shares at June 30, 2018 and December 31, 2017 | (56,440 | ) | (56,440 | ) | |||
Accumulated deficit | (3,163,690 | ) | (2,541,294 | ) | |||
Total Brookdale Senior Living Inc. stockholders' equity | 921,161 | 1,530,728 | |||||
Noncontrolling interest | (504 | ) | (437 | ) | |||
Total equity | 920,657 | 1,530,291 | |||||
Total liabilities and equity | $ | 6,729,647 | $ | 7,675,449 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Revenue | |||||||||||||||
Resident fees | $ | 895,969 | $ | 934,070 | $ | 1,802,235 | $ | 1,950,997 | |||||||
Management fees | 17,071 | 22,442 | 35,752 | 38,336 | |||||||||||
Reimbursed costs incurred on behalf of managed communities | 242,160 | 229,960 | 504,447 | 413,905 | |||||||||||
Total revenue | 1,155,200 | 1,186,472 | 2,342,434 | 2,403,238 | |||||||||||
Expense | |||||||||||||||
Facility operating expense (excluding depreciation and amortization of $105,316, $105,673, $208,484, and $220,552, respectively) | 627,076 | 642,405 | 1,259,401 | 1,316,947 | |||||||||||
General and administrative expense (including non-cash stock-based compensation expense of $6,269, $7,246, $14,675, and $15,020, respectively) | 60,314 | 67,090 | 137,024 | 132,650 | |||||||||||
Transaction costs | 2,593 | 3,339 | 7,318 | 10,932 | |||||||||||
Facility lease expense | 81,960 | 84,690 | 162,360 | 173,497 | |||||||||||
Depreciation and amortization | 116,116 | 120,887 | 230,371 | 248,374 | |||||||||||
Goodwill and asset impairment | 16,103 | 1,559 | 446,466 | 22,265 | |||||||||||
Loss on facility lease termination and modification, net | 146,467 | 6,368 | 146,467 | 6,368 | |||||||||||
Costs incurred on behalf of managed communities | 242,160 | 229,960 | 504,447 | 413,905 | |||||||||||
Total operating expense | 1,292,789 | 1,156,298 | 2,893,854 | 2,324,938 | |||||||||||
Income (loss) from operations | (137,589 | ) | 30,174 | (551,420 | ) | 78,300 | |||||||||
Interest income | 2,941 | 804 | 5,924 | 1,435 | |||||||||||
Interest expense: | |||||||||||||||
Debt | (48,967 | ) | (41,517 | ) | (94,694 | ) | (82,090 | ) | |||||||
Capital and financing lease obligations | (22,389 | ) | (32,228 | ) | (45,320 | ) | (82,087 | ) | |||||||
Amortization of deferred financing costs and debt premium (discount) | (2,328 | ) | (2,692 | ) | (6,284 | ) | (5,283 | ) | |||||||
Change in fair value of derivatives | (217 | ) | (39 | ) | (143 | ) | (85 | ) | |||||||
Debt modification and extinguishment costs | (9 | ) | (693 | ) | (44 | ) | (754 | ) | |||||||
Equity in loss of unconsolidated ventures | (1,324 | ) | (4,570 | ) | (5,567 | ) | (3,589 | ) | |||||||
Gain (loss) on sale of assets, net | 23,322 | (547 | ) | 66,753 | (1,150 | ) | |||||||||
Other non-operating income | 5,505 | 2,236 | 8,091 | 3,898 | |||||||||||
Income (loss) before income taxes | (181,055 | ) | (49,072 | ) | (622,704 | ) | (91,405 | ) | |||||||
Benefit (provision) for income taxes | 15,546 | 2,735 | (39 | ) | (81,293 | ) | |||||||||
Net income (loss) | (165,509 | ) | (46,337 | ) | (622,743 | ) | (172,698 | ) | |||||||
Net (income) loss attributable to noncontrolling interest | 21 | 50 | 67 | 107 | |||||||||||
Net income (loss) attributable to Brookdale Senior Living Inc. common stockholders | $ | (165,488 | ) | $ | (46,287 | ) | $ | (622,676 | ) | $ | (172,591 | ) | |||
Basic and diluted net income (loss) per share attributable to Brookdale Senior Living Inc. common stockholders | $ | (0.88 | ) | $ | (0.25 | ) | $ | (3.33 | ) | $ | (0.93 | ) | |||
Weighted average shares used in computing basic and diluted net income (loss) per share | 187,585 | 186,212 | 187,234 | 185,952 |
Common Stock | Additional Paid-In- Capital | Treasury Stock | Accumulated Deficit | Stockholders' Equity | Noncontrolling Interest | Total Equity | ||||||||||||||||||||||||
Shares | Amount | |||||||||||||||||||||||||||||
Balances at January 1, 2018 | 191,276 | $ | 1,913 | $ | 4,126,549 | $ | (56,440 | ) | $ | (2,541,294 | ) | $ | 1,530,728 | $ | (437 | ) | $ | 1,530,291 | ||||||||||||
Compensation expense related to restricted stock grants | — | — | 14,675 | — | — | 14,675 | — | 14,675 | ||||||||||||||||||||||
Net income (loss) | — | — | — | — | (622,676 | ) | (622,676 | ) | (67 | ) | (622,743 | ) | ||||||||||||||||||
Issuance of common stock under Associate Stock Purchase Plan | 111 | 1 | 769 | — | — | 770 | — | 770 | ||||||||||||||||||||||
Restricted stock, net | 2,805 | 28 | (28 | ) | — | — | — | — | — | |||||||||||||||||||||
Shares withheld for employee taxes | (394 | ) | (4 | ) | (2,711 | ) | — | — | (2,715 | ) | — | (2,715 | ) | |||||||||||||||||
Other, net | — | — | 99 | — | 280 | 379 | — | 379 | ||||||||||||||||||||||
Balances at June 30, 2018 | 193,798 | $ | 1,938 | $ | 4,139,353 | $ | (56,440 | ) | $ | (3,163,690 | ) | $ | 921,161 | $ | (504 | ) | $ | 920,657 |
Six Months Ended June 30, | |||||||
2018 | 2017 | ||||||
Cash Flows from Operating Activities | |||||||
Net income (loss) | $ | (622,743 | ) | $ | (172,698 | ) | |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||
Debt modification and extinguishment costs | 44 | 754 | |||||
Depreciation and amortization, net | 236,655 | 253,657 | |||||
Goodwill and asset impairment | 446,466 | 22,265 | |||||
Equity in loss of unconsolidated ventures | 5,567 | 3,589 | |||||
Distributions from unconsolidated ventures from cumulative share of net earnings | 1,147 | 892 | |||||
Amortization of deferred gain | (2,179 | ) | (2,186 | ) | |||
Amortization of entrance fees | (837 | ) | (2,030 | ) | |||
Proceeds from deferred entrance fee revenue | 1,398 | 3,952 | |||||
Deferred income tax (benefit) provision | (991 | ) | 80,373 | ||||
Straight-line lease (income) expense | (8,595 | ) | (6,126 | ) | |||
Change in fair value of derivatives | 143 | 85 | |||||
(Gain) loss on sale of assets, net | (66,753 | ) | 1,150 | ||||
Loss on facility lease termination and modification, net | 133,423 | 6,368 | |||||
Non-cash stock-based compensation expense | 14,675 | 15,020 | |||||
Non-cash interest expense on financing lease obligations | 6,446 | 10,021 | |||||
Amortization of (above) below market lease, net | (3,574 | ) | (3,394 | ) | |||
Non-cash management contract termination fee | (5,076 | ) | — | ||||
Other | (156 | ) | (2,969 | ) | |||
Changes in operating assets and liabilities: | |||||||
Accounts receivable, net | 10,956 | 11,957 | |||||
Prepaid expenses and other assets, net | 1,878 | 18,979 | |||||
Trade accounts payable and accrued expenses | (57,615 | ) | (47,982 | ) | |||
Tenant refundable fees and security deposits | (303 | ) | (215 | ) | |||
Deferred revenue | 8,608 | 9,070 | |||||
Net cash provided by operating activities | 98,584 | 200,532 | |||||
Cash Flows from Investing Activities | |||||||
Change in lease security deposits and lease acquisition deposits, net | (2,962 | ) | 5 | ||||
Sale of marketable securities, net | 273,273 | (29,779 | ) | ||||
Additions to property, plant and equipment and leasehold intangibles, net | (120,458 | ) | (89,570 | ) | |||
Acquisition of assets, net of related payables and cash received | (271,320 | ) | (400 | ) | |||
Investment in unconsolidated ventures | (8,864 | ) | (186,166 | ) | |||
Distributions received from unconsolidated ventures | 9,397 | 8,045 | |||||
Proceeds from sale of assets, net | 130,897 | 34,455 | |||||
Property insurance proceeds | 156 | 2,969 | |||||
Other | 1,393 | 947 | |||||
Net cash provided by (used in) investing activities | 11,512 | (259,494 | ) | ||||
Cash Flows from Financing Activities | |||||||
Proceeds from debt | 279,919 | 92,571 | |||||
Repayment of debt and capital and financing lease obligations | (466,267 | ) | (89,204 | ) | |||
Proceeds from line of credit | 200,000 | — | |||||
Repayment of line of credit | (200,000 | ) | — | ||||
Payment of financing costs, net of related payables | (3,191 | ) | (1,181 | ) | |||
Proceeds from refundable entrance fees, net of refunds | 52 | (1,554 | ) | ||||
Payments for lease termination | (10,548 | ) | (552 | ) | |||
Payments of employee taxes for withheld shares | (2,715 | ) | (5,320 | ) | |||
Other | 770 | 1,054 | |||||
Net cash used in financing activities | (201,980 | ) | (4,186 | ) | |||
Net decrease in cash, cash equivalents and restricted cash | (91,884 | ) | (63,148 | ) | |||
Cash, cash equivalents and restricted cash at beginning of period | 282,546 | 277,322 | |||||
Cash, cash equivalents and restricted cash at end of period | $ | 190,662 | $ | 214,174 |
Asset Category | Estimated Useful Life (in years) | |
Trade names | 2 – 5 | |
Management contracts | 3 – 9 |
• | Master Lease Transactions. The Company and HCP amended and restated triple-net leases covering substantially all of the communities the Company leased from HCP as of November 1, 2017 into the HCP Master Lease. During the three months ended June 30, 2018, the Company acquired two communities formerly leased for an aggregate purchase price of $35.4 million and leases with respect to ten communities were terminated, and such communities were removed from the HCP Master Lease. |
• | RIDEA Ventures Restructuring. Pursuant to the multi-part transaction agreement, HCP acquired the Company's 10% ownership interest in one of the Company's RIDEA ventures with HCP in December 2017 for $32.1 million (for which the Company recognized a $7.2 million gain on sale) and the Company's 10% ownership interest in the remaining RIDEA venture with HCP in March 2018 for $62.3 million (for which the Company recognized a $41.7 million gain on sale). The Company provided management services to 59 communities on behalf of the two RIDEA ventures as of November 1, 2017. Pursuant to the multi-part transaction agreement, the Company acquired one community for an aggregate purchase price of $32.1 million in January 2018 and three communities for an aggregate purchase price of $207.4 million in April 2018 and retained management of 18 of such communities. The amended and restated management agreements for such 18 communities have a term set to expire in 2030, subject to certain early termination rights. In addition, HCP will be entitled to sell or transition operations and/or management of 37 of such communities. Management agreements for seven and 17 such communities were terminated by HCP during the three and six months ended June 30, 2018, respectively (for which the Company recognized a $2.8 million and $5.1 million non-cash management contract termination gain, respectively), and the Company expects the termination of management agreements on the remaining 20 communities to occur in stages throughout 2018. |
• | Lease Terminations. The Company and Welltower agreed to early termination of the Company's triple-net lease obligations on 37 communities effective June 30, 2018. The two lease portfolios were due to mature in 2028 (27 communities) and 2020 (10 communities). The Company paid Welltower an aggregate lease termination fee of $58.0 million. The Company will continue to manage the foregoing 37 communities on an interim basis until the communities are transitioned to new managers and such communities will be reported in the Management Services segment during such interim period. The Company recognized a $22.6 million loss on lease termination in the three and six months ended June 30, 2018 for the amount by which the aggregate lease termination fee exceeded the net carrying value of the Company's assets and liabilities under operating and capital leases at the lease termination date. |
• | Future Lease Terminations. The parties separately agreed to allow the Company to terminate leases with respect to, and to remove from the remaining Welltower leased portfolio, a number of communities with annual aggregate base rent up to $5.0 million upon Welltower's sale of such communities, with the Company to receive a corresponding 6.25% rent credit on Welltower's disposition proceeds. |
• | RIDEA Restructuring. The Company agreed to sell its 20% equity interest in its existing Welltower RIDEA venture to Welltower, effective June 30, 2018, for net proceeds of $33.5 million(for which the Company recognized a $14.7 million gain on sale during the three and six months ended June 30, 2018). As of June 30, 2018, the Company provided management services to the 15 venture communities and will continue to manage the communities until the communities are transitioned by Welltower to new managers. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(in millions) | 2018 | 2017 | 2018 | 2017 | |||||||||||
Goodwill | $ | — | $ | — | $ | 351.7 | $ | — | |||||||
Property, plant and equipment and leasehold intangibles, net | 6.9 | 1.4 | 47.7 | 2.4 | |||||||||||
Investment in unconsolidated ventures | — | — | 33.4 | 19.7 | |||||||||||
Other intangible assets, net | — | — | 1.7 | — | |||||||||||
Assets held for sale | 9.2 | 0.2 | 12.0 | 0.2 | |||||||||||
Goodwill and asset impairment | $ | 16.1 | $ | 1.6 | $ | 446.5 | $ | 22.3 |
(share amounts in thousands, except for per share amounts) | Shares Granted | Weighted Average Grant Date Fair Value | Total Value | |||||||
Three months ended March 31, 2018 | 3,387 | $ | 9.10 | $ | 30,823 | |||||
Three months ended June 30, 2018 | 169 | $ | 7.19 | $ | 1,214 |
(in thousands) | Retirement Centers | Assisted Living | Brookdale Ancillary Services | Total | |||||||||||
Balance at January 1, 2018 | $ | 27,321 | $ | 351,652 | $ | 126,810 | $ | 505,783 | |||||||
Impairment | — | (351,652 | ) | — | (351,652 | ) | |||||||||
Balance at June 30, 2018 | $ | 27,321 | $ | — | $ | 126,810 | $ | 154,131 |
June 30, 2018 | |||||||||||
(in thousands) | Gross Carrying Amount | Accumulated Amortization | Net | ||||||||
Community purchase options | $ | 4,738 | $ | — | $ | 4,738 | |||||
Health care licenses | 49,250 | — | 49,250 | ||||||||
Trade names | 27,800 | (25,006 | ) | 2,794 | |||||||
Management contracts | 10,680 | (7,645 | ) | 3,035 | |||||||
Total | $ | 92,468 | $ | (32,651 | ) | $ | 59,817 |
December 31, 2017 | |||||||||||
(in thousands) | Gross Carrying Amount | Accumulated Amortization | Net | ||||||||
Community purchase options | $ | 9,533 | $ | — | $ | 9,533 | |||||
Health care licenses | 50,927 | — | 50,927 | ||||||||
Trade names | 27,800 | (23,714 | ) | 4,086 | |||||||
Management contracts | 11,360 | (7,929 | ) | 3,431 | |||||||
Total | $ | 99,620 | $ | (31,643 | ) | $ | 67,977 |
(in thousands) | June 30, 2018 | December 31, 2017 | |||||
Land | $ | 473,580 | $ | 449,295 | |||
Buildings and improvements | 5,057,848 | 4,923,621 | |||||
Leasehold improvements | 121,542 | 124,850 | |||||
Furniture and equipment | 1,040,220 | 1,006,889 | |||||
Resident and leasehold operating intangibles | 550,876 | 594,748 | |||||
Construction in progress | 50,245 | 74,678 | |||||
Assets under capital and financing leases | 1,530,890 | 1,742,384 | |||||
8,825,201 | 8,916,465 | ||||||
Accumulated depreciation and amortization | (3,109,270 | ) | (3,064,320 | ) | |||
Property, plant and equipment and leasehold intangibles, net | $ | 5,715,931 | $ | 5,852,145 |
(in thousands) | June 30, 2018 | December 31, 2017 | |||||
Mortgage notes payable due 2018 through 2047; weighted average interest rate of 4.8% for the six months ended June 30, 2018, less debt discount and deferred financing costs of $20.5 million and $16.6 million as of June 30, 2018 and December 31, 2017, respectively (weighted average interest rate of 4.59% in 2017) | $ | 3,647,622 | $ | 3,497,762 | |||
Capital and financing lease obligations payable through 2032; weighted average interest rate of 7.93% for the six months ended June 30, 2018 (weighted average interest rate of 6.75% in 2017) | 1,094,178 | 1,271,554 | |||||
Convertible notes payable in aggregate principal amount of $316.3 million, less debt discount and deferred financing costs of $6.4 million as of December 31, 2017, interest at 2.75% per annum | — | 309,853 | |||||
Notes payable issued to finance insurance premiums, weighted average interest rate of 3.44% for the six months ended June 30, 2018 | 12,946 | — | |||||
Other notes payable, weighted average interest rate of 5.91% for the six months ended June 30, 2018 (weighted average interest rate of 5.98% in 2017) and maturity dates ranging from 2020 to 2021 | 61,558 | 63,122 | |||||
Total long-term debt and capital and financing lease obligations | 4,816,304 | 5,142,291 | |||||
Less current portion | 278,848 | 602,501 | |||||
Total long-term debt and capital and financing lease obligations, less current portion | $ | 4,537,456 | $ | 4,539,790 |
Six Months Ended June 30, | |||||||
(in thousands) | 2018 | 2017 | |||||
Supplemental Disclosure of Cash Flow Information: | |||||||
Interest paid | $ | 133,000 | $ | 155,389 | |||
Income taxes paid, net of refunds | $ | 1,421 | $ | 1,876 | |||
Additions to property, plant and equipment and leasehold intangibles, net: | |||||||
Property, plant and equipment and leasehold intangibles, net | $ | 105,266 | $ | 91,014 | |||
Accounts payable | 15,192 | (1,444 | ) | ||||
Net cash paid | $ | 120,458 | $ | 89,570 | |||
Acquisition of assets, net of related payables: | |||||||
Property, plant and equipment and leasehold intangibles, net | $ | 237,563 | $ | — | |||
Other intangible assets, net | (4,796 | ) | 400 | ||||
Capital and financing lease obligations | 36,120 | — | |||||
Other liabilities | 2,433 | — | |||||
Net cash paid | $ | 271,320 | $ | 400 |
Proceeds from sale of assets, net: | |||||||
Prepaid expenses and other assets | $ | (1,991 | ) | $ | (13,954 | ) | |
Assets held for sale | (18,758 | ) | (20,952 | ) | |||
Property, plant and equipment and leasehold intangibles, net | (87,864 | ) | (11,598 | ) | |||
Investments in unconsolidated ventures | (58,179 | ) | (26,301 | ) | |||
Long-term debt | — | 7,552 | |||||
Capital and financing lease obligations | 93,514 | — | |||||
Refundable entrance fees and deferred revenue | 8,345 | 30,771 | |||||
Other liabilities | 789 | 39 | |||||
(Gain) loss on sale of assets, net | (66,753 | ) | 1,150 | ||||
Loss on lease termination and modification, net | — | (1,162 | ) | ||||
Net cash received | $ | (130,897 | ) | $ | (34,455 | ) | |
Lease termination and modification, net | |||||||
Prepaid expenses and other assets | $ | (2,000 | ) | $ | — | ||
Property, plant and equipment and leasehold intangibles, net | (52,920 | ) | — | ||||
Capital and financing lease obligations | 21,898 | — | |||||
Deferred liabilities | 67,950 | — | |||||
Loss on lease termination and modification, net | 22,260 | — | |||||
Net cash paid (1) | $ | 57,188 | $ | — | |||
Formation of the Blackstone Venture: | |||||||
Prepaid expenses and other assets | $ | — | $ | (8,173 | ) | ||
Property, plant and equipment and leasehold intangibles, net | — | (768,897 | ) | ||||
Investments in unconsolidated ventures | — | 66,816 | |||||
Capital and financing lease obligations | — | 879,959 | |||||
Deferred liabilities | — | 7,504 | |||||
Other liabilities | — | 1,998 | |||||
Net cash paid | $ | — | $ | 179,207 | |||
Supplemental Schedule of Non-cash Operating, Investing and Financing Activities: | |||||||
Assets designated as held for sale: | |||||||
Prepaid expenses and other assets | $ | — | $ | 106 | |||
Assets held for sale | 58,445 | (14,122 | ) | ||||
Property, plant and equipment and leasehold intangibles, net | (58,445 | ) | 14,016 | ||||
Net | $ | — | $ | — | |||
Lease termination and modification, net | |||||||
Prepaid expenses and other assets | $ | (2,813 | ) | $ | — | ||
Property, plant and equipment and leasehold intangibles, net | 2,959 | — | |||||
Capital and financing lease obligations | (2,375 | ) | — | ||||
Deferred liabilities | (122,304 | ) | — | ||||
Other liabilities | 326 | — | |||||
Loss on lease termination and modification, net | 124,207 | — | |||||
Net | $ | — | $ | — |
(1) | The net cash paid to terminate community leases is presented within the condensed consolidated statement of cash flows based upon the lease classification of the terminated leases. Net cash paid of $46.6 million for the termination of operating leases is presented within net cash provided by operating activities and net cash paid of $10.5 million for the termination of capital leases is presented within net cash used in financing activities for the six months ended June 30, 2018. |
June 30, 2018 | December 31, 2017 | ||||||
Reconciliation of cash, cash equivalents and restricted cash: | |||||||
Cash and cash equivalents | $ | 126,637 | $ | 222,647 | |||
Restricted cash | 39,015 | 37,189 | |||||
Long-term restricted cash | 25,010 | 22,710 | |||||
Total cash, cash equivalents and restricted cash shown in the condensed consolidated statement of cash flows | $ | 190,662 | $ | 282,546 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(in thousands) | 2018 | 2017 | 2018 | 2017 | |||||||||||
Cash basis payment | $ | 87,115 | $ | 90,599 | $ | 176,708 | $ | 185,203 | |||||||
Straight-line (income) expense | (2,430 | ) | (3,119 | ) | (8,595 | ) | (6,126 | ) | |||||||
Amortization of (above) below market lease, net | (1,636 | ) | (1,697 | ) | (3,574 | ) | (3,394 | ) | |||||||
Amortization of deferred gain | (1,089 | ) | (1,093 | ) | (2,179 | ) | (2,186 | ) | |||||||
Facility lease expense | $ | 81,960 | $ | 84,690 | $ | 162,360 | $ | 173,497 |
VIE Type | Asset Type | Maximum Exposure to Loss | Carrying Value | |||||
CCRC Venture opco | Investment in unconsolidated ventures | $ | 25.4 | $ | 25.4 |
Three Months Ended June 30, 2018 | |||||||||||||||||||
(in thousands) | Retirement Centers | Assisted Living | CCRCs-Rental | Brookdale Ancillary Services | Total | ||||||||||||||
Private pay | $ | 158,405 | $ | 503,806 | $ | 73,392 | $ | 157 | $ | 735,760 | |||||||||
Government reimbursement | 888 | 18,221 | 21,379 | 90,605 | 131,093 | ||||||||||||||
Other third-party payor programs | — | — | 10,025 | 19,091 | 29,116 | ||||||||||||||
Total resident fee revenue | $ | 159,293 | $ | 522,027 | $ | 104,796 | $ | 109,853 | $ | 895,969 |
Three Months Ended June 30, 2017 | |||||||||||||||||||
(in thousands) | Retirement Centers | Assisted Living | CCRCs-Rental | Brookdale Ancillary Services | Total | ||||||||||||||
Private pay | $ | 161,362 | $ | 528,516 | $ | 77,116 | $ | 186 | $ | 767,180 | |||||||||
Government reimbursement | 886 | 18,914 | 26,283 | 95,763 | 141,846 | ||||||||||||||
Other third-party payor programs | — | — | 10,803 | 14,241 | 25,044 | ||||||||||||||
Total resident fee revenue | $ | 162,248 | $ | 547,430 | $ | 114,202 | $ | 110,190 | $ | 934,070 |
Six Months Ended June 30, 2018 | |||||||||||||||||||
(in thousands) | Retirement Centers | Assisted Living | CCRCs-Rental | Brookdale Ancillary Services | Total | ||||||||||||||
Private pay | $ | 315,912 | $ | 1,018,070 | $ | 144,113 | $ | 426 | $ | 1,478,521 | |||||||||
Government reimbursement | 1,778 | 36,237 | 45,085 | 183,232 | 266,332 | ||||||||||||||
Other third-party payor programs | — | — | 20,667 | 36,715 | 57,382 | ||||||||||||||
Total resident fee revenue | $ | 317,690 | $ | 1,054,307 | $ | 209,865 | $ | 220,373 | $ | 1,802,235 |
Six Months Ended June 30, 2017 | |||||||||||||||||||
(in thousands) | Retirement Centers | Assisted Living | CCRCs-Rental | Brookdale Ancillary Services | Total | ||||||||||||||
Private pay | $ | 332,979 | $ | 1,098,469 | $ | 171,739 | $ | 337 | $ | 1,603,524 | |||||||||
Government reimbursement | 1,889 | 39,498 | 59,111 | 194,297 | 294,795 | ||||||||||||||
Other third-party payor programs | — | — | 25,150 | 27,528 | 52,678 | ||||||||||||||
Total resident fee revenue | $ | 334,868 | $ | 1,137,967 | $ | 256,000 | $ | 222,162 | $ | 1,950,997 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(in thousands) | 2018 | 2017 | 2018 | 2017 | |||||||||||
Revenue: | |||||||||||||||
Retirement Centers (1) | $ | 159,293 | $ | 162,248 | $ | 317,690 | $ | 334,868 | |||||||
Assisted Living (1) | 522,027 | 547,430 | 1,054,307 | 1,137,967 | |||||||||||
CCRCs-Rental (1) | 104,796 | 114,202 | 209,865 | 256,000 | |||||||||||
Brookdale Ancillary Services (1) | 109,853 | 110,190 | 220,373 | 222,162 | |||||||||||
Management Services (2) | 259,231 | 252,402 | 540,199 | 452,241 | |||||||||||
$ | 1,155,200 | $ | 1,186,472 | $ | 2,342,434 | $ | 2,403,238 | ||||||||
Segment Operating Income: (3) | |||||||||||||||
Retirement Centers | $ | 65,134 | $ | 67,297 | $ | 129,556 | $ | 141,299 | |||||||
Assisted Living | 169,737 | 186,921 | 346,275 | 404,360 | |||||||||||
CCRCs-Rental | 23,819 | 24,344 | 48,482 | 59,659 | |||||||||||
Brookdale Ancillary Services | 10,203 | 13,103 | 18,521 | 28,732 | |||||||||||
Management Services | 17,071 | 22,442 | 35,752 | 38,336 | |||||||||||
285,964 | 314,107 | 578,586 | 672,386 | ||||||||||||
General and administrative (including non-cash stock-based compensation expense) | 60,314 | 67,090 | 137,024 | 132,650 | |||||||||||
Transaction costs | 2,593 | 3,339 | 7,318 | 10,932 | |||||||||||
Facility lease expense | 81,960 | 84,690 | 162,360 | 173,497 | |||||||||||
Depreciation and amortization | 116,116 | 120,887 | 230,371 | 248,374 | |||||||||||
Goodwill and asset impairment | 16,103 | 1,559 | 446,466 | 22,265 | |||||||||||
Loss on facility lease termination and modification | 146,467 | 6,368 | 146,467 | 6,368 | |||||||||||
Income (loss) from operations | $ | (137,589 | ) | $ | 30,174 | $ | (551,420 | ) | $ | 78,300 |
As of | |||||||
(in thousands) | June 30, 2018 | December 31, 2017 | |||||
Total assets: | |||||||
Retirement Centers | $ | 1,298,989 | $ | 1,266,076 | |||
Assisted Living | 3,957,957 | 4,535,114 | |||||
CCRCs-Rental | 723,655 | 667,234 | |||||
Brookdale Ancillary Services | 244,692 | 257,257 | |||||
Corporate and Management Services | 504,354 | 949,768 | |||||
$ | 6,729,647 | $ | 7,675,449 |
(1) | All revenue is earned from external third parties in the United States. |
(2) | Management services segment revenue includes management fees and reimbursements of costs incurred on behalf of managed communities. |
(3) | Segment operating income is defined as segment revenues less segment facility operating expenses (excluding depreciation and amortization) and costs incurred on behalf of managed communities. |
• | Stockholders. Our stockholders' continued investment in us allows us to advance our mission to our residents and their families. Therefore we believe we must balance our mission with an emphasis on margin. With this strategic priority, we intend to take actions to provide long-term returns to our stockholders by focusing on growing RevPAR, Adjusted EBITDA and Adjusted Free Cash Flow. |
• | Associates. Brookdale's culture is based on servant leadership, and our associates are the key to attracting and caring for residents and creating value for all of our stakeholders. Through this strategic priority, we intend to create a compelling value proposition for our associates in the areas of compensation, leadership, career growth and meaningful work. In 2017, we took the first corrective steps by investing in community leaders, and in 2018 we are extending this plan deeper in the communities. |
• | Residents, Patients and Their Families. Brookdale continues to be driven by its mission—to enrich the lives of those we serve with compassion, respect, excellence and integrity—and we believe this continued focus is essential to create value for all of our stakeholders. This strategic priority includes enhancing our organizational alignment to foster an environment where our |
• | Master Lease Transactions. We and HCP amended and restated triple-net leases covering substantially all of the communities we leased from HCP as of November 1, 2017 into the HCP Master Lease. During the three months ended June 30, 2018, we acquired two communities (208 units) for an aggregate purchase price of $35.4 million and leases with respect to ten communities (1,169 units) were terminated, and such communities were removed from the HCP Master Lease. We continue to manage these ten communities on an interim basis until operations of such communities are transitioned to a third party. |
• | RIDEA Ventures Restructuring. Pursuant to the multi-part transaction agreement, HCP acquired our 10% ownership interest in one of our RIDEA ventures with HCP in December 2017 for $32.1 million (for which we recognized a $7.2 million gain on sale) and our 10% ownership interest in the remaining RIDEA venture with HCP in March 2018 for $62.3 million (for which we recognized a $41.7 million gain on sale). We provided management services to 59 communities (9,585 units) on behalf of the two RIDEA ventures as of November 1, 2017. Pursuant to the multi-part transaction agreement, we acquired one community (137 units) for an aggregate purchase price of $32.1 million in January 2018 and three communities (650 units) for an aggregate purchase price of $207.4 million in April 2018 and retained management 18 of such communities (3,276 units). The amended and restated management agreements for such 18 communities have a term set to expire in 2030, subject to certain early termination rights. In addition, HCP will be entitled to sell or transition operations and/or management of 37 of such communities. Management agreements for seven and 17 such communities (1,429 and 2,367 units, respectively) were terminated by HCP during the three and six months ended June 30, 2018 (for which we recognized a $2.8 million and $5.1 million non-cash management contract termination gain, respectively), and we expect the termination of management agreements on the remaining 20 communities (3,155 units) to occur during the remainder of 2018. |
• | Lease Terminations. We and Welltower agreed to early termination of the Company's triple-net lease obligations on 37 communities (4,095 units) effective June 30, 2018. The two lease portfolios were due to mature in 2028 (27 communities; 3,175 units) and 2020 (10 communities; 920 units). We paid Welltower an aggregate lease termination fee of $58.0 million. We will continue to manage the foregoing 37 communities on an interim basis until the communities are transitioned to new managers and such communities will be reported in the Management Services segment during such interim period. We recognized a $22.6 million loss on lease termination in the three and six months ended June 30, 2018 for the amount by which the aggregate lease termination fee exceeded the net carrying value of the Company's assets and liabilities under operating and capital leases at the lease termination date. |
• | Future Lease Terminations. The parties separately agreed to allow us to terminate leases with respect to, and to remove from the remaining Welltower leased portfolio, a number of communities with annual aggregate base rent up to $5.0 million upon Welltower's sale of such communities, and we would receive a corresponding 6.25% rent credit on Welltower's disposition proceeds. |
• | RIDEA Restructuring. We agreed to sell our 20% equity interest in our existing Welltower RIDEA joint venture to Welltower, effective June 30, 2018, for net proceeds of $33.5 million (for which we recognized a $14.7 million gain on sale during the three and six months ended June 30, 2018). As of June 30, 2018, we provided management services to the 15 venture communities and will continue to manage the communities until the communities are transitioned by Welltower to new managers. |
Three Months Ended June 30, 2018 | |||||||||||
(in thousands) | Actual Results | Amounts Attributable to Completed Dispositions | Actual Results Less Amounts Attributable to Completed Dispositions | ||||||||
Resident fees | |||||||||||
Retirement Centers | $ | 159,293 | $ | 15,066 | $ | 144,227 | |||||
Assisted Living | 522,027 | 34,933 | 487,094 | ||||||||
CCRCs-Rental | 104,796 | — | 104,796 | ||||||||
Senior housing resident fees | $ | 786,116 | $ | 49,999 | $ | 736,117 | |||||
Facility operating expense | |||||||||||
Retirement Centers | $ | 94,159 | $ | 8,877 | $ | 85,282 | |||||
Assisted Living | 352,290 | 22,909 | 329,381 | ||||||||
CCRCs-Rental | 80,977 | — | 80,977 | ||||||||
Senior housing facility operating expense | $ | 527,426 | $ | 31,786 | $ | 495,640 | |||||
Cash lease payments | $ | 125,228 | $ | 17,442 | $ | 107,786 |
Three Months Ended June 30, 2017 | |||||||||||
(in thousands) | Actual Results | Amounts Attributable to Completed Dispositions | Actual Results Less Amounts Attributable to Completed Dispositions | ||||||||
Resident fees | |||||||||||
Retirement Centers | $ | 162,248 | $ | 23,033 | $ | 139,215 | |||||
Assisted Living | 547,430 | 60,034 | 487,396 | ||||||||
CCRCs-Rental | 114,202 | 11,394 | 102,808 | ||||||||
Senior housing resident fees | $ | 823,880 | $ | 94,461 | $ | 729,419 | |||||
Facility operating expense | |||||||||||
Retirement Centers | $ | 94,951 | $ | 14,355 | $ | 80,596 | |||||
Assisted Living | 360,509 | 42,666 | 317,843 | ||||||||
CCRCs-Rental | 89,858 | 11,655 | 78,203 | ||||||||
Senior housing facility operating expense | $ | 545,318 | $ | 68,676 | $ | 476,642 | |||||
Cash lease payments | $ | 133,344 | $ | 24,753 | $ | 108,591 |
Six Months Ended June 30, 2018 | |||||||||||
(in thousands) | Actual Results | Amounts Attributable to Completed Dispositions | Actual Results Less Amounts Attributable to Completed Dispositions | ||||||||
Resident fees | |||||||||||
Retirement Centers | $ | 317,690 | $ | 32,325 | $ | 285,365 | |||||
Assisted Living | 1,054,307 | 74,823 | 979,484 | ||||||||
CCRCs-Rental | 209,865 | 1,945 | 207,920 | ||||||||
Senior housing resident fees | $ | 1,581,862 | $ | 109,093 | $ | 1,472,769 | |||||
Facility operating expense | |||||||||||
Retirement Centers | $ | 188,134 | $ | 19,364 | $ | 168,770 | |||||
Assisted Living | 708,032 | 48,569 | 659,463 | ||||||||
CCRCs-Rental | 161,383 | 2,274 | 159,109 | ||||||||
Senior housing facility operating expense | $ | 1,057,549 | $ | 70,207 | $ | 987,342 | |||||
Cash lease payments | $ | 255,483 | $ | 37,364 | $ | 218,119 |
Six Months Ended June 30, 2017 | |||||||||||
(in thousands) | Actual Results | Amounts Attributable to Completed Dispositions | Actual Results Less Amounts Attributable to Completed Dispositions | ||||||||
Resident fees | |||||||||||
Retirement Centers | $ | 334,868 | $ | 54,651 | $ | 280,217 | |||||
Assisted Living | 1,137,967 | 155,545 | 982,422 | ||||||||
CCRCs-Rental | 256,000 | 49,515 | 206,485 | ||||||||
Senior housing resident fees | $ | 1,728,835 | $ | 259,711 | $ | 1,469,124 | |||||
Facility operating expense | |||||||||||
Retirement Centers | $ | 193,569 | $ | 32,873 | $ | 160,696 | |||||
Assisted Living | 733,607 | 108,171 | 625,436 | ||||||||
CCRCs-Rental | 196,341 | 42,826 | 153,515 | ||||||||
Senior housing facility operating expense | $ | 1,123,517 | $ | 183,870 | $ | 939,647 | |||||
Cash lease payments | $ | 288,899 | $ | 72,053 | $ | 216,846 |
Six Months Ended June 30, | Twelve Months Ended December 31, | ||||
2018 | 2017 | ||||
Number of communities | |||||
Retirement Centers | 10 | 10 | |||
Assisted Living | 39 | 86 | |||
CCRCs-Rental | 1 | 12 | |||
Total | 50 | 108 | |||
Total units | |||||
Retirement Centers | 1,756 | 2,078 | |||
Assisted Living | 3,582 | 5,858 | |||
CCRCs-Rental | 236 | 2,389 | |||
Total | 5,574 | 10,325 |
(in thousands) | Amounts Attributable to Planned Dispositions | ||
Resident fees | |||
Retirement Centers | $ | 17,964 | |
Assisted Living | 67,464 | ||
CCRCs - Rental | 11,764 | ||
Senior housing resident fees | $ | 97,192 | |
Facility operating expense | |||
Retirement Centers | $ | 10,186 | |
Assisted Living | 49,675 | ||
CCRCs-Rental | 10,834 | ||
Senior housing facility operating expense | $ | 70,695 | |
Cash lease payments | $ | 21,504 |
Three Months Ended June 30, | Increase (Decrease) | |||||||||||||
(in millions) | 2018 | 2017 | Amount | Percent | ||||||||||
Total revenues | $ | 1,155.2 | $ | 1,186.5 | $ | (31.3 | ) | (2.6 | )% | |||||
Facility operating expense | $ | 627.1 | $ | 642.4 | $ | (15.3 | ) | (2.4 | )% | |||||
Net income (loss) | $ | (165.5 | ) | $ | (46.3 | ) | $ | 119.2 | NM | |||||
Net income (loss) attributable to Brookdale Senior Living Inc. common stockholders | $ | (165.5 | ) | $ | (46.3 | ) | $ | 119.2 | NM | |||||
Adjusted EBITDA(1) | $ | 142.2 | $ | 160.3 | $ | (18.1 | ) | (11.3 | )% | |||||
Net cash provided by operating activities | $ | 60.6 | $ | 133.8 | $ | (73.1 | ) | (54.7 | )% | |||||
Adjusted Free Cash Flow(1) | $ | 12.4 | $ | 40.6 | $ | (28.2 | ) | (69.6 | )% |
Six Months Ended June 30, | Increase (Decrease) | |||||||||||||
(in millions) | 2018 | 2017 | Amount | Percent | ||||||||||
Total revenues | $ | 2,342.4 | $ | 2,403.2 | $ | (60.8 | ) | (2.5 | )% | |||||
Facility operating expense | $ | 1,259.4 | $ | 1,316.9 | $ | (57.5 | ) | (4.4 | )% | |||||
Net income (loss) | $ | (622.7 | ) | $ | (172.7 | ) | $ | 450.0 | NM | |||||
Net income (loss) attributable to Brookdale Senior Living Inc. common stockholders | $ | (622.7 | ) | $ | (172.6 | ) | $ | 450.1 | NM | |||||
Adjusted EBITDA(1) | $ | 272.2 | $ | 358.6 | $ | (86.4 | ) | (24.1 | )% | |||||
Net cash provided by operating activities | $ | 98.6 | $ | 200.5 | $ | (101.9 | ) | (50.8 | )% | |||||
Adjusted Free Cash Flow(1) | $ | 17.8 | $ | 104.1 | $ | (86.2 | ) | (82.8 | )% |
(1) | Adjusted EBITDA and Adjusted Free Cash Flow are non-GAAP financial measures we use to assess our operating performance and liquidity. See "Non-GAAP Financial Measures" below for important information regarding both measures. |
(dollars in thousands, except Total RevPAR, RevPAR and RevPOR) | Three Months Ended June 30, | Increase (Decrease) | ||||||||||||
2018 | 2017 | Amount | Percent (6) | |||||||||||
Statement of Operations Data: | ||||||||||||||
Revenue | ||||||||||||||
Resident fees | ||||||||||||||
Retirement Centers | $ | 159,293 | $ | 162,248 | $ | (2,955 | ) | (1.8 | )% | |||||
Assisted Living | 522,027 | 547,430 | (25,403 | ) | (4.6 | )% | ||||||||
CCRCs-Rental | 104,796 | 114,202 | (9,406 | ) | (8.2 | )% | ||||||||
Brookdale Ancillary Services | 109,853 | 110,190 | (337 | ) | (0.3 | )% | ||||||||
Total resident fees | 895,969 | 934,070 | (38,101 | ) | (4.1 | )% | ||||||||
Management services (1) | 259,231 | 252,402 | 6,829 | 2.7 | % | |||||||||
Total revenue | 1,155,200 | 1,186,472 | (31,272 | ) | (2.6 | )% | ||||||||
Expense | ||||||||||||||
Facility operating expense | ||||||||||||||
Retirement Centers | 94,159 | 94,951 | (792 | ) | (0.8 | )% | ||||||||
Assisted Living | 352,290 | 360,509 | (8,219 | ) | (2.3 | )% | ||||||||
CCRCs-Rental | 80,977 | 89,858 | (8,881 | ) | (9.9 | )% | ||||||||
Brookdale Ancillary Services | 99,650 | 97,087 | 2,563 | 2.6 | % | |||||||||
Total facility operating expense | 627,076 | 642,405 | (15,329 | ) | (2.4 | )% | ||||||||
General and administrative expense | 60,314 | 67,090 | (6,776 | ) | (10.1 | )% | ||||||||
Transaction costs | 2,593 | 3,339 | (746 | ) | (22.3 | )% | ||||||||
Facility lease expense | 81,960 | 84,690 | (2,730 | ) | (3.2 | )% | ||||||||
Depreciation and amortization | 116,116 | 120,887 | (4,771 | ) | (3.9 | )% | ||||||||
Goodwill and asset impairment | 16,103 | 1,559 | 14,544 | NM | ||||||||||
Loss on facility lease termination and modification, net | 146,467 | 6,368 | 140,099 | NM | ||||||||||
Costs incurred on behalf of managed communities | 242,160 | 229,960 | 12,200 | 5.3 | % | |||||||||
Total operating expense | 1,292,789 | 1,156,298 | 136,491 | 11.8 | % | |||||||||
Income (loss) from operations | (137,589 | ) | 30,174 | (167,763 | ) | NM | ||||||||
Interest income | 2,941 | 804 | 2,137 | NM | ||||||||||
Interest expense | (73,901 | ) | (76,476 | ) | (2,575 | ) | (3.4 | )% | ||||||
Debt modification and extinguishment costs | (9 | ) | (693 | ) | (684 | ) | (98.7 | )% | ||||||
Equity in loss of unconsolidated ventures | (1,324 | ) | (4,570 | ) | (3,246 | ) | (71.0 | )% | ||||||
Gain (loss) on sale of assets, net | 23,322 | (547 | ) | 23,869 | NM | |||||||||
Other non-operating income | 5,505 | 2,236 | 3,269 | 146.2 | % | |||||||||
Income (loss) before income taxes | (181,055 | ) | (49,072 | ) | 131,983 | NM | ||||||||
Benefit (provision) for income taxes | 15,546 | 2,735 | 12,811 | NM | ||||||||||
Net income (loss) | (165,509 | ) | (46,337 | ) | 119,172 | NM | ||||||||
Net (income) loss attributable to noncontrolling interest | 21 | 50 | (29 | ) | (58.0 | )% | ||||||||
Net income (loss) attributable to Brookdale Senior Living Inc. common stockholders | $ | (165,488 | ) | $ | (46,287 | ) | $ | 119,201 | NM |
Three Months Ended June 30, | Increase (Decrease) | |||||||||||||
2018 | 2017 | Amount | Percent (6) | |||||||||||
Selected Operating and Other Data: | ||||||||||||||
Total number of communities (period end) | 988 | 1,039 | (51 | ) | (4.9 | )% | ||||||||
Total units operated (2) | ||||||||||||||
Period end | 94,885 | 101,717 | (6,832 | ) | (6.7 | )% | ||||||||
Weighted average | 96,764 | 102,194 | (5,430 | ) | (5.3 | )% | ||||||||
Owned/leased communities units (2) | ||||||||||||||
Period end | 61,709 | 70,263 | (8,554 | ) | (12.2 | )% | ||||||||
Weighted average | 66,342 | 70,833 | (4,491 | ) | (6.3 | )% | ||||||||
Total RevPAR (3) | $ | 4,500 | $ | 4,392 | $ | 108 | 2.5 | % | ||||||
RevPAR (4) | $ | 3,948 | $ | 3,873 | $ | 75 | 1.9 | % | ||||||
Owned/leased communities occupancy rate (weighted average) | 84.1 | % | 84.6 | % | (0.5 | )% | (0.6 | )% | ||||||
RevPOR (5) | $ | 4,692 | $ | 4,580 | $ | 112 | 2.4 | % | ||||||
Selected Segment Operating and Other Data: | ||||||||||||||
Retirement Centers | ||||||||||||||
Number of communities (period end) | 75 | 86 | (11 | ) | (12.8 | )% | ||||||||
Total units (2) | ||||||||||||||
Period end | 13,559 | 16,071 | (2,512 | ) | (15.6 | )% | ||||||||
Weighted average | 15,083 | 16,071 | (988 | ) | (6.1 | )% | ||||||||
RevPAR (4) | $ | 3,520 | $ | 3,365 | $ | 155 | 4.6 | % | ||||||
Occupancy rate (weighted average) | 88.1 | % | 87.3 | % | 0.8 | % | 0.9 | % | ||||||
RevPOR (5) | $ | 3,993 | $ | 3,857 | $ | 136 | 3.5 | % | ||||||
Assisted Living | ||||||||||||||
Number of communities (period end) | 645 | 713 | (68 | ) | (9.5 | )% | ||||||||
Total units (2) | ||||||||||||||
Period end | 41,266 | 46,999 | (5,733 | ) | (12.2 | )% | ||||||||
Weighted average | 44,403 | 47,246 | (2,843 | ) | (6.0 | )% | ||||||||
RevPAR (4) | $ | 3,919 | $ | 3,862 | $ | 57 | 1.5 | % | ||||||
Occupancy rate (weighted average) | 82.9 | % | 83.9 | % | (1.0 | )% | (1.2 | )% | ||||||
RevPOR (5) | $ | 4,725 | $ | 4,602 | $ | 123 | 2.7 | % | ||||||
CCRCs-Rental | ||||||||||||||
Number of communities (period end) | 28 | 30 | (2 | ) | (6.7 | )% | ||||||||
Total units (2) | ||||||||||||||
Period end | 6,884 | 7,193 | (309 | ) | (4.3 | )% | ||||||||
Weighted average | 6,856 | 7,516 | (660 | ) | (8.8 | )% | ||||||||
RevPAR (4) | $ | 5,079 | $ | 5,028 | $ | 51 | 1.0 | % | ||||||
Occupancy rate (weighted average) | 83.0 | % | 83.0 | % | — | % | — | % | ||||||
RevPOR (5) | $ | 6,115 | $ | 6,063 | $ | 52 | 0.9 | % | ||||||
Management Services | ||||||||||||||
Number of communities (period end) | 240 | 210 | 30 | 14.3 | % | |||||||||
Total units (2) | ||||||||||||||
Period end | 33,176 | 31,454 | 1,722 | 5.5 | % | |||||||||
Weighted average | 30,422 | 31,361 | (939 | ) | (3.0 | )% |
Occupancy rate (weighted average) | 83.6 | % | 84.8 | % | (1.2 | )% | (1.4 | )% | ||||||
Brookdale Ancillary Services | ||||||||||||||
Home Health average daily census | 15,238 | 14,821 | 417 | 2.8 | % | |||||||||
Hospice average daily census | 1,337 | 1,033 | 304 | 29.4 | % | |||||||||
Outpatient Therapy treatment codes | 176,065 | 190,618 | (14,553 | ) | (7.6 | )% |
(1) | Management services segment revenue includes management fees and reimbursements of costs incurred on behalf of managed communities. |
(2) | Weighted average units operated represents the average units operated during the period. |
(3) | Total RevPAR, or average monthly resident fee revenues per available unit, is defined by the Company as resident fee revenues, excluding entrance fee amortization, for the Company for the period, divided by the weighted average number of available units in the Company's consolidated portfolio for the period, divided by the number of months in the period. |
(4) | RevPAR, or average monthly senior housing resident fee revenues per available unit, is defined by the Company as resident fee revenues, excluding Brookdale Ancillary Services segment revenue and entrance fee amortization, for the corresponding portfolio for the period, divided by the weighted average number of available units in the corresponding portfolio for the period, divided by the number of months in the period. |
(5) | RevPOR, or average monthly senior housing resident fee revenues per occupied unit, is defined by the Company as resident fee revenues, excluding Brookdale Ancillary Services segment revenue and entrance fee amortization, for the corresponding portfolio for the period, divided by the weighted average number of occupied units in the corresponding portfolio for the period, divided by the number of months in the period. |
(6) | NM - Not meaningful |
(dollars in thousands, except Total RevPAR, RevPAR and RevPOR) | Six Months Ended June 30, | Increase (Decrease) | ||||||||||||
2018 | 2017 | Amount | Percent (6) | |||||||||||
Statement of Operations Data: | ||||||||||||||
Revenue | ||||||||||||||
Resident fees | ||||||||||||||
Retirement Centers | $ | 317,690 | $ | 334,868 | $ | (17,178 | ) | (5.1 | )% | |||||
Assisted Living | 1,054,307 | 1,137,967 | (83,660 | ) | (7.4 | )% | ||||||||
CCRCs-Rental | 209,865 | 256,000 | (46,135 | ) | (18.0 | )% | ||||||||
Brookdale Ancillary Services | 220,373 | 222,162 | (1,789 | ) | (0.8 | )% | ||||||||
Total resident fees | 1,802,235 | 1,950,997 | (148,762 | ) | (7.6 | )% | ||||||||
Management services (1) | 540,199 | 452,241 | 87,958 | 19.4 | % | |||||||||
Total revenue | 2,342,434 | 2,403,238 | (60,804 | ) | (2.5 | )% | ||||||||
Expense | ||||||||||||||
Facility operating expense | ||||||||||||||
Retirement Centers | 188,134 | 193,569 | (5,435 | ) | (2.8 | )% | ||||||||
Assisted Living | 708,032 | 733,607 | (25,575 | ) | (3.5 | )% | ||||||||
CCRCs-Rental | 161,383 | 196,341 | (34,958 | ) | (17.8 | )% | ||||||||
Brookdale Ancillary Services | 201,852 | 193,430 | 8,422 | 4.4 | % | |||||||||
Total facility operating expense | 1,259,401 | 1,316,947 | (57,546 | ) | (4.4 | )% | ||||||||
General and administrative expense | 137,024 | 132,650 | 4,374 | 3.3 | % | |||||||||
Transaction costs | 7,318 | 10,932 | (3,614 | ) | (33.1 | )% | ||||||||
Facility lease expense | 162,360 | 173,497 | (11,137 | ) | (6.4 | )% | ||||||||
Depreciation and amortization | 230,371 | 248,374 | (18,003 | ) | (7.2 | )% | ||||||||
Goodwill and asset impairment | 446,466 | 22,265 | 424,201 | NM | ||||||||||
Loss on facility lease termination and modification, net | 146,467 | 6,368 | 140,099 | NM | ||||||||||
Costs incurred on behalf of managed communities | 504,447 | 413,905 | 90,542 | 21.9 | % | |||||||||
Total operating expense | 2,893,854 | 2,324,938 | 568,916 | 24.5 | % | |||||||||
Income (loss) from operations | (551,420 | ) | 78,300 | (629,720 | ) | NM | ||||||||
Interest income | 5,924 | 1,435 | 4,489 | NM | ||||||||||
Interest expense | (146,441 | ) | (169,545 | ) | (23,104 | ) | (13.6 | )% | ||||||
Debt modification and extinguishment costs | (44 | ) | (754 | ) | (710 | ) | (94.2 | )% | ||||||
Equity in loss of unconsolidated ventures | (5,567 | ) | (3,589 | ) | 1,978 | 55.1 | % | |||||||
Gain (loss) on sale of assets, net | 66,753 | (1,150 | ) | 67,903 | NM | |||||||||
Other non-operating income | 8,091 | 3,898 | 4,193 | 107.6 | % | |||||||||
Income (loss) before income taxes | (622,704 | ) | (91,405 | ) | 531,299 | NM | ||||||||
Provision for income taxes | (39 | ) | (81,293 | ) | 81,254 | 100.0 | % | |||||||
Net income (loss) | (622,743 | ) | (172,698 | ) | 450,045 | NM | ||||||||
Net (income) loss attributable to noncontrolling interest | 67 | 107 | (40 | ) | (37.4 | )% | ||||||||
Net income (loss) attributable to Brookdale Senior Living Inc. common stockholders | $ | (622,676 | ) | $ | (172,591 | ) | $ | 450,085 | NM |
Six Months Ended June 30, | Increase (Decrease) | |||||||||||||
2018 | 2017 | Amount | Percent (6) | |||||||||||
Selected Operating and Other Data: | ||||||||||||||
Total number of communities (period end) | 988 | 1,039 | (51 | ) | (4.9 | )% | ||||||||
Total units operated (2) | ||||||||||||||
Period end | 94,885 | 101,717 | (6,832 | ) | (6.7 | )% | ||||||||
Weighted average | 98,510 | 102,379 | (3,869 | ) | (3.8 | )% | ||||||||
Owned/leased communities units (2) | ||||||||||||||
Period end | 61,709 | 70,263 | (8,554 | ) | (12.2 | )% | ||||||||
Weighted average | 66,450 | 73,848 | (7,398 | ) | (10.0 | )% | ||||||||
Total RevPAR (3) | $ | 4,518 | $ | 4,399 | $ | 119 | 2.7 | % | ||||||
RevPAR (4) | $ | 3,965 | $ | 3,897 | $ | 68 | 1.7 | % | ||||||
Owned/leased communities occupancy rate (weighted average) | 84.3 | % | 84.9 | % | (0.6 | )% | (0.7 | )% | ||||||
RevPOR (5) | $ | 4,705 | $ | 4,589 | $ | 116 | 2.5 | % | ||||||
Selected Segment Operating and Other Data: | ||||||||||||||
Retirement Centers | ||||||||||||||
Number of communities (period end) | 75 | 86 | (11 | ) | (12.8 | )% | ||||||||
Total units (2) | ||||||||||||||
Period end | 13,559 | 16,071 | (2,512 | ) | (15.6 | )% | ||||||||
Weighted average | 15,064 | 16,590 | (1,526 | ) | (9.2 | )% | ||||||||
RevPAR (4) | $ | 3,515 | $ | 3,364 | $ | 151 | 4.5 | % | ||||||
Occupancy rate (weighted average) | 87.9 | % | 87.6 | % | 0.3 | % | 0.3 | % | ||||||
RevPOR (5) | $ | 3,998 | $ | 3,839 | $ | 159 | 4.1 | % | ||||||
Assisted Living | ||||||||||||||
Number of communities (period end) | 645 | 713 | (68 | ) | (9.5 | )% | ||||||||
Total units (2) | ||||||||||||||
Period end | 41,266 | 46,999 | (5,733 | ) | (12.2 | )% | ||||||||
Weighted average | 44,588 | 48,893 | (4,305 | ) | (8.8 | )% | ||||||||
RevPAR (4) | $ | 3,941 | $ | 3,879 | $ | 62 | 1.6 | % | ||||||
Occupancy rate (weighted average) | 83.2 | % | 84.3 | % | (1.1 | )% | (1.3 | )% | ||||||
RevPOR (5) | $ | 4,738 | $ | 4,601 | $ | 137 | 3.0 | % | ||||||
CCRCs-Rental | ||||||||||||||
Number of communities (period end) | 28 | 30 | (2 | ) | (6.7 | )% | ||||||||
Total units (2) | ||||||||||||||
Period end | 6,884 | 7,193 | (309 | ) | (4.3 | )% | ||||||||
Weighted average | 6,798 | 8,365 | (1,567 | ) | (18.7 | )% | ||||||||
RevPAR (4) | $ | 5,125 | $ | 5,060 | $ | 65 | 1.3 | % | ||||||
Occupancy rate (weighted average) | 83.5 | % | 83.3 | % | 0.2 | % | 0.2 | % | ||||||
RevPOR (5) | $ | 6,137 | $ | 6,078 | $ | 59 | 1.0 | % | ||||||
Management Services | ||||||||||||||
Number of communities (period end) | 240 | 210 | 30 | 14.3 | % | |||||||||
Total units (2) | ||||||||||||||
Period end | 33,176 | 31,454 | 1,722 | 5.5 | % | |||||||||
Weighted average | 32,060 | 28,531 | 3,529 | 12.4 | % | |||||||||
Occupancy rate (weighted average) | 83.9 | % | 85.5 | % | (1.6 | )% | (1.9 | )% |
Brookdale Ancillary Services | ||||||||||||||
Home Health average daily census | 15,367 | 15,094 | 273 | 1.8 | % | |||||||||
Hospice average daily census | 1,319 | 977 | 342 | 35.0 | % | |||||||||
Outpatient Therapy treatment codes | 343,325 | 384,471 | (41,146 | ) | (10.7 | )% |
(1) | Management services segment revenue includes management fees and reimbursements of costs incurred on behalf of managed communities. |
(2) | Weighted average units operated represents the average units operated during the period. |
(3) | Total RevPAR, or average monthly resident fee revenues per available unit, is defined by the Company as resident fee revenues, excluding entrance fee amortization, for the Company for the period, divided by the weighted average number of available units in the Company's consolidated portfolio for the period, divided by the number of months in the period. |
(4) | RevPAR, or average monthly senior housing resident fee revenues per available unit, is defined by the Company as resident fee revenues, excluding Brookdale Ancillary Services segment revenue and entrance fee amortization, for the corresponding portfolio for the period, divided by the weighted average number of available units in the corresponding portfolio for the period, divided by the number of months in the period. |
(5) | RevPOR, or average monthly senior housing resident fee revenues per occupied unit, is defined by the Company as resident fee revenues, excluding Brookdale Ancillary Services segment revenue and entrance fee amortization, for the corresponding portfolio for the period, divided by the weighted average number of occupied units in the corresponding portfolio for the period, divided by the number of months in the period. |
(6) | NM - Not meaningful |
Six Months Ended June 30, | Increase (Decrease) | |||||||||||||
(in thousands) | 2018 | 2017 | Amount | Percent | ||||||||||
Net cash provided by operating activities | $ | 98,584 | $ | 200,532 | $ | (101,948 | ) | (50.8 | )% | |||||
Net cash provided by (used in) investing activities | 11,512 | (259,494 | ) | 271,006 | 104.4 | % | ||||||||
Net cash used in financing activities | (201,980 | ) | (4,186 | ) | 197,794 | NM | ||||||||
Net increase (decrease) in cash, cash equivalents and restricted cash | (91,884 | ) | (63,148 | ) | (28,736 | ) | (45.5 | )% | ||||||
Cash, cash equivalents and restricted cash at beginning of period | 282,546 | 277,322 | 5,224 | 1.9 | % | |||||||||
Cash, cash equivalents and restricted cash at end of period | $ | 190,662 | $ | 214,174 | $ | (23,512 | ) | (11.0 | )% |
• | cash balances on hand, cash equivalents and marketable securities; |
• | cash flows from operations; |
• | proceeds from our credit facilities; |
• | funds generated through unconsolidated venture arrangements; |
• | proceeds from mortgage financing, refinancing of various assets or sale-leaseback transactions; |
• | funds raised in the debt or equity markets; and |
• | proceeds from the disposition of assets. |
• | working capital; |
• | operating costs such as employee compensation and related benefits, severance costs, general and administrative expense and supply costs; |
• | debt service and lease payments; |
• | acquisition consideration and transaction and integration costs; |
• | capital expenditures and improvements, including the expansion, renovation, redevelopment and repositioning of our current communities and the development of new communities; |
• | cash collateral required to be posted in connection with our financial instruments and insurance programs; |
• | purchases of common stock under our share repurchase authorizations; |
• | other corporate initiatives (including integration, information systems, branding and other strategic projects); and |
• | prior to 2009, dividend payments. |
• | working capital; |
• | operating costs such as employee compensation and related benefits, severance costs, general and administrative expense and supply costs; |
• | debt service and lease payments; |
• | acquisition consideration and transaction costs; |
• | capital expenditures and improvements, including the expansion, renovation, redevelopment and repositioning of our existing communities; |
• | cash funding needs of our unconsolidated ventures for operating, capital expenditure and financing needs; |
• | cash collateral required to be posted in connection with our financial instruments and insurance programs; |
• | purchases of common stock under our share repurchase authorization; and |
• | other corporate initiatives (including information systems and other strategic projects). |
(in millions) | Six Months Ended June 30, 2018 | ||
Community-level capital expenditures, net (1) | $ | 67.4 | |
Corporate (2) | 22.0 | ||
Non-development capital expenditures, net (3) | $ | 89.4 | |
Development capital expenditures, net (4) | 13.4 | ||
Total capital expenditures, net | $ | 102.8 |
(1) | Reflects the amount invested, net of lessor reimbursements of $1.8 million. |
(2) | Includes $5.9 million of remediation costs at our communities resulting from Hurricanes Harvey and Irma and for the acquisition of emergency power generators at our impacted Florida communities. Amounts exclude reimbursement from our property and casualty insurance policies of approximately $0.9 million. |
(3) | Amount is included in Adjusted Free Cash Flow. |
(4) | Reflects the amount invested, net of lessor reimbursements of $0.7 million. |
• | the cash portion of interest expense, income tax (benefit) provision and non-recurring charges related to gain (loss) on sale of communities (or facility lease termination and modification) and extinguishment of debt activities generally represent charges (gains), which may significantly affect our operating results; and |
• | depreciation and amortization and asset impairment represent the wear and tear and/or reduction in value of our communities and other assets, which affects the services we provide to residents and may be indicative of future needs for capital expenditures. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(in thousands) | 2018 | 2017 | 2018 | 2017 | |||||||||||
Net income (loss) | $ | (165,509 | ) | $ | (46,337 | ) | $ | (622,743 | ) | $ | (172,698 | ) | |||
(Benefit) provision for income taxes | (15,546 | ) | (2,735 | ) | 39 | 81,293 | |||||||||
Equity in loss of unconsolidated ventures | 1,324 | 4,570 | 5,567 | 3,589 | |||||||||||
Debt modification and extinguishment costs | 9 | 693 | 44 | 754 | |||||||||||
(Gain) loss on sale of assets | (23,322 | ) | 547 | (66,753 | ) | 1,150 | |||||||||
Other non-operating income | (5,505 | ) | (2,236 | ) | (8,091 | ) | (3,898 | ) | |||||||
Interest expense | 73,901 | 76,476 | 146,441 | 169,545 | |||||||||||
Interest income | (2,941 | ) | (804 | ) | (5,924 | ) | (1,435 | ) | |||||||
Income (loss) from operations | (137,589 | ) | 30,174 | (551,420 | ) | 78,300 | |||||||||
Depreciation and amortization | 116,116 | 120,887 | 230,371 | 248,374 | |||||||||||
Goodwill and asset impairment | 16,103 | 1,559 | 446,466 | 22,265 | |||||||||||
Loss on facility lease termination and modification, net | 146,467 | 6,368 | 146,467 | 6,368 | |||||||||||
Straight-line lease (income) expense | (2,430 | ) | (3,119 | ) | (8,595 | ) | (6,126 | ) | |||||||
Amortization of (above) below market lease, net | (1,636 | ) | (1,697 | ) | (3,574 | ) | (3,394 | ) | |||||||
Amortization of deferred gain | (1,089 | ) | (1,093 | ) | (2,179 | ) | (2,186 | ) | |||||||
Non-cash stock-based compensation expense | 6,269 | 7,246 | 14,675 | 15,020 | |||||||||||
Adjusted EBITDA (1) | $ | 142,211 | $ | 160,325 | $ | 272,211 | $ | 358,621 |
(1) | The calculation of Adjusted EBITDA includes transaction and organizational restructuring costs of $5.0 million and $22.2 million for the three and six months ended June 30, 2018, respectively. The calculation of Adjusted EBITDA includes transaction and strategic project costs of $3.9 million and $11.6 million for the three and six months ended June 30, 2017, respectively. Transaction costs include third party costs directly related to acquisition and disposition activity, community financing and leasing activity, our assessment of options and alternatives to enhance stockholder value, and stockholder relations advisory matters, and are primarily comprised of legal, finance, consulting, professional fees and other third party costs. Organizational restructuring costs include those related to our efforts to reduce general and administrative expense and our senior leadership changes, including severance and retention costs. Strategic project costs include costs associated with certain strategic projects related to refining our strategy, building out enterprise-wide capabilities (including the EMR roll-out project) and reducing costs and achieving synergies by capitalizing on scale. |
• | Adjusted Free Cash Flow does not represent cash available for dividends or discretionary expenditures, since we have mandatory debt service requirements and other non-discretionary expenditures not reflected in this measure; and |
• | the cash portion of non-recurring charges related to gain (loss) on lease termination and modification and extinguishment of debt activities generally represent charges (gains), which may significantly affect our financial results. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(in thousands) | 2018 | 2017 | 2018 | 2017 | |||||||||||
Net cash provided by operating activities | $ | 60,620 | $ | 133,759 | $ | 98,584 | $ | 200,532 | |||||||
Net cash (used in) provided by investing activities | (79,643 | ) | (59,751 | ) | 11,512 | (259,494 | ) | ||||||||
Net cash (used in) provided by financing activities | (185,876 | ) | 19,375 | (201,980 | ) | (4,186 | ) | ||||||||
Net (decrease) increase in cash, cash equivalents and restricted cash | $ | (204,899 | ) | $ | 93,383 | $ | (91,884 | ) | $ | (63,148 | ) | ||||
Net cash provided by operating activities | $ | 60,620 | $ | 133,759 | $ | 98,584 | $ | 200,532 | |||||||
Changes in operating assets and liabilities | 6,076 | (40,401 | ) | 36,476 | 8,191 | ||||||||||
Proceeds from refundable entrance fees, net of refunds | (171 | ) | (652 | ) | 52 | (1,554 | ) | ||||||||
Lease financing debt amortization | (18,787 | ) | (14,382 | ) | (39,901 | ) | (31,630 | ) | |||||||
Loss on facility lease termination and modification, net | 13,044 | — | 13,044 | — | |||||||||||
Distributions from unconsolidated ventures from cumulative share of net earnings | (739 | ) | (453 | ) | (1,147 | ) | (892 | ) | |||||||
Non-development capital expenditures, net | (47,681 | ) | (38,832 | ) | (89,417 | ) | (73,554 | ) | |||||||
Property insurance proceeds | — | 1,571 | 156 | 2,969 | |||||||||||
Adjusted Free Cash Flow (1) | $ | 12,362 | $ | 40,610 | $ | 17,847 | $ | 104,062 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(in thousands) | 2018 | 2017 | 2018 | 2017 | |||||||||||
Net cash provided by operating activities | $ | 47,510 | $ | 85,867 | $ | 97,772 | $ | 145,791 | |||||||
Net cash used in investing activities | (15,746 | ) | (26,408 | ) | (30,388 | ) | (1,170,523 | ) | |||||||
Net cash (used in) provided by financing activities | (29,380 | ) | (37,686 | ) | (52,659 | ) | 1,107,373 | ||||||||
Net increase in cash, cash equivalents and restricted cash | $ | 2,384 | $ | 21,773 | $ | 14,725 | $ | 82,641 | |||||||
Net cash provided by operating activities | $ | 47,510 | $ | 85,867 | $ | 97,772 | $ | 145,791 | |||||||
Changes in operating assets and liabilities | (13,838 | ) | (16,559 | ) | (12,719 | ) | (14,473 | ) | |||||||
Proceeds from refundable entrance fees, net of refunds | (3,323 | ) | (5,028 | ) | (10,035 | ) | (9,393 | ) | |||||||
Non-development capital expenditures, net | (18,867 | ) | (23,739 | ) | (38,928 | ) | (40,766 | ) | |||||||
Property insurance proceeds | 634 | 834 | 1,535 | 1,227 | |||||||||||
Adjusted Free Cash Flow of unconsolidated ventures | $ | 12,116 | $ | 41,375 | $ | 37,625 | $ | 82,386 | |||||||
Brookdale weighted average ownership percentage | 47.9 | % | 19.1 | % | 30.9 | % | 20.2 | % | |||||||
Brookdale's proportionate share of Adjusted Free Cash Flow of unconsolidated ventures | $ | 5,798 | $ | 7,920 | $ | 11,622 | $ | 16,670 |
(a) | Not applicable. |
(b) | Not applicable. |
(c) | The following table contains information regarding purchases of our common stock made during the quarter ended June 30, 2018 by or on behalf of the Company or any ''affiliated purchaser,'' as defined by Rule 10b-18(a)(3) of the Exchange Act: |
Period | Total Number of Shares Purchased (1) | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs ($ in thousands) (2) | ||||||||
4/1/2018 - 4/30/2018 | — | — | — | 90,360 | ||||||||
5/1/2018 - 5/31/2018 | 12,685 | $ | 7.64 | — | 90,360 | |||||||
6/1/2018 - 6/30/2018 | — | — | — | 90,360 | ||||||||
Total | 12,685 | $ | 7.64 | — |
(1) | Consists entirely of shares withheld to satisfy tax liabilities due upon the vesting of restricted stock. The average price paid per share for such share withholding is based on the closing price per share on the vesting date of the restricted stock or, if such date is not a trading day, the trading day immediately prior to such vesting date. |
(2) | On November 1, 2016, the Company announced that its Board of Directors had approved a share repurchase program that authorizes the Company to purchase up to $100.0 million in the aggregate of its common stock. The share repurchase program is intended to be implemented through purchases made from time to time using a variety of methods, which may include open market purchases, privately negotiated transactions or block trades, or by any combination of such methods, in accordance with applicable insider trading and other securities laws and regulations. The size, scope and timing of any purchases will be based on business, market and other conditions and factors, including price, regulatory and contractual requirements, and capital availability. The repurchase program does not obligate the Company to acquire any particular amount of common stock and the program may be suspended, modified or discontinued at any time at the Company's discretion without prior notice. Shares of stock repurchased under the program will be held as treasury shares. No shares were purchased pursuant to the repurchase program during the three months ended June 30, 2018, and approximately $90.4 million remained available under the repurchase program as of June 30, 2018. |
Exhibit No. | Description | |
3.1 | ||
3.2 | ||
3.3 | ||
4.1 | ||
10.1 | ||
10.2 |
10.3 | ||
31.1 | ||
31.2 | ||
32 | ||
101.INS | XBRL Instance Document. | |
101.SCH | XBRL Taxonomy Extension Schema Document. | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document. | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document. | |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document. | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document. |
† | Portions of this exhibit have been omitted pursuant to a request for confidential treatment with the SEC. |
BROOKDALE SENIOR LIVING INC. | |||
(Registrant) | |||
By: | /s/ Lucinda M. Baier | ||
Name: | Lucinda M. Baier | ||
Title: | President and Chief Executive Officer (Principal Executive Officer) | ||
Date: | August 7, 2018 | ||
Section | Page | |
1. | Defined Terms | 1 |
2. | Premises; Single Lease; Lease Combination and Amendment and Restatement | 1 |
2.1. | Premises | 1 |
2.2. | Single Lease | 1 |
2.3. | Lease Combination and Amendment and Restatement | 2 |
3. | Term | 3 |
3.1. | Initial Term | 3 |
3.2. | Renewal Terms | 3 |
3.3. | Term Defined | 4 |
4. | Rent | 4 |
4.1. | Minimum Rent, Adjustments | 4 |
4.2. | Additional Rent | 6 |
4.3. | [Reserved] | 7 |
4.4. | Tax and Insurance Escrow | 7 |
4.5. | Absolute Net Lease | 10 |
4.6. | Payment Method | 10 |
5. | Operating Covenants | 10 |
5.1 | Insurance | 10 |
5.2. | Permitted Use | 15 |
5.3. | Tenant Property | 15 |
5.4. | Authorizations | 16 |
5.5. | Compliance with Requirements, Third Party Payor Programs and Permitted Encumbrances | 16 |
5.6. | Preservation of Business | 18 |
5.7. | Hazardous Materials | 18 |
5.8. | Financial, Management and Regulatory Reports | 19 |
5.9. | Intentionally Deleted | 19 |
5.10. | Negative Covenants | 19 |
5.11. | Furnish Information | 21 |
5.12. | Further Assurances | 21 |
5.13. | No Impairment | 21 |
5.14. | Permitted AR Financing | 21 |
5.15. | No Liens | 21 |
6. | Condition and Maintenance of the Premises | 22 |
6.1. | Acceptance “AS IS” | 22 |
6.2. | Tenant’s Maintenance Obligations | 22 |
6.3. | Upgrade Expenditures | 22 |
6.4. | Alterations | 26 |
6.5. | Revenue Enhancing Projects | 27 |
6.6. | Granting of Easements and Licenses | 33 |
7. | Events of Default; Remedies | 33 |
7.1. | Master Lease Events of Default | 33 |
7.2. | Facility Defaults | 35 |
7.3. | Landlord Termination Right | 37 |
7.4. | Remedies | 37 |
8. | Obligations of Tenant on Expiration or Early Termination of the Lease | 41 |
8.1. | Surrender of Possession | 41 |
8.2. | Transition of Operations | 41 |
8.3. | Facility Termination | 43 |
8.4. | Tenant Property | 44 |
8.5. | Holding Over | 44 |
8.6. | Survival | 45 |
9. | Certain Landlord Rights | 45 |
9.1. | Landlord’s Security Interest and Financing Statements | 45 |
9.2. | Entry and Examination of Records | 45 |
9.3. | Estoppel Certificates | 45 |
9.4. | Conveyance Release | 46 |
9.5. | Landlord’s Financing | 46 |
10. | Assignment and Subletting | 46 |
10.1. | Prohibition on Transfer | 46 |
10.2. | Effect of any Unapproved Transfer | 46 |
10.3. | Permitted Transfers | 47 |
10.4. | Rights of Landlord | 47 |
10.5. | Transfer Defined | 47 |
10.6. | Subleases | 48 |
11. | Damage and Destruction | 48 |
11.1. | Notice of Property Loss | 48 |
11.2. | Substantial Destruction | 49 |
11.3. | Partial Destruction | 49 |
11.4. | Restoration | 49 |
11.5. | Disbursement of Insurance Proceeds | 50 |
11.6. | Insufficient Proceeds/Risk of Loss | 51 |
11.7. | Landlord’s Inspection | 51 |
11.8. | Not Trust Funds | 51 |
11.9. | Waiver | 51 |
11.10. | Facility Mortgagee | 51 |
12. | Condemnation | 51 |
12.1. | Total Taking | 52 |
12.2. | Partial Taking | 52 |
12.3. | Restoration | 52 |
12.4. | Temporary Taking | 52 |
12.5. | Waiver | 52 |
13. | Indemnification by Tenant | 52 |
13.1. | Indemnity | 52 |
13.2. | Indemnity Claims Process | 53 |
13.3. | Survival of Indemnity | 54 |
13.4. | Waiver of Subrogation | 54 |
14. | Combination of Leases and New Leases | 54 |
14.1. | Combination of Leases | 54 |
14.2. | New Lease | 54 |
15. | Miscellaneous | 54 |
15.1. | Attorneys’ Fees | 54 |
15.2. | Non-Recourse | 54 |
15.3. | General REIT Provisions | 55 |
15.4. | Prohibited Transactions | 55 |
15.5. | Personal Property REIT Requirements | 55 |
15.6. | Impermissible Services REIT Requirements | 56 |
15.7. | Waiver of Jury Trial | 56 |
15.8. | Notices | 56 |
15.9. | Interpretation | 57 |
15.10. | Time of the Essence | 57 |
15.11. | Severability | 57 |
15.12. | General Terms | 58 |
15.13. | Governing Law | 58 |
15.14. | Anti-Terrorism Representations | 59 |
15.15. | Notice to the Department of Health | 59 |
15.16. | Confidentiality | 59 |
15.17. | Permitted Contests | 60 |
15.16. | State Specific Provisions | 61 |
Defined Terms | Exhibit A |
Real Property Legal Description | Exhibit B |
Landlord Personal Property | Exhibit C |
Fair Market Rental | Exhibit D |
Intentionally Deleted | Exhibit E |
Financial, Management and Regulatory Reports | Exhibit F |
Restrictive Covenants | Exhibit G |
Combination of Leases and New Leases; Proportionate Shares | Exhibit H |
Intentionally Deleted | Exhibit I |
Intentionally Deleted | Exhibit J |
Form of Subordination of Management Agreement | Exhibit K |
Sale Facilities | Exhibit L |
Facility Information | Schedule 1 |
Authorizations and Licensed Units/Beds | Schedule 1A |
Existing Leases and Existing ARLs/Documents | Schedule 2.3.1 |
Site Specific Provisions | Schedule 2.3.5 |
Rent Credit | Schedule 4.1.5 |
[Reserved] | Schedule 4.1.6 |
[Reserved] | Schedule 4.6 |
Facilities Previously Under Existing Lease with no Vehicle Conveyance | Schedule 5.3 |
Affiliate Management Agreements | Schedule 5.10.1 |
Illustrative Example of Upgrade Expenditures Provisions | Schedule 6.3.5 |
Form of Officer’s Certificate for Revenue Enhancing Projects | Schedule 6.5.5.9 |
Form of Guaranty Reaffirmation | Schedule 7.2.7 |
If to Tenant: c/o Brookdale Senior Living Inc. 111 Westwood Place, Suite 400 Brentwood, Tennessee 37027 Attention: General Counsel | If to Landlord: c/o Ventas, Inc. 500 North Hurstbourne Parkway, Suite 200 Louisville, Kentucky 40222 Attention: Lease Administration Telephone: (502) 357-9000 Fax No.: (502) 357-9001 |
With a copy to: c/o Brookdale Senior Living Inc. 6737 W. Washington Street, Suite 2300 Milwaukee, WI 53214 Attention: Legal Department | With a copy to: c/o Ventas, Inc. 353 N. Clark Street, Suite 3300 Chicago, Illinois 60654 Attention: Legal Department Telephone: (312) 660-3800 Fax No.: (312) 660-3850 With a copy to: Barack Ferrazzano Kirschbaum & Nagelberg LLP 200 W. Madison Street, Suite 3900 Chicago, Illinois 60606 Attention: Joseph D. Lambert Telephone: (312) 984-3143 Fax No.: (312) 984-3150 |
(a) | Notwithstanding anything contained in this Lease to the contrary, Hazardous Materials Laws, in addition to all specific laws referenced in Exhibit A hereof as Hazardous Materials Laws, shall include the New Jersey Spill Compensation and Control Act (N.J.S.A. 58:10-23.11 et seq.) (for purposes of this Section 15.17.8, the “Spill Act”) and the New Jersey Industrial Site Recovery Act (N.J.S.A. 13:1K-6 et seq.) (for purposes of this Section 15.17.8, “ISRA”), if and to the extent they apply to the Premises or the use thereof at any time during the Term. The term “Authority” as used in this Section 15.17.8 shall mean governmental and quasi-governmental authorities, bodies or boards having jurisdiction over the Premises and compliance with the Hazardous Materials Laws with respect thereto, including, but not limited to, the New Jersey Department of Environmental Protection. More than one |
(b) | If at any time during the Term of this Lease, the Premises shall be determined to be an industrial establishment under ISRA as a result of the North American Industrial Classification System code applicable to Tenant’s operations, Tenant, at Tenant’s sole cost and expense, shall comply with the provisions of ISRA, or other similar applicable laws, if Tenant takes any action which would be a “triggering event” under ISRA. |
(c) | Should any Authority or any third party demand that a clean-up plan be prepared and that a clean-up be undertaken at the Premises because of any deposit, spill, discharge, or other release of Hazardous Substances in violation of the Spill Act that occurs during the Term, at or from the Premises, or which arises at any time from Tenant’s use or occupancy of the Premises, then Tenant shall, at Tenant’s sole expense, prepare and submit the required plans and all related bonds and other financial assurances; and Tenant shall carry out all such clean-up plans. |
(d) | Tenant shall indemnify, defend, and hold harmless Landlord, the manager of the property, and their respective officers, directors, beneficiaries, shareholders, partners, agents, and employees from all fines, suits, procedures, claims and actions of every kind, and all costs associated therewith (including attorneys’ and consultants’ fees) arising out of or in any way connected with any deposit, spill, discharge, or other release of Hazardous Substances that occurs during the Term, at or from the Premises, or which arises at any time from Tenant’s use or occupancy of the Premises, or from Tenant’s failure to provide all information, make all submissions, and take all steps required by all Authorities under the Hazardous Materials Laws and all other environmental laws, including any lien assessed to the Premises. |
(e) | Tenant’s obligations and liabilities under this Section 15.18.8 shall survive the termination or expiration of this Lease. |
(a) | Express Agreement. The parties acknowledge and agree that the provisions of this Section 12 constitute an express agreement pursuant to the New York Real Property Law, Section 227, as the same may be amended or re-codified or any similar or successor law. |
(a) | Tenant’s Waiver; Mitigation. In connection with the exercise by Landlord of any of its remedies under this Section 7.4, including the termination of this Lease, in whole or in part, Tenant waives, to the maximum extent permitted by applicable Legal Requirements, (1) any right of redemption, re-entry or repossession under present or future laws, including without limitation, Section 761 of the New York Real Property Actions and Proceeding Law, (2) the benefit of any moratorium laws or any laws now or hereafter in force exempting property from liability for rent or for debt, (3) any duty on the part of Landlord to mitigate the damages recoverable from Tenant on account of any Default Event or Event of Default by Tenant, except that, notwithstanding the foregoing or anything in this Lease to the contrary, Landlord |
BROOKDALE LIVING COMMUNITIES OF ILLINOIS-GV, LLC, a Delaware limited liability company By: /s/ George T. Hicks Name: George T. Hicks Title: Executive Vice President and Treasurer |
BLC-THE HALLMARK, LLC, a Delaware limited liability company By: /s/ George T. Hicks Name: George T. Hicks Title: Executive Vice President and Treasurer |
BLC-KENWOOD OF LAKE VIEW, LLC, a Delaware limited liability company By: /s/ George T. Hicks Name: George T. Hicks Title: Executive Vice President and Treasurer |
BLC-GABLES AT FARMINGTON, LLC, a Delaware limited liability company By: /s/ George T. Hicks Name: George T. Hicks Title: Executive Vice President and Treasurer |
BLC-DEVONSHIRE OF HOFFMAN ESTATES, LLC, a Delaware limited liability company By: /s/ George T. Hicks Name: George T. Hicks Title: Executive Vice President and Treasurer |
BLC-THE BERKSHIRE OF CASTLETON, L.P., a Delaware limited partnership By:BLC-The Berkshire of Castleton, LLC, a Delaware limited liability company, its General Partner By: /s/ George T. Hicks Name: George T. Hicks Title: Executive Vice President and Treasurer |
BLC-SPRINGS AT EAST MESA, LLC, a Delaware limited liability company By: /s/ George T. Hicks Name: George T. Hicks Title: Executive Vice President and Treasurer |
BLC-RIVER BAY CLUB, LLC, a Delaware limited liability company By: /s/ George T. Hicks Name: George T. Hicks Title: Executive Vice President and Treasurer |
BLC-WOODSIDE TERRACE, L.P., a Delaware limited partnership By: BLC-Woodside Terrace, LLC, a Delaware limited liability company, its general partner By: /s/ George T. Hicks Name: George T. Hicks Title: Executive Vice President and Treasurer BLC-ATRIUM AT SAN JOSE, L.P., a Delaware limited partnership By:BLC-Atrium at San Jose, LLC, a Delaware limited liability company, its general partner By: /s/ George T. Hicks Name: George T. Hicks Title: Executive Vice President and Treasurer |
BLC-BROOKDALE PLACE OF SAN MARCOS, L.P., a Delaware limited partnership By:BLC-Brookdale Place of San Marcos, LLC, a Delaware limited liability company, its general partner By: /s/ George T. Hicks Name: George T. Hicks Title: Executive Vice President and Treasurer |
BLC-PONCE DE LEON, LLC, a Delaware limited liability company By: /s/ George T. Hicks Name: George T. Hicks Title: Executive Vice President and Treasurer |
BLC-PARK PLACE, LLC, a Delaware limited liability company By: /s/ George T. Hicks Name: George T. Hicks Title: Executive Vice President and Treasurer |
BLC-HAWTHORNE LAKES, LLC, a Delaware limited liability company By: /s/ George T. Hicks Name: George T. Hicks Title: Executive Vice President and Treasurer |
BLC-THE WILLOWS, LLC, a Delaware limited liability company By: /s/ George T. Hicks Name: George T. Hicks Title: Executive Vice President and Treasurer |
BLC-BRENDENWOOD, LLC, a Delaware limited liability company By: /s/ George T. Hicks Name: George T. Hicks Title: Executive Vice President and Treasurer |
BLC-CHATFIELD, LLC, a Delaware limited liability company By: /s/ George T. Hicks Name: George T. Hicks Title: Executive Vice President and Treasurer |
BROOKDALE LIVING COMMUNITIES OF FLORIDA, INC. a Delaware corporation By: /s/ George T. Hicks Name: George T. Hicks Title: Executive Vice President and Treasurer |
BROOKDALE LIVING COMMUNITIES OF ILLINOIS-DNC, LLC, a Delaware limited liability company By: /s/ George T. Hicks Name: George T. Hicks Title: Executive Vice President and Treasurer |
SW ASSISTED LIVING, LLC, a Delaware limited liability company By: /s/ George T. Hicks Name: George T. Hicks Title: Executive Vice President and Treasurer |
SUMMERVILLE AT FAIRWOOD MANOR, LLC, a Delaware limited liability company By: /s/ George T. Hicks Name: George T. Hicks Title: Executive Vice President and Treasurer |
SUMMERVILLE AT HERITAGE PLACE, LLC, a Delaware limited liability company By: /s/ George T. Hicks Name: George T. Hicks Title: Executive Vice President and Treasurer |
SUMMERVILLE 5 LLC, a Delaware limited liability company By: /s/ George T. Hicks Name: George T. Hicks Title: Executive Vice President and Treasurer |
SUMMERVILLE 4 LLC, a Delaware limited liability company By: /s/ George T. Hicks Name: George T. Hicks Title: Executive Vice President and Treasurer |
SUMMERVILLE 17 LLC, a Delaware limited liability company By: /s/ George T. Hicks Name: George T. Hicks Title: Executive Vice President and Treasurer |
SUMMERVILLE AT RIDGEWOOD GARDENS LLC, a Delaware limited liability company By: /s/ George T. Hicks Name: George T. Hicks Title: Executive Vice President and Treasurer |
ALS PROPERTIES TENANT II, LLC, a Delaware limited liability company By: /s/ George T. Hicks Name: George T. Hicks Title: Executive Vice President and Treasurer |
ALS LEASING, INC., a Delaware corporation By: /s/ George T. Hicks Name: George T. Hicks Title: Executive Vice President and Treasurer |
ASSISTED LIVING PROPERTIES, INC., a Kansas corporation By: /s/ George T. Hicks Name: George T. Hicks Title: Executive Vice President and Treasurer |
ALS PROPERTIES TENANT I, LLC, a Delaware limited liability company By: /s/ George T. Hicks Name: George T. Hicks Title: Executive Vice President and Treasurer |
BROOKDALE SENIOR LIVING COMMUNITIES, INC. a Delaware corporation (f/k/a Alterra Healthcare Corporation and Alternative Living Services, Inc.) By: /s/ George T. Hicks Name: George T. Hicks Title: Executive Vice President and Treasurer |
LANDLORD: |
VENTAS REALTY, LIMITED PARTNERSHIP, a Delaware limited partnership By: Ventas, Inc., a Delaware corporation, its general partner By: /s/ John D. Cobb Name: John D. Cobb Title: Authorized Signatory |
PSLT-ALS PROPERTIES I, LLC, a Delaware limited liability company By: PSLT-ALS Properties Holdings, LLC, its sole member By: PSLT OP, L.P., its sole member By: PSLT GP, LLC, its general partner By: Ventas Provident, LLC, its sole member By: /s/ John D. Cobb Name: John D. Cobb Title: Authorized Signatory |
PSLT-ALS PROPERTIES II, LLC, a Delaware limited liability company By: PSLT-ALS Properties Holdings, LLC, its sole member By: PSLT OP, L.P., its sole member By: PSLT GP, LLC, its general partner By: Ventas Provident, LLC, its sole member By: /s/ John D. Cobb Name: John D. Cobb Title: Authorized Signatory |
PSLT-ALS PROPERTIES IV, LLC, a Delaware limited liability company By: /s/ John D. Cobb Name: John D. Cobb Title: Authorized Signatory |
PSLT-ALS PROPERTIES III, LLC, a Delaware limited liability company By: /s/ John D. Cobb Name: John D. Cobb Title: Authorized Signatory |
BROOKDALE LIVING COMMUNITIES OF ILLINOIS-2960, LLC, a Delaware limited liability company By: PSLT-BLC Properties Holdings, LLC, its sole member By: PSLT OP, L.P., its sole member By: PSLT GP, LLC, its general partner By: Ventas Provident, LLC, its sole member By: /s/ John D. Cobb Name: John D. Cobb Title: Authorized Signatory |
BROOKDALE LIVING COMMUNITIES OF ILLINOIS-HV, LLC, a Delaware limited liability company By: /s/ John D. Cobb Name: John D. Cobb Title: Authorized Signatory |
RIVER OAKS PARTNERS, an Illinois general partnership By: Brookdale Holdings, LLC, its managing partner By: PSLT-BLC Properties Holdings, LLC, its sole member By: PSLT OP, L.P., its sole member By: PSLT GP, LLC, its general partner By: Ventas Provident, LLC, its sole member By: /s/ John D. Cobb Name: John D. Cobb Title: Authorized Signatory |
BROOKDALE LIVING COMMUNITIES OF MINNESOTA, LLC, a Delaware limited liability company By: PSLT-BLC Properties Holdings, LLC, its sole member By: PSLT OP, L.P., its sole member By: PSLT GP, LLC, its general partner By: Ventas Provident, LLC, its sole member By: /s/ John D. Cobb Name: John D. Cobb Title: Authorized Signatory |
BROOKDALE LIVING COMMUNITIES OF CONNECTICUT, LLC, a Delaware limited liability company By: /s/ John D. Cobb Name: John D. Cobb Title: Authorized Signatory |
PSLT-BLC PROPERTIES HOLDINGS, LLC, a Delaware limited liability company By: PSLT OP, L.P., its sole member By: PSLT GP, LLC, its general partner By: Ventas Provident, LLC, its sole member By: /s/ John D. Cobb Name: John D. Cobb Title: Authorized Signatory |
THE PONDS OF PEMBROKE LIMITED PARTNERSHIP, an Illinois general partnership By: Brookdale Holdings, LLC, its general partner By: PSLT-BLC Properties Holdings, LLC, its sole member By: PSLT OP, L.P., its sole member By: PSLT GP, LLC, its general partner By: Ventas Provident, LLC, its sole member By: /s/ John D. Cobb Name: John D. Cobb Title: Authorized Signatory |
BROOKDALE LIVING COMMUNITIES OF ARIZONA-EM, LLC, a Delaware limited liability company By: PSLT-BLC Properties Holdings, LLC, its sole member By: PSLT OP, L.P., its sole member By: PSLT GP, LLC, its general partner By: Ventas Provident, LLC, its sole member By: /s/ John D. Cobb Name: John D. Cobb Title: Authorized Signatory |
BROOKDALE LIVING COMMUNITIES OF MASSACHUSETTS-RB, LLC, a Delaware limited liability company By: PSLT-BLC Properties Holdings, LLC, its sole member By: PSLT OP, L.P., its sole member By: PSLT GP, LLC, its general partner By: Ventas Provident, LLC, its sole member By: /s/ John D. Cobb Name: John D. Cobb Title: Authorized Signatory |
BROOKDALE LIVING COMMUNITIES OF CALIFORNIA-RC, LLC, a Delaware limited liability company By: PSLT-BLC Properties Holdings, LLC, its sole member By: PSLT OP, L.P., its sole member By: PSLT GP, LLC, its general partner By: Ventas Provident, LLC, its sole member By: /s/ John D. Cobb Name: John D. Cobb Title: Authorized Signatory |
BROOKDALE LIVING COMMUNITIES OF CALIFORNIA, LLC, a Delaware limited liability company By: PSLT-BLC Properties Holdings, LLC, its sole member By: PSLT OP, L.P., its sole member By: PSLT GP, LLC, its general partner By: Ventas Provident, LLC, its sole member By: /s/ John D. Cobb Name: John D. Cobb Title: Authorized Signatory |
BLC OF CALIFORNIA-SAN MARCOS, L.P., a Delaware limited partnership By: Brookdale Living Communities of California-San Marcos, LLC, its general partner By: PSLT-BLC Properties Holdings, LLC, its sole member By: PSLT OP, L.P., its sole member By: PSLT GP, LLC, its general partner By: Ventas Provident, LLC, its sole member By: /s/ John D. Cobb Name: John D. Cobb Title: Authorized Signatory |
BROOKDALE LIVING COMMUNITIES OF WASHINGTON-PP, LLC, a Delaware limited liability company By: PSLT-BLC Properties Holdings, LLC, its sole member By: PSLT OP, L.P., its sole member By: PSLT GP, LLC, its general partner By: Ventas Provident, LLC, its sole member By: /s/ John D. Cobb Name: John D. Cobb Title: Authorized Signatory |
BROOKDALE LIVING COMMUNITIES OF ILLINOIS-II, LLC, a Delaware limited liability company By: PSLT-BLC Properties Holdings, LLC, its sole member By: PSLT OP, L.P., its sole member By: PSLT GP, LLC, its general partner By: Ventas Provident, LLC, its sole member By: /s/ John D. Cobb Name: John D. Cobb Title: Authorized Signatory |
BROOKDALE LIVING COMMUNITIES OF NEW JERSEY, LLC, a Delaware limited liability company By: PSLT-BLC Properties Holdings, LLC, its sole member By: PSLT OP, L.P., its sole member By: PSLT GP, LLC, its general partner Ventas Provident, LLC, its sole member By: /s/ John D. Cobb Name: John D. Cobb Title: Authorized Signatory |
BROOKDALE LIVING COMMUNITIES OF FLORIDA-CL, LLC, a Delaware limited liability company By: PSLT-BLC Properties Holdings, LLC, its sole member By: PSLT OP, L.P., its sole member By: PSLT GP, LLC, its general partner Ventas Provident, LLC, its sole member By: /s/ John D. Cobb Name: John D. Cobb Title: Authorized Signatory |
NATIONWIDE HEALTH PROPERTIES, LLC, a Delaware limited liability company By: /s/ John D. Cobb Name: John D. Cobb Title: Authorized Signatory |
2010 UNION LIMITED PARTNERSHIP, a Washington limited partnership By: Nationwide Health Properties, LLC, its general partner By: /s/ John D. Cobb Name: John D. Cobb Title: Authorized Signatory |
NH TEXAS PROPERTIES LIMITED PARTNERSHIP, a Texas limited partnership By: MLD Texas Corporation, its general partner By: /s/ John D. Cobb Name: John D. Cobb Title: Authorized Signatory |
MLD PROPERTIES, INC., a Delaware corporation By: /s/ John D. Cobb Name: John D. Cobb Title: Authorized Signatory |
JER/NHP SENIOR LIVING ACQUISITION, LLC, a Delaware limited liability company By: /s/ John D. Cobb Name: John D. Cobb Title: Authorized Signatory |
JER/NHP SENIOR LIVING KANSAS, INC., a Kansas corporation By: /s/ John D. Cobb Name: John D. Cobb Title: Authorized Signatory |
JER/NHP SENIOR LIVING TEXAS, L.P., a Texas limited partnership By: JER/NHP Management Texas, LLC, its general partner By: /s/ John D. Cobb Name: John D. Cobb Title: Authorized Signatory |
MLD PROPERTIES LIMITED PARTNERSHIP, a Delaware limited partnership By: MLD Properties II, Inc., its general partner By: /s/ John D. Cobb Name: John D. Cobb Title: Authorized Signatory |
NHP MCCLAIN, LLC, a Delaware limited liability company By: /s/ John D. Cobb Name: John D. Cobb Title: Authorized Signatory |
VENTAS FAIRWOOD, LLC, a Delaware limited liability company By: /s/ John D. Cobb Name: John D. Cobb Title: Authorized Signatory |
VENTAS FRAMINGHAM, LLC, a Delaware limited liability company By: /s/ John D. Cobb Name: John D. Cobb Title: Authorized Signatory |
VENTAS WHITEHALL ESTATES, LLC, a Delaware limited liability company By: /s/ John D. Cobb Name: John D. Cobb Title: Authorized Signatory |
VTR-EMRTS HOLDINGS, LLC, a Delaware limited liability company By: /s/ John D. Cobb Name: John D. Cobb Title: Authorized Signatory |
2018 Supplemental Rent | 6 |
Additional Properties | Exhibit H-1 |
Additional Rent | 7 |
Additional Sale Facility | Exhibit L-1 |
Affiliate Manager | 22 |
Alterations | 28 |
Annual Budget | Exhibit F-3 |
AR Financing | 23 |
Business | 1 |
Cash Sale Proceeds | Exhibit L-2 |
Code | 6 |
Combination Lease | 59 |
Condition Standard | 24 |
Deleted Facility | 43 |
Deleted Facility or Facilities | 43 |
Effective Date | 1 |
Escrow Deposits | 9 |
Event of Default | 36 |
Excluded Property | Schedule 5.3 |
Existing ARLs/Documents | 2 |
Existing Leases | 2 |
Facilities | 1 |
Facility | 1 |
Facility Actual Upgrade Expenditures Amount | 25 |
Facility Default | 38 |
Facility Proprietary Marks | Schedule 5.3 |
Facility Required Upgrade Expenditures Amount | 26 |
Facility Termination | 45 |
Facility Upgrade Deposit | 25 |
Facility Upgrade Reimbursement Amount | 25 |
Fair Market Rental | Exhibit D-1 |
Individually Identifiable Health Information | Exhibit C-1 |
Initial Term | 4 |
Insurance Captive | 15 |
Investigations | Exhibit F-4 |
Landlord | 1 |
Landlord Funded Upgrade Expenditures | 27 |
Landlord Funding Threshold | 28 |
Landlord Funds Rent Increase | 34 |
Landlord Indemnified Parties | 57 |
Landlord Insured Parties | 12 |
Landlord Match Funds | 29 |
Landlord Match Requirement | 29 |
Landlord Personal Property | 1 |
Landlord Seller | Exhibit L-1 |
Landlord UE Funds | 27 |
Lease | 1 |
Limited Termination Election | 41 |
Listed Sale Facility | Exhibit L-1 |
MAI Appraiser | Exhibit D-2 |
Marketing End Date | Exhibit L-1 |
Marketing Notice | Exhibit L-1 |
Master Lease Event of Default | 36 |
Minimum Rent | 4 |
New Lease | 59 |
NY DOH | 65 |
OFAC | 65 |
OTA | Exhibit L-1 |
Other Landlord Expenses | 7 |
Patient Information | Exhibit C-1 |
Penalty | 7 |
Permitted Transfer | 51 |
Personal Property REIT Requirement | 61 |
Premises | 1 |
Previously Paid 2018 Minimum Rent | 6 |
Prohibited Persons | 65 |
Project Information | 31 |
Property Loss Insurance Proceeds | 53 |
Property Removal Date | 44 |
Property Transfer Date | Exhibit H-3 |
Proportionate Share | 5 |
Protest | 7 |
Real Property Taxes | 9 |
Receivership | 41 |
Reimbursement Period | 46 |
Renewal Notice | 4 |
Renewal Term | 4 |
Renewal Terms | 4 |
Rent Credit | 6 |
Request for Disbursement | 33 |
Required Escrow Deficiency Payment | 9 |
Restoration Plans and Specifications | 54 |
Restrictive Covenants | 20 |
Revenue Enhancing Projects End Date | 30 |
Revenue Enhancing Projects Status Report | 31 |
Revenue Enhancing Projects Upgrade Expenditures | 31 |
Sale Facility | Exhibit L-1 |
Sale Facility Rent Reduction | Exhibit L-4, Exhibit L-3, Exhibit L-2 |
Sale Notice | 2 |
Section 8.3 Premises | 47 |
Service Provider | 16 |
SF Purchase Contract | Exhibit L-1 |
Situs State | 63 |
Subject Facility | Exhibit L-1 |
Substantially Destroyed | 53 |
Surviving Lease | Exhibit H-1 |
Surviving Lease Date | Exhibit H-1 |
Tenant | 1 |
Tenant Investment Requirement | 29 |
Tenant Investment Requirement Deposit | 29 |
Tenant Personal Property | 17 |
Tenant Revenue Enhancing Projects Funds | 29 |
Tenant Seller | Exhibit L-1 |
Tenant’s Proportionate Share | Exhibit H-4 |
Term | 4 |
Terminated/Dispossessed Premises | 44 |
Termination/Dispossession Date | 44 |
Transfer | 52 |
Transferred Facilities | 59 |
Transferred Facility | 59 |
Unpermitted Transfer | 50 |
Upgrade Expenditures | 28 |
Upgrade Expenditures Report | 27 |
Upgrade Expenditures Test Period | 25 |
Work | 54 |
EXHIBIT A | 10. Brevard County, FL | |
LEGAL DESCRIPTION |
EXHIBIT A | 14. Vanderburgh County, IN | |
LEGAL DESCRIPTION |
EXHIBIT A | 15. Grant County, IN | |
LEGAL DESCRIPTION |
EXHIBIT A | 16. Porter County, IN | |
LEGAL DESCRIPTION |
EXHIBIT A | 17. Wayne County, IN | |
LEGAL DESCRIPTION |
EXHIBIT A | 18. Johnson County, KS | |
LEGAL DESCRIPTION |
EXHIBIT A | 19. Shawnee County, KS | |
LEGAL DESCRIPTION |
EXHIBIT A | 21. Hennepin County, MN | |
LEGAL DESCRIPTION |
EXHIBIT A | 22. Dakota County, MN | |
LEGAL DESCRIPTION |
EXHIBIT A | 23. Ramsey County, MN | |
LEGAL DESCRIPTION |
EXHIBIT A | 24. Hennepin County, MN | |
LEGAL DESCRIPTION |
EXHIBIT A | 25. Forsyth County, NC | |
LEGAL DESCRIPTION |
EXHIBIT A | 26. Oneida County, NY | |
LEGAL DESCRIPTION |
EXHIBIT A | 27. Onondaga County, NY | |
LEGAL DESCRIPTION |
EXHIBIT A | 28. Stark County, OH | |
LEGAL DESCRIPTION |
EXHIBIT A | 29. Mahoning County, OH | |
LEGAL DESCRIPTION |
EXHIBIT A | 30. Greene County, OH | |
LEGAL DESCRIPTION |
EXHIBIT A | 31. Frankling County, OH | |
LEGAL DESCRIPTION |
EXHIBIT A | 32. Columbiana County, OH | |
LEGAL DESCRIPTION |
EXHIBIT A | 33. Snohomish County, WA | |
LEGAL DESCRIPTION |
EXHIBIT A | 34. Pierce County, WA | |
LEGAL DESCRIPTION |
EXHIBIT A | 36. Kenosha County, WI | |
LEGAL DESCRIPTION |
EXHIBIT A | 37. LaCrosse County, WI | |
LEGAL DESCRIPTION |
EXHIBIT A | 38. LaCrosse County, WI | |
LEGAL DESCRIPTION |
4) | northeasterly on a course N 11o 31' 35" E, and being parallel with the East Line of Lot No. 2, 392.36 feet to a point in the south line of Map Cover 2632 which is also the north line of premises conveyed to Kennard Ragon and Agnus Ragon, his wife, be deed recorded in Erie County Clerk's Office in Liber 2847 of Deeds at Page 404; thence; |
7) | northwesterly on a course N 78o 28' 25" W, 63.97 feet to a point on a line parallel with the east line of Lot No. 2; thence; |
8) | southeasterly along said line on a course S 11o 31' 35" W, 275 feet to a point in the north line of Main Street, said point being the point or place of beginning. |
Property Name | State | City | County | |
1. | The Springs of East Mesa | Arizona | Mesa | Maricopa |
2. | Woodside Terrace | California | Redwood City | San Mateo |
3. | The Atrium | California | San Jose | Santa Clara |
4. | Brookdale Place at San Marcos | California | San Marcos | San Diego |
5. | The Gables at Farmington | Connecticut | Farmington | Hartford |
6. | Chatfield | Connecticut | West Hartford | Hartford |
7. | The Classic at West Palm Beach | Florida | West Palm Beach | Palm Beach |
8. | The Hallmark | Illinois | Chicago | Cook |
9. | The Kenwood of Lake View | Illinois | Chicago | Cook |
11. | The Devonshire of Hoffman Estates | Illinois | Hoffman Estates | Cook |
13 | The Willows | Illinois | Vernon Hills | Lake |
14. | Hawthorn Lakes | Illinois | Vernon Hills | Lake |
15. | The Berkshire of Castleton | Indiana | Indianapolis | Marion |
16. | River Bay Club | Massachusetts | Quincy | Norfolk |
18. | Brendenwood | New Jersey | Voorhees | Camden |
19. | Ponce de Leon | New Mexico | Santa Fe | Santa Fe |
20. | The Gables at Brighton | New York | Rochester | Monroe |
21. | Park Place | Washington | Spokane | Spokane |
1. | North 90o 00' 00" West 366.99 feet; |
2. | Northwesterly on a curve to the right having a radius of 28 feet (subtended by a chord bearing of North 44o 59' 49" West, a diatnce of 39.59 feet) an arc distance of 43.98 feeet; |
3. | North 00o 00' 00" East, and parallel with the East line of said Southeast Quarter a distance of 268.67 feet; |
EXHIBIT A | South Windsor | |
LEGAL DESCRIPTION | (Emeritus) |
1. | Combination of Properties. If Landlord desires to combine this Lease with one or more properties (“Additional Properties”) under a Combination Lease, Tenant shall execute an amendment to this Lease pursuant to which (a) if this Lease is the Surviving Lease, the Additional Properties covered by the Combination Lease are added as Facilities under this Lease and otherwise merged into this Lease or (b) if the Combination Lease is the Surviving Lease, the Facilities covered by this Lease are added as Facilities under the Combination Lease and otherwise merged into the Combination Lease, in each case subject to this Exhibit H. Notwithstanding anything to the contrary contained in this Lease, unless Tenant agrees otherwise (in its sole discretion), this Lease shall at all times be the “Surviving Lease” (and Landlord shall be deemed to have elected or chosen this Lease as the Surviving Lease) if Landlord elects to combine this Lease with any other lease or agreement pursuant to this Exhibit H. |
1.1. | Surviving Lease. References in this Lease to the “Surviving Lease” shall mean and refer to whichever of this Lease or the Combination Lease is chosen or deemed chosen by Landlord to be the Surviving Lease. |
1.2. | Lease Amendments Where This Lease Survives. If this Lease is the Surviving Lease, effective as of the date specified in Section 1.3 of this Exhibit H (the “Surviving Lease Date”), this Lease shall be deemed to be amended as follows: |
1.4 | Additional Actions. Landlord and each Tenant shall take such actions and execute and deliver such documents, including required amendments to this Lease and the Combination Lease, as are reasonably necessary and appropriate to effectuate fully the provisions and intent of Section 14.1 and Section 1 of this Exhibit H. |
2. | New Lease. If Landlord elects to separate from this Lease one or more Transferred Facilities and move them to a New Lease, Tenant shall execute such New Lease and an amendment to this Lease, pursuant to the terms of this Section. |
2.1 | New Lease Terms. Landlord and Tenant shall execute a New Lease for such Transferred Facilities, effective as of the date specified in Section 2.3 of this Exhibit H (the “Property Transfer Date”), in the same form and substance as this Lease (and Landlord shall be deemed to have elected or chosen the terms of such New Lease as the governing terms if Landlord elects to combine such New Lease with any other lease or agreement pursuant to its terms), but with the following changes thereto: |
2.1.1. | The initial Minimum Rent for such Transferred Facilities shall be an amount of Minimum Rent allocable to the Transferred Facilities immediately prior to the Property Transfer Date (based upon the Proportionate Shares of such Transferred Facilities and as described in Section 2.6 of this Exhibit H). The term, any rental escalations and extension rights applicable to any Transferred Facilities under this Lease shall apply under the New Lease after the combination, provided (i) extension rights shall apply in the same manner as required under this Lease and (ii) any escalation shall be applied in the full amount required as if such Transferred Facilities had been under the New Lease for a full year, notwithstanding that the period from the Property Transfer Date to the rent escalation date may be less than one full year. |
2.1.2. | The Proportionate Shares for the Transferred Facilities shall be determined as provided in Section 2.9 of this Exhibit H. |
2.1.3. | The New Lease shall provide that each Tenant thereunder shall be responsible for the payment, performance and satisfaction of all duties, obligations and liabilities arising under this Lease, insofar as they relate to the Transferred Facilities subject to the New Lease, that were not paid, performed and satisfied in full prior to the Property Transfer Date (and Tenant under this Lease shall also be responsible for the payment, performance and satisfaction of the aforesaid duties, obligations and liabilities not paid, performed and satisfied in full prior to the Property Transfer Date), and shall further provide that the Tenant thereunder shall not be responsible for the payment, performance or satisfaction of any duties, obligations and liabilities of Tenant under this Lease arising after the Property Transfer Date. |
2.1.4. | At the election of Landlord, any one or more of the provisions of the New Lease pertaining to the REIT Requirements of any REIT Affiliate shall be deleted. |
2.1.5. | Such New Lease shall contain escrow and capital expenditures deposits in the same manner or fashion as described in this Lease. Such amounts under the New Lease shall initially be funded by Landlord from the Escrow Deposits and Facility Upgrade Deposits credited to Tenant, with the Escrow Deposits and Facility Upgrade Deposits under the New Lease to be equal to such amounts, as |
2.1.6. | Such New Lease shall be guaranteed in the same manner or fashion as this Lease. Such New Lease shall remain subject to the Lease Guaranty for so long as the Facilities subject to such New Lease are owned by Ventas or a wholly owned Affiliate of Ventas. Contemporaneously with the transfer of any Facility(ies) under a New Lease to party that is not Ventas or a wholly-owned Affiliate of Ventas (a “Third Party”), Tenant shall cause Guarantor to execute and deliver to Landlord a Lease Guaranty in the same form and substance with respect to the New Lease and the duties, liabilities and other obligations of Tenant under such New Lease as such Guarantor’s Lease Guaranty with respect to this Lease and the duties, liabilities and other obligations of Tenant under this Lease (a “New Guaranty”); provided that if, in one transaction or in a series of related transactions, Tenant transfers15 or fewer Facilities to any Third Party, the New Guaranty with respect to such Facilities shall not include any “Portfolio Coverage Ratio” requirement or any “Landlord Termination Right Period” or the rights associated therewith. |
2.2. | Amendments to this Lease. Upon execution of such New Lease, and effective as of the Property Transfer Date, this Lease shall be deemed to be amended to provide that (a) the Transferred Facilities shall be excluded from the Facilities hereunder, (b) Minimum Rent hereunder shall be reduced by the amount of the Minimum Rent allocable to the Transferred Facilities (based upon the Proportionate Shares of such Transferred Facilities and as described in Section 2.6 of this Exhibit H) and (c) Schedule 1 of this Lease shall be amended as provided in Section 2.9 of this Exhibit H. Such amendments shall occur automatically and without the necessity of any further action by Landlord or Tenant, but, at Landlord’s election, the same shall be reflected in a formal amendment to this Lease, which amendment shall be promptly executed by Tenant. |
2.3. | Effective Date. Any New Lease shall be effective on the date the New Lease and the New Guaranty (if applicable) are fully executed and delivered by the parties thereto. |
2.4. | Other Undertakings. Tenant shall take such actions and execute and deliver such documents, including the New Lease and causing Guarantor to execute and deliver the New Guaranty (if applicable), and if requested by Landlord, an amendment to this Lease, as are reasonably necessary and appropriate to effect fully the provisions and intent of this Section 2 of this Exhibit H, and Landlord shall execute and deliver an amendment of this Lease in accordance with Section 2.2 of this Exhibit H. |
2.5. | Renewal Rights under this Lease and Other Leases. Notwithstanding anything to the contrary contained in Section 3 of this Lease, this Exhibit H or elsewhere in this Lease, Tenant acknowledges and agrees that (a) any purported Renewal Notice sent by it under this Lease shall be void and of no force or effect unless, simultaneously with the issuance of any such Renewal Notice, the tenant under each of the Other Leases that is co-terminous with this Lease and that remains in effect, also issues a Renewal Notice (as such term may be defined in such Other Leases) with respect to the property(ies) to which each such Other Lease applies and (b) if the tenant under any such Other Lease is for any reason precluded by the terms of such Other Lease from exercising its renewal rights thereunder (e.g., due to the existence of a Master Lease Event of Default (after giving effect to the Omnibus Agreement), Tenant shall be precluded from exercising its renewal rights under this Lease. |
2.6. | New Proportionate Shares. As of the Effective Date, Schedule 1 includes, with respect to each Facility, the proportionate share of Minimum Rent allocated to such Facility (the “Proportionate Share”), which Proportionate Share is expressed as a percentage (to two decimal places) and is subject to adjustment as follows: |
2.7. | Deletion of a Facility(ies) pursuant to Section 7.4.12. In the event a Facility or Facilities are removed from this Lease as provided in Section 7.4.12, Schedule 1 to this Lease shall be revised to remove the allocations of Minimum Rent and the Proportionate Share(s) for the Deleted Facility(ies), and to recalculate the Proportionate Shares applicable to the remaining Facilities set forth on such Schedule 1 so that each remaining Facility shall have a Proportionate Share equal to the percentage that the Proportionate Share for such remaining Facility, prior to such revision of Schedule 1, comprises of the aggregate Proportionate Shares, prior to such revision of Schedule 1, for all of the Facilities remaining under this Lease such that the aggregate of all of such recalculated Proportionate Shares equals 100%. |
2.8. | Combination of Leases pursuant to Section 14.1 and Exhibit H. In the event this Lease is combined with a Combination Lease as provided in Section 14.1 and this Lease is the Surviving Lease, Schedule 1 to this Lease shall be amended so as to add thereto the Proportionate Share(s) relative to the Facility(ies) under the Combination Lease that was/were previously included in Schedule 1 to the Combination Lease, and the Proportionate Share(s) of the Facility(ies) included in this Lease (including the additional Facility(ies) from the Combination Lease) shall be recalculated so that each such Facility shall have a Proportionate Share equal to the percentage that the Minimum Rent allocable to such Facility (which allocable portion of Minimum Rent shall remain equal to the share of Minimum Rent that was allocated to such Facility under this Lease or the Combination Lease, as applicable, prior to the combination of such leases pursuant to such Section 14.1 and Exhibit H) comprises of the aggregate Minimum Rent for all Facilities included in this Lease (including the Additional Properties) and so that the aggregate of all Proportionate Shares equals 100%. |
2.9. | New Lease pursuant to Section 14.2 and Exhibit H. In the event a New Lease is entered into pursuant to Section 14.2 and Exhibit H: |
2.9.1. | Such New Lease shall include a schedule comparable to Schedule 1 of this Lease, and such schedule shall include therein a Proportionate Share for each Facility located on the Transferred Facilities covered by the New Lease equal to the percentage that the Minimum Rent allocable to such Facility under the New Lease comprises of the aggregate Minimum Rent for all Facilities located on all of the Transferred Facilities under such New Lease (and the aggregate of all such Proportionate Shares under such New Lease shall equal 100%); and |
2.9.2. | Upon the execution of such New Lease, and effective as of the Property Transfer Date, Schedule 1 of this Lease shall be deemed amended so as to remove the Proportionate Shares for the Transferred Facilities, and the Proportionate Shares for the Facilities remaining under this Lease shall be recalculated so that each such Facility shall have a Proportionate Share equal to the percentage that the Minimum Rent for such Facility comprises of the aggregate Minimum Rent for all Facilities remaining under this Lease, and so that the aggregate of all Proportionate Shares remaining under this Lease equals 100%. Such amendments shall occur automatically and without the necessity of any further action by Landlord or Tenant, but, at Landlord’s election, the same shall be reflected in a formal amendment to this Lease, which amendment shall be promptly executed by Tenant. |
1. | Definitions. All capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Master Lease. |
2. | Manager’s Representations. Manager warrants and represents to Landlord, as of the date hereof, that the following are true and correct: |
3. | Manager’s Agreements. Notwithstanding any terms of the Management Agreement to the contrary, Manager hereby consents to and covenants and agrees with Landlord as follows: |
4. | Termination. This Agreement shall terminate upon the termination of the Master Lease as it applies to the Property and/or, subject to compliance with the terms of this Agreement, upon the termination of the Management Agreement, provided, however, that no such termination shall impair the enforceability of any provisions of this Agreement or the Management Agreement that survive termination and/or any obligations under this Agreement or the Management Agreement that have accrued prior to such termination. |
5. | Notices. All notices, demands, requests, consents, approvals and other communications hereunder shall be in writing and delivered (i) by mail (registered or certified mail, return receipt requested), in which case such notice shall be deemed received three (3) business days after its deposit, (ii) by confirmed facsimile, in which case such notice shall be deemed received the next business day, or (iii) by reputable nationally recognized overnight courier service, in which case such notice shall be deemed received the next business day, addressed to the respective parties, as follows: |
1. | Certain Definitions. |
a. | “Additional Sale Facility” means each Facility identified in a Marketing Notice (defined below) that is not a Listed Sale Facility; provided that (i) the total annual Minimum Rent for all Additional Sale Facilities (based on such Facilities’ Proportionate Shares) shall not exceed $[***], and Landlord shall have no obligations under this Exhibit L with respect to any such Facility identified in a Marketing Notice that would cause such total annual Minimum Rent to exceed $[***] annually and (ii) no Facility that has been designated as the subject of a Revenue Enhancing Project may be identified as an Additional Sale Facility. |
b. | “Landlord Seller” means, as to a given Sale Facility, the Landlord owner of such Sale Facility as identified on Schedule 1. |
c. | “Listed Sale Facility” means each Facility identified on Schedule 1 as a “Listed Sale Facility”. |
d. | “Sale Facility” means each Listed Sale Facility and each Additional Sale Facility. |
e. | “Tenant Seller” means, as to a given Sale Facility, the Tenant of such Sale Facility as identified on Schedule 1. |
2. | Marketing of Subject Facilities. Commencing on the Effective Date and continuing through the first anniversary of the Effective Date (the “Marketing End Date”), from time to time, Tenant may give notice (a “Marketing Notice”) to Landlord indicating that it wishes to terminate the Lease with respect one or more of the Sale Facilities (each such Sale Facility so identified, a “Subject Facility”). Upon receipt of such a notice, Landlord will initiate a marketing process and use commercially reasonable, diligent efforts to advance the sale of the applicable Subject Facility(ies). Landlord will provide Tenant’s designated representative a monthly, written reasonably detailed update of the marketing process summarizing, with respect to each Subject Facility, information as to prospective purchasers, active negotiations and indications of interest as well as advertising and marketing programs in connection therewith. Each Landlord Seller of a Subject Facility shall execute and deliver a purchase contract acceptable to such Landlord Seller in its reasonable discretion (“SF Purchase Contract”) with an unrelated third-party purchaser (a “Purchaser”) provided that the purchase price therefor exceeds the Minimum Sale Price for such Subject Facility (which Minimum Sale Price shall be set forth in Schedule L-1 (a) with respect to each Listed Sale Facility, within thirty (30) days following the Effective Date, and (b) with respect to each Additional Sale Facility, promptly following the delivery of the Marketing Notice associated with such Additional Sale Facility) and, with respect to any Subject Facility, that the closing of such Subject Facility under such SF Purchase Contract is scheduled to occur no later than December 31, 2020, subject to extension for regulatory approval purposes, but any such extension shall not exceed 180 days. Promptly upon execution of an SF Purchase Contract, Landlord Seller(s) shall notify (a “Sale Notice”) the applicable Tenant Seller(s) |
3. | Pending Purchase and Sale of Subject Facilities. Following entry into an SF Purchase Contract, each of Landlord and Tenant shall use commercially reasonable, diligent efforts (including causing its Affiliates to use such efforts) to cooperate in the Purchaser’s or it designee’s efforts to obtain as soon as practicable any necessary regulatory licenses, approvals and other authorizations required with respect to the sale referenced in such SF Purchase Contract including the transfer of operations of the applicable Subject Facility(ies). Upon the reasonable request of Landlord, Tenant shall disclose any information (including by delivering written copies thereof if so requested) in its possession or control with respect to the sale or other transfer of the applicable Subject Facility(ies), provided that such information is not privileged or subject to a duty of confidentiality. No Tenant shall take any action or omit to take any action that causes the applicable Landlord Seller(s) to default on its/their obligations under such SF Purchase Contract or any document executed or delivered in connection therewith. |
4. | Effect of Closing. |
a. | Closing. |
i. | Reduced Rent. Contemporaneously with the closing of the sale of each of the Subject Facilities pursuant to the SF Purchase Contracts, Landlord and Tenant shall amend the Lease to reflect the removal of such Subject Facility(ies) in accordance with the terms of Section 7.4.12, provided, however, that (i) the reduction in Minimum Rent for each sold Subject Facility shall be equal to the Sale Facility Rent Reduction for such Subject Facility, and (ii) (x) if the Sale Facility Rent Reduction for a given Subject Facility exceeds the allocated Minimum Rent for the Subject Facility immediately prior to any such amendment pursuant to subsection (i) above, the Minimum Rent for the remaining Facilities shall be reduced pro-rata by the amount of such excess based upon the remaining Facilities’ Proportionate Shares, and (y) if the allocated Minimum Rent for the Subject Facility immediately prior to any such amendment pursuant to subsection (i) above exceeds the Sale Facility Rent Reduction, the allocable Minimum Rent for the remaining Facilities shall be increased pro-rata by the amount of such excess based upon the remaining Facilities’ Proportionate Shares. In the event that additional Cash Sale Proceeds are received on account of the sale of a Subject Facility after the closing (e.g., from the release of escrowed amounts), Tenant and Landlord shall further amend the Lease to reduce Minimum Rent by the additional Sale Facility Rent Reduction resulting from such additional Cash Sale Proceeds (with the amount of such reduction to be |
ii. | “Sale Facility Rent Reduction” means, as to each Subject Facility sold by the applicable Landlord Seller, an amount equal to the product of (i) the Cash Sale Proceeds that such Landlord Seller receives on account of such sale and (ii) 6.25%. |
iii. | “Cash Sale Proceeds” means, with respect to the sale of a Subject Facility, the net cash proceeds received at the closing of such sale by the applicable Landlord Seller(s), after deducting therefrom, whether or not paid at such closing, (i) any holdback or escrowed amount (subject to the last sentence of Section 4(a)(i) above), and (ii) all of the Reimbursable Sales Costs (as defined below) relating to such sale. |
b. | PSA Breaches. |
i. | Tenant and Brookdale Senior Living Inc. shall be jointly and severally liable for any damages of Purchaser under the SF Purchase Contract or the OTA resulting from any Tenant Seller’s breach under the OTA. |
ii. | In the event an SF Purchase Contract is terminated prior to the closing of the sale of a Subject Facility due to Purchaser’s breach thereof, any earnest money forfeited by Purchaser shall be (i) distributed to the applicable Landlord Seller and Tenant Seller, pro rata based on the amount of reasonable and documented costs and expenses incurred by such Landlord Seller and Tenant Seller, respectively, in connection with the proposed sale of such Subject Facility (excluding any fees payable to brokers, but not excluding any expense reimbursements payable to brokers), and (ii) if any earnest money remains following the foregoing reimbursement, such remaining earnest money shall be retained by Landlord Seller. |
c. | Post-Closing Escrow. Landlord Seller may give such instructions under the Post-Closing Escrow Agreement (as defined in the SF Purchase Contract) as (i) it may in good faith deem appropriate and which are not inconsistent with the applicable SF Purchase Contract, or any document executed or delivered in connection therewith, or this Lease, or (ii) may be approved by the applicable Tenant Seller. |
5. | Costs and Expenses. |
a. | Closed Sales. With respect to any closed sale of a Subject Facility, all expenses incurred in connection with the sale of such Subject Facility, including without limitation, recording costs, transfer taxes, application fees, title insurance costs, and escrow charges shall be paid as provided in the applicable SF Purchase Contract. Landlord Seller’s reasonable and documented out-of-pocket expenses incurred in connection with the sale of such Subject Facility, including, without limitation, broker’s fees, marketing costs and attorneys’ fees incurred to accomplish the sale of such Subject Facility (“Reimbursable Sales Costs”), shall be paid to Landlord Seller out of the purchase consideration for such Subject Facility. |
VTR ID | BKD ID | Community Name | Landlord | Tenant | Address | Type | No. of Units | Tenant’s Proportionate Share | Listed Sale Facility |
[***] | [***] | Northbrook | Ventas Realty, Limited Partnership | Brookdale Living Communities of Illinois-GV, LLC | 4501 Concord Lane, Northbrook, IL, 60062 | IL/AL | 220 | [***] | [***] |
[***] | [***] | Lake Shore Drive | Brookdale Living Communities of Illinois-2960, LLC | BLC-The Hallmark, LLC | 2960 North Lake Shore Drive, Chicago, IL, 60657 | IL/AL | 337 | [***] | [***] |
[***] | [***] | Lake View | Brookdale Living Communities of Illinois-HV, LLC | BLC-Kenwood of Lake View, LLC | 3121 North Sheridan Road, Chicago, IL, 60657 | IL/AL | 254 | [***] | [***] |
[***] | [***] | Farmington | Brookdale Living Communities of Connecticut, LLC | BLC-Gables at Farmington, LLC | 20 Devonwood Drive, Farmington, CT, 6032 | IL/AL | 168 | [***] | [***] |
[***] | [***] | Hoffman Estates | PSLT-BLC Properties Holdings, LLC | BLC-Devonshire of Hoffman Estates, LLC | 1515 Barrington Road, Hoffman Estates, IL, 60169 | IL/AL | 249 | [***] | [***] |
[***] | [***] | Castleton | PSLT-BLC Properties Holdings, LLC | BLC-The Berkshire of Castleton, L.P. | 8480 Craig Street, Indianapolis, IN, 46250 | AL | 137 | [***] | [***] |
[***] | [***] | Springs Mesa | Brookdale Living Communities of Arizona-EM, LLC | BLC-Springs at East Mesa, LLC | 6220 East Broadway Rd, Mesa, AZ, 85206 | IL/AL | 186 | [***] | [***] |
[***] | [***] | Quincy Bay | Brookdale Living Communities of Massachusetts-RB, LLC | BLC-River Bay Club, LLC | 99 Brackett Street, Quincy, MA, 02169 | IL/AL | 281 | [***] | [***] |
[***] | [***] | Redwood City | Brookdale Living Communities of California-RC, LLC | BLC-Woodside Terrace, L.P. | 485 Woodside Road, Redwood City, CA, 94061 | IL/AL | 271 | [***] | [***] |
[***] | [***] | San Jose | Brookdale Living Communities of California, LLC | BLC-Atrium at San Jose, L.P. | 1009 Blossom River Way, San Jose, CA, 95123 | IL/AL/ALZ | 294 | [***] | [***] |
[***] | [***] | San Marcos | Brookdale Living Communities of California-San Marcos, L.P. | BLC-Brookdale Place at San Marcos, L.P. | 1590 W. San Marcos Blvd., San Marcos, CA, 92069 | AL | 209 | [***] | [***] |
[***] | [***] | Santa Fe | PSLT-BLC Properties Holdings, LLC | BLC-Ponce de Leon, LLC | 640 Alta Vista, Santa Fe, NM, 87505 | IL/AL | 143 | [***] | [***] |
[***] | [***] | Park Place | Brookdale Living Communities of Washington-PP, LLC | BLC-Park Place, LLC | 601 South Park Road, Spokane, WA, 99212 | IL/AL/ALZ | 190 | [***] | [***] |
[***] | [***] | Hawthorn Lakes IL/AL | Brookdale Living Communities of Illinois-II, LLC | BLC-Hawthorne Lakes, LLC | 10 E. Hawthorn Parkway, Vernon Hills, IL, 60061 | IL/AL | 201 | [***] | [***] |
[***] | [***] | Hawthorn Lakes AL | PSLT-BLC Properties Holdings, LLC | BLC-The Willows, LLC | 10 E. Hawthorn Parkway, Vernon Hills, IL, 60061 | AL | 50 | [***] | [***] |
[***] | [***] | Evesham | Brookdale Living Communities of New Jersey, LLC | BLC-Brendenwood, LLC | 1 Brendenwood Drive, Voorhees Township, NJ, 08043 | AL | 145 | [***] | [***] |
[***] | [***] | Chatfield | PSLT-BLC Properties Holdings, LLC | BLC-Chatfield, LLC | One Chatfield Drive, West Hartford, CT, 06110 | IL/AL/ALZ | 201 | [***] | [***] |
[***] | [***] | West Palm Beach | Brookdale Living Communities of Florida-CL, LLC | Brookdale Living Communities of Florida, Inc. | 6100 Common Circle, West Palm Beach, FL, 33417 | IL/AL | 290 | [***] | [***] |
[***] | [***] | Lisle SNF | Ventas Realty, Limited Partnership | Brookdale Living Communities of Illinois-DNC, LLC | 1800 Robin Lane, Lisle, IL, 60532 | SNF | 82 | [***] | [***] |
[***] | [***] | Boulder Creek | Nationwide Health Properties, LLC | Brookdale Senior Living Communities, Inc. | 3375 34th Street, Boulder, CO, 80301 | AL | 76 | [***] | [***] |
[***] | [***] | Forest Grove | Nationwide Health Properties, LLC | Brookdale Senior Living Communities, Inc. | 3110 19th Avenue, Forest Grove, OR, 97116 | AL | 88 | [***] | [***] |
[***] | [***] | Mt. Hood | Nationwide Health Properties, LLC | Brookdale Senior Living Communities, Inc. | 25200 S.E. Stark Street, Gresham, OR, 97030 | AL | 77 | [***] | [***] |
[***] | [***] | Richland | Nationwide Health Properties, LLC | Brookdale Senior Living Communities, Inc. | 1629 George Washington Way, Richland, WA, 99354 | AL | 114 | [***] | [***] |
[***] | [***] | Allenmore AL | Nationwide Health Properties, LLC | Brookdale Senior Living Communities, Inc. | 3615 S. 23rd Street, Tacoma, WA, 98405 | AL | 68 | [***] | [***] |
[***] | [***] | Denton North | NH Texas Properties Limited Partnership | Brookdale Senior Living Communities, Inc. | 2525 North Hinkle Drive, Denton, TX, 76201 | AL | 37 | [***] | [***] |
[***] | [***] | Ennis | NH Texas Properties Limited Partnership | Brookdale Senior Living Communities, Inc. | 2500 Yorkstown, Ennis, TX, 75119 | AL | 33 | [***] | [***] |
[***] | [***] | Broken Arrow | Nationwide Health Properties, LLC | Brookdale Senior Living Communities, Inc. | 4001 S Aspen Road, Broken Arrow, OK, 74011 | AL / ALZ | 69 | [***] | [***] |
[***] | [***] | Salina Fairdale | Nationwide Health Properties, LLC | Brookdale Senior Living Communities, Inc. | 2251 East Crawford, Salina, KS, 67401 | AL | 40 | [***] | [***] |
[***] | [***] | Tavares | Nationwide Health Properties, LLC | Brookdale Senior Living Communities, Inc. | 2232 Dora Avenue, Tavares, FL, 32778 | AL | 42 | [***] | [***] |
[***] | [***] | Greenville AL/MC | Nationwide Health Properties, LLC | Brookdale Senior Living Communities, Inc. | 1401 N. Broadway, Greenville, OH, 45331 | AL / ALZ | 66 | [***] | [***] |
[***] | [***] | Avondale | Nationwide Health Properties, LLC | Brookdale Senior Living Communities, Inc. | 4455 Merrimac Avenue, Jacksonville, FL, 32210 | AL | 42 | [***] | [***] |
[***] | [***] | Springdale | Nationwide Health Properties, LLC | Brookdale Senior Living Communities, Inc. | 11320 Springfield Pike, Springdale, OH, 45246 | AL / ALZ | 41 | [***] | [***] |
[***] | [***] | Palm Coast | Nationwide Health Properties, LLC | Brookdale Senior Living Communities, Inc. | 3 Club House Drive, Palm Coast, FL, 32137 | AL | 42 | [***] | [***] |
[***] | [***] | Rotonda | Nationwide Health Properties, LLC | Brookdale Senior Living Communities, Inc. | 550 Rotonda Blvd West, Rotonda West, FL, 33947 | AL | 42 | [***] | [***] |
[***] | [***] | Yakima | Nationwide Health Properties, LLC | Brookdale Senior Living Communities, Inc. | 4100 West Englewood Avenue, Yakima, WA, 98908 | AL | 73 | [***] | [***] |
[***] | [***] | Falling Creek | MLD Properties, Inc. | Brookdale Senior Living Communities, Inc. | 910 29th Avenue NE, Hickory, NC, 28601 | AL | 42 | [***] | [***] |
[***] | [***] | Chandler Ray Road | Nationwide Health Properties, LLC | Brookdale Senior Living Communities, Inc. | 2800 West Ray Rd, Chandler, AZ, 85224 | AL | 52 | [***] | [***] |
[***] | [***] | Allenmore - IL | 2010 Union Limited Partnership | Brookdale Senior Living Communities, Inc. | 2010 S. Union Avenue, Tacoma, WA, 98405 | IL | 118 | [***] | [***] |
[***] | [***] | South Windsor | Ventas Realty, Limited Partnership | SW Assisted Living, LLC | 1715 Ellington Road, South Windsor, CT, 06074 | AL/ALZ | 81 | [***] | [***] |
[***] | [***] | Anaheim | Ventas Realty, Limited Partnership | Summerville at Fairwood Manor, LLC | 200 North Dale Street, Anaheim, CA, 92801 | AL/ALZ | 115 | [***] | [***] |
[***] | [***] | Tracy | Ventas Realty, Limited Partnership | Summerville at Heritage Place, LLC | 355 West Grant Line Road, Tracy, CA, 95376 | AL/ALZ | 131 | [***] | [***] |
[***] | [***] | Cushing Park | Ventas Framingham, LLC | Summerville 5 LLC | 300 West Farm Pond Road, Framingham, MA, 01702 | IL/AL/ALZ | 225 | [***] | [***] |
[***] | [***] | Cape Cod | Ventas Whitehall Estates, LLC | Summerville 4 LLC | 790 Falmouth Road, Hyannis, MA, 02601 | AL/ALZ | 80 | [***] | [***] |
[***] | [***] | Deer Creek AL/MC | Ventas Realty, Limited Partnership | Summerville 17 LLC | 2403 West Hillsboro Boulevard, Deerfield Beach, FL, 33442 | AL/ALZ | 128 | [***] | [***] |
[***] | [***] | Salem AL (VA) | Nationwide Health Properties, LLC | Summerville at Ridgewood Gardens LLC | 2001 Ridgewood Drive, Salem, VA, 24153 | AL/ALZ | 75 | [***] | [***] |
[***] | [***] | Austintown | PSLT-ALS Properties I, LLC | ALS Properties Tenant I, LLC | 1420 South Canfield Niles Road, Austintown, OH, 44515 | ALZ | 32 | [***] | [***] |
[***] | [***] | Beavercreek | PSLT-ALS Properties I, LLC | ALS Properties Tenant I, LLC | 3839 Indian Ripple Road, Beavercreek, OH, 45440 | AL | 42 | [***] | [***] |
[***] | [***] | Cary | PSLT-ALS Properties II, LLC | ALS Properties Tenant II, LLC | 7870 Chapel Hill Road, Cary, NC, 27513 | ALZ | 44 | [***] | [***] |
[***] | [***] | Clinton IL | PSLT-ALS Properties I, LLC | ALS Properties Tenant I, LLC | 99 Brookside Drive, Clinton, NY, 13323 | IL | 84 | [***] | [***] |
[***] | [***] | Vista Grande | PSLT-ALS Properties I, LLC | ALS Properties Tenant I, LLC | 2780 Vickers Drive, Colorado Springs, CO, 80918 | AL | 67 | [***] | [***] |
[***] | [***] | Eden Prairie | PSLT-ALS Properties I, LLC | ALS Properties Tenant I, LLC | 7513 Mitchell Road, Eden Prairie, MN, 55344 | ALZ | 46 | [***] | [***] |
[***] | [***] | Kenosha | PSLT-ALS Properties I, LLC | ALS Properties Tenant I, LLC | 10108 74th Street, Kenosha, WI, 53142 | ALZ | 54 | [***] | [***] |
[***] | [***] | LaCrosse MC | PSLT-ALS Properties I, LLC | ALS Properties Tenant I, LLC | 3161 South Avenue, La Crosse, WI, 54601 | ALZ | 32 | [***] | [***] |
[***] | [***] | LaCrosse AL | PSLT-ALS Properties I, LLC | ALS Properties Tenant I, LLC | 3141 East Avenue South, La Crosse, WI, 54601 | AL | 52 | [***] | [***] |
[***] | [***] | Alderwood | PSLT-ALS Properties I, LLC | ALS Properties Tenant I, LLC | 18706 36th Avenue West, Lynnwood, WA, 98037 | ALZ | 60 | [***] | [***] |
[***] | [***] | Marion AL (IN) | PSLT-ALS Properties I, LLC | ALS Properties Tenant I, LLC | 2452 West Kem Road, Marion, IN, 46952 | AL | 42 | [***] | [***] |
[***] | [***] | East Arbor | PSLT-ALS Properties I, LLC | ALS Properties Tenant I, LLC | 6060 East Arbor Avenue, Mesa, AZ, 85206 | AL | 50 | [***] | [***] |
[***] | [***] | East Niskayuna | PSLT-ALS Properties II, LLC | ALS Properties Tenant II, LLC | 2861 Troy Schenectady Road, Schenectady, NY, 12309 | ALZ | 46 | [***] | [***] |
[***] | [***] | North Oaks | PSLT-ALS Properties I, LLC | ALS Properties Tenant I, LLC | 300 Village Center Drive, North Oaks, MN, 55127 | ALZ | 46 | [***] | [***] |
[***] | [***] | Oro Valley | PSLT-ALS Properties I, LLC | ALS Properties Tenant I, LLC | 10175 North Oracle Road, Oro Valley, AZ, 85704 | ALZ | 34 | [***] | [***] |
[***] | [***] | Pensacola | PSLT-ALS Properties I, LLC | ALS Properties Tenant I, LLC | 8700 University Parkway, Pensacola, FL, 32514 | AL | 50 | [***] | [***] |
[***] | [***] | Peoria | PSLT-ALS Properties I, LLC | ALS Properties Tenant I, LLC | 8989 West Greenbrian Drive, Peoria, AZ, 85382 | AL | 50 | [***] | [***] |
[***] | [***] | Pittsford | PSLT-ALS Properties II, LLC | ALS Properties Tenant II, LLC | 159 Sullys Trail, Pittsford, NY, 14534 | ALZ | 46 | [***] | [***] |
[***] | [***] | Plymouth | PSLT-ALS Properties I, LLC | ALS Properties Tenant I, LLC | 15855 22nd Avenue North, Plymouth, MN, 55447 | ALZ | 46 | [***] | [***] |
[***] | [***] | Portage AL | PSLT-ALS Properties I, LLC | ALS Properties Tenant I, LLC | 3444 Swanson Road, Portage, IN, 46368 | AL | 42 | [***] | [***] |
[***] | [***] | Richmond | PSLT-ALS Properties I, LLC | ALS Properties Tenant I, LLC | 3700 South A Street, Richmond, IN, 47374 | AL | 42 | [***] | [***] |
[***] | [***] | Salem AL (OH) | PSLT-ALS Properties I, LLC | ALS Properties Tenant I, LLC | 1916 South Lincoln Avenue, Salem, OH, 44460 | AL | 42 | [***] | [***] |
[***] | [***] | Summerfield | PSLT-ALS Properties I, LLC | ALS Properties Tenant I, LLC | 100 Summerfield Village Lane, Syracuse, NY, 13215 | IL | 84 | [***] | [***] |
[***] | [***] | Tempe | PSLT-ALS Properties I, LLC | ALS Properties Tenant I, LLC | 1610 East Guadalupe Road, Tempe, AZ, 85283 | ALZ | 46 | [***] | [***] |
[***] | [***] | East Tucson | PSLT-ALS Properties I, LLC | ALS Properties Tenant I, LLC | 8468 East Speedway Boulevard, Tucson, AZ, 85710 | AL | 46 | [***] | [***] |
[***] | [***] | Twin Falls | PSLT-ALS Properties I, LLC | ALS Properties Tenant I, LLC | 1367 Locust Street North, Twin Falls, ID, 83301 | AL | 70 | [***] | [***] |
[***] | [***] | Utica AL | PSLT-ALS Properties II, LLC | ALS Properties Tenant II, LLC | 45969 North Pointe Boulevard, Utica, MI, 48315 | AL | 58 | [***] | [***] |
[***] | [***] | Westampton | PSLT-ALS Properties II, LLC | ALS Properties Tenant II, LLC | 480 Woodlane Road, Westampton, NJ, 08060 | ALZ | 44 | [***] | [***] |
[***] | [***] | Winston-Salem | PSLT-ALS Properties I, LLC | ALS Properties Tenant I, LLC | 275 South Peace Haven Road, Winston-Salem, NC, 27104 | ALZ | 32 | [***] | [***] |
[***] | [***] | Winter Haven MC | PSLT-ALS Properties I, LLC | ALS Properties Tenant I, LLC | 6120 Cypress Gardens Boulevard, Winter Haven, FL, 33884 | ALZ | 32 | [***] | [***] |
[***] | [***] | Winter Haven AL | PSLT-ALS Properties I, LLC | ALS Properties Tenant I, LLC | 6110 Cypress Gardens Boulevard, Winter Haven, FL, 33884 | AL | 42 | [***] | [***] |
[***] | [***] | Farmington Hills North | JER/NHP Senior Living Acquisition, LLC | ALS Leasing, Inc. | 27900 Drake Road, Farmington Hills, MI, 48331 | ALZ | 28 | [***] | [***] |
[***] | [***] | Farmington Hills North II | JER/NHP Senior Living Acquisition, LLC | ALS Leasing, Inc. | 27950 Drake Road, Farmington Hills, MI, 48331 | ALZ | 28 | [***] | [***] |
[***] | [***] | Utica MC | JER/NHP Senior Living Acquisition, LLC | ALS Leasing, Inc. | 45959 North Pointe Blvd., Utica, MI, 48315 | ALZ | 28 | [***] | [***] |
[***] | [***] | Meridian AL | JER/NHP Senior Living Acquisition, LLC | ALS Leasing, Inc. | 5346 Marsh Rd, Haslett, MI, 48840 | AL | 59 | [***] | [***] |
[***] | [***] | Troy MC | JER/NHP Senior Living Acquisition, LLC | ALS Leasing, Inc. | 4900 Northfield Pky, Troy, MI, 48098 | ALZ | 46 | [***] | [***] |
[***] | [***] | Davison | JER/NHP Senior Living Acquisition, LLC | ALS Leasing, Inc. | 432 East Clark Street, Davison, MI, 48423 | AL | 32 | [***] | [***] |
[***] | [***] | Delta MC | JER/NHP Senior Living Acquisition, LLC | ALS Leasing, Inc. | 4235 Delta Commerce Drive, Delta Township, MI, 48917 | ALZ | 34 | [***] | [***] |
[***] | [***] | Grand Blanc MC | JER/NHP Senior Living Acquisition, LLC | ALS Leasing, Inc. | 5130 Baldwin Road, Holly, MI, 48442 | ALZ | 46 | [***] | [***] |
[***] | [***] | Grand Blanc AL | JER/NHP Senior Living Acquisition, LLC | ALS Leasing, Inc. | 5080 Baldwin Road, Holly, MI, 48442 | AL | 66 | [***] | [***] |
[***] | [***] | Troy AL | JER/NHP Senior Living Acquisition, LLC | ALS Leasing, Inc. | 4850 Northfield Pky, Troy, MI, 48098 | AL | 66 | [***] | [***] |
[***] | [***] | Delta AL | JER/NHP Senior Living Acquisition, LLC | ALS Leasing, Inc. | 7323 Delta Commerce Drive, Delta Township, MI, 48917 | AL | 19 | [***] | [***] |
[***] | [***] | Fort Myers The Colony | JER/NHP Senior Living Acquisition, LLC | ALS Leasing, Inc. | 13565 American Colony Boulevard, Fort Myers, FL, 33912 | ALZ | 32 | [***] | [***] |
[***] | [***] | Ormond Beach West | JER/NHP Senior Living Acquisition, LLC | Assisted Living Properties, Inc. | 240 Interchange Blvd., Ormond Beach, FL, 32174 | ALZ | 42 | [***] | [***] |
[***] | [***] | Crown Point | JER/NHP Senior Living Acquisition, LLC | ALS Leasing, Inc. | 10050 Old Saint Augustine Road, Jacksonville, FL, 32257 | ALZ | 32 | [***] | [***] |
[***] | [***] | Manlius | JER/NHP Senior Living Acquisition, LLC | ALS Leasing, Inc. | 100 Flume Road, Manlius, NY, 13104 | AL | 78 | [***] | [***] |
[***] | [***] | Onalaska | JER/NHP Senior Living Acquisition, LLC | ALS Leasing, Inc. | 949 10th Avenue North, Onalaska, WI, 54650 | AL | 19 | [***] | [***] |
[***] | [***] | Sun Prairie | JER/NHP Senior Living Acquisition, LLC | ALS Leasing, Inc. | 650 Broadway Drive, Sun Prairie, WI, 53590 | ALZ | 20 | [***] | [***] |
[***] | [***] | Mankato | JER/NHP Senior Living Acquisition, LLC | ALS Leasing, Inc. | 100 Teton Lane, Mankato, MN, 56001 | AL | 19 | [***] | [***] |
[***] | [***] | Winona | JER/NHP Senior Living Acquisition, LLC | ALS Leasing, Inc. | 835 E Belleview Street, Winona, MN, 55987 | AL | 19 | [***] | [***] |
[***] | [***] | Middleton Century Ave | JER/NHP Senior Living Acquisition, LLC | ALS Leasing, Inc. | 6916 Century Avenue, Middleton, WI, 53562 | AL | 19 | [***] | [***] |
[***] | [***] | Willmar | JER/NHP Senior Living Acquisition, LLC | ALS Leasing, Inc. | 1501 19th Avenue SouthWest, Wilmar, MN, 56201 | AL | 19 | [***] | [***] |
[***] | [***] | Faribault | JER/NHP Senior Living Acquisition, LLC | ALS Leasing, Inc. | 935 Spring Road, Faribault, MN, 55021 | AL | 19 | [***] | [***] |
[***] | [***] | Derby | JER/NHP Senior Living Kansas, Inc. | Assisted Living Properties, Inc. | 1709 E Walnut Grove, Derby, KS, 67037 | AL | 25 | [***] | [***] |
[***] | [***] | Wellington | JER/NHP Senior Living Kansas, Inc. | Assisted Living Properties, Inc. | 500 N Plum Street, Wellington, KS, 67152 | AL | 26 | [***] | [***] |
[***] | [***] | Barberton | JER/NHP Senior Living Acquisition, LLC | Assisted Living Properties, Inc. | 487 Austin Drive, Barberton, OH, 44203 | AL | 42 | [***] | [***] |
[***] | [***] | Centennial Park | JER/NHP Senior Living Acquisition, LLC | Assisted Living Properties, Inc. | 350 Union Road, Clayton, OH, 45322 | AL | 41 | [***] | [***] |
[***] | [***] | Marion AL/MC (OH) | JER/NHP Senior Living Acquisition, LLC | Assisted Living Properties, Inc. | 308 Barks Road East, Marion, OH, 43302 | AL / ALZ | 43 | [***] | [***] |
[***] | [***] | Bartlesville South | JER/NHP Senior Living Acquisition, LLC | Assisted Living Properties, Inc. | 3737 SE Camelot Drive, Bartlesville, OK, 74006 | AL | 33 | [***] | [***] |
[***] | [***] | Bethany | JER/NHP Senior Living Acquisition, LLC | Assisted Living Properties, Inc. | 4101 N Council Road, Bethany, OK, 73008 | AL | 26 | [***] | [***] |
[***] | [***] | Kerrville | JER/NHP Senior Living Texas, L.P. | Assisted Living Properties, Inc. | 725 Leslie Drive, Kerrville, TX, 78028 | AL | 37 | [***] | [***] |
[***] | [***] | Medical Center Whitby | JER/NHP Senior Living Texas, L.P. | Assisted Living Properties, Inc. | 5996 Whitby Road, San Antonio, TX, 78240 | AL | 49 | [***] | [***] |
[***] | [***] | Western Hills | JER/NHP Senior Living Texas, L.P. | Assisted Living Properties, Inc. | 3902 W Adams Avenue, Temple, TX, 76504 | AL | 42 | [***] | [***] |
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1. | Alterra I ML |
a. | Property Lease Agreement, by and between PSLT-ALS Properties I, LLC, and ALS Properties Tenant I, LLC, dated as of October 20, 2004, as the same may have been amended, restated, supplemented, or modified from time to time, together with any and all related letter agreements, guaranties, and other ancillary agreements. |
2. | Alterra II ML |
a. | Amended and Restated Property Lease Agreement, by and between PSLT-ALS Properties II, LLC and ALS Properties Tenant II, LLC, dated as of December 16, 2004, as the same may have been amended, restated, supplemented, or modified from time to time, together with any and all related letter agreements, guaranties, and other ancillary agreements. |
3. | Provident 22 |
a. | Agreement Regarding Leases dated as of October 19, 2004 by and among PSLT-BLC Properties Holdings, LLC, Brookdale Provident Properties, LLC, Brookdale Provident Management, LLC, Ventas Provident, LLC, Brookdale Living Communities, Inc., Brookdale Senior Living Inc., as the same may have been amended, restated, supplemented, or modified from time to time, together with any and all related letter agreements, guaranties, and other ancillary agreements. |
b. | Property Lease Agreements by and between the parties described below, joined by Brookdale Provident Management, LLC, each as the same may have been amended, restated, supplemented, or modified from time to time, together with any and all related letter agreements, guaranties, and other ancillary agreements: |
i. | Property Lease Agreement, by and between Brookdale Living Communities of Illinois-II, LLC and BLC-Hawthorne Lakes, LLC, dated as of October 19, 2004. |
ii. | Property Lease Agreement, by and between Brookdale Living Communities of Illinois-HV, LLC and BLC-Kenwood of Lake View, LLC, dated as of October 19, 2004. |
iii. | Property Lease Agreement, by and between Brookdale Living Communities of Washington-PP, LLC and BLC-Park Place, LLC, dated as of October 19, 2004. |
iv. | Property Lease Agreement, by and between Brookdale Living Communities of New Mexico-SF, LLC and BLC-Ponce de Leon, LLC, dated as of October 19, 2004. |
v. | Property Lease Agreement, by and between Brookdale Living Communities of Massachusetts-RB, LLC and BLC-River Bay Club, LLC, dated as of October 19, 2004. |
vi. | Property Lease Agreement, by and between Brookdale Living Communities of California-San Marcos, L.P. and BLC-Brookdale Place at San Marcos, L.P., dated as of October 19, 2004. |
vii. | Property Lease Agreement, by and between Brookdale Living Communities of Arizona-EM, LLC and BLC-Springs at East Mesa, LLC, dated as of October 19, 2004. |
viii. | Property Lease Agreement, by and between Brookdale Living Communities of Illinois-HLAL, LLC and BLC-The Willows, LLC, dated as of October 19, 2004. |
ix. | Property Lease Agreement, by and between Brookdale Living Communities of California-RC, LLC and BLC-Woodside Terrace, L.P., dated as of October 19, 2004. |
x. | Property Lease Agreement, by and between Brookdale Living Communities of Illinois-2960, LLC and BLC-The Hallmark, LLC, dated as of October 19, 2004. |
xi. | Property Lease Agreement, by and between Brookdale Living Communities of Connecticut, LLC and BLC-Gables at Farmington, LLC, dated as of October 19, 2004. |
xii. | Property Lease Agreement, by and between Brookdale Living Communities of California, LLC and BLC-Atrium at San Jose, L.P., dated as of October 19, 2004. |
xiii. | Property Lease Agreement, by and between BLC of Indiana-OL, L.P. and BLC-The Berkshire of Castleton, L.P., dated as of October 19, 2004. |
xiv. | Property Lease Agreement, by and between Brookdale Living Communities of New Jersey, LLC and BLC-Brendenwood, LLC, dated as of October 19, 2004. |
xv. | Property Lease Agreement, by and between PSLT-BLC Properties Holdings, LLC (as successor by merger to Brookdale Living Communities of Connecticut-WH, LLC) and BLC-Chatfield, LLC. |
xvi. | Property Lease Agreement, by and between Brookdale Living Communities of Florida-CL, LLC and Brookdale Living Communities of Florida, Inc. (f/k/a BLC-Classic at West Palm Beach, LLC), dated as of October 19, 2004. |
xvii. | Property Lease Agreement, by and between Brookdale Living Communities of Illinois-Hoffman Estates, LLC and BLC-Devonshire of Hoffman Estates, LLC, dated as of October 19, 2004. |
xviii. | Property Lease Agreement, by and between The Ponds of Pembroke Limited Partnership and BLC-Devonshire of Lisle, LLC, dated as of October 19, 2004. |
xix. | Property Lease Agreement, by and between Ventas Realty Limited Partnership and Brookdale Living Communities of Illinois-DNC, LLC, dated as of March 2, 2009, as amended as of April 9, 2010, as amended from time to time, together with all related letter agreements, related guaranties, and other related agreements. |
4. | NHP Alterra Master Lease |
a. | Master Lease, by and between Nationwide Health Properties, Inc., NH Texas Properties Limited Partnership, MLD Delaware Trust, MLD Properties, LLC, NHP Silverwood Investments, Inc., NHP Westwood Investments, Inc., collectively, Landlord, and Brookdale Senior Living Communities, Inc. (f/k/a Alterra Healthcare Corporation), Tenant, dated as of April 9, 2002, as the same may have been amended, restated, |
5. | JER I Master Lease |
a. | Master Lease, by and between JER/NHP Senior Living Acquisition, LLC, JER/NHP Senior Living Texas, L.P., JER/NHP Senior Living Wisconsin, LLC, JER/NHP Senior Living Kansas, Inc., collectively, as Landlord, and ALS Leasing, Inc., Brookdale Senior Living Communities, Inc. (f/k/a Assisted Living Properties, Inc.), collectively, as Tenant, dated as of April 9, 2002, as the same may have been amended, restated, supplemented, or modified from time to time, together with any and all related letter agreements, guaranties, and other ancillary agreements. |
6. | Alterra Individual Lease – Forest Grove |
a. | Lease and Security Agreement, by and between Nationwide Health Properties, Inc. and Brookdale Senior Living Communities, Inc. (as successor in interest to New Crossings International Corporation), dated as of December 15, 1995, as the same may have been amended, restated, supplemented, or modified from time to time, together with any and all related letter agreements, guaranties, and other ancillary agreements. |
7. | Alterra Individual Lease – Mt. Hood |
a. | Sublease and Security Agreement, by and between Healthlink, Nationwide Health Properties, Inc. and Brookdale Senior Living Communities, Inc. (as successor in interest to New Crossings International Corporation), dated as of December 15, 1995, as the same may have been amended, restated, supplemented, or modified from time to time, together with any and all related letter agreements, guaranties, and other ancillary agreements. |
8. | Alterra Individual Lease – Union Park |
a. | Sublease and Security Agreement by and between 2010 Union Limited Partnership, and New Crossings International Corporation, dated as of December 15, 1995, as the same may have been amended, restated, supplemented, or modified from time to time, together with any and all related letter agreements, guaranties, and other ancillary agreements. |
9. | Summerville ML-E Leases |
a. | Third Amended and Restated Master Lease Agreement, by and among Ventas Realty, Limited Partnership, and Ventas Framingham, LLC, and Summerville 3, LLC, Summerville 5 LLC, Summerville 14 LLC, Summerville 15 LLC, Summerville 16 LLC, Summerville 17 LLC, SW Assisted Living, LLC, Summerville at Mentor, LLC, Summerville at Heritage Place, LLC, Summerville at Atherton Court LLC, Summerville at Barrington Court, LLC, Summerville at Roseville Gardens LLC, and Summerville at Golden Pond LLC, dated as of July 25, 2008, as the same may have been amended, restated, supplemented, or modified from time to time, together with any and all related letter agreements, guaranties, and other ancillary agreements. |
10. | Master Lease Agreement – Whitehall Estates |
a. | Master Lease Agreement – Whitehall, by and between Ventas Whitehall Estates, LLC and Summerville 4 LLC, dated as of April 14, 2005, as the same may have been amended, restated, supplemented, or modified from time to time, together with any and all related letter agreements, guaranties, and other ancillary agreements. |
11. | Farm Pond |
a. | Master Lease Agreement No 2., by and between Ventas Framingham, LLC and Summerville 5 LLC, dated as of October 21, 2009, as the same may have been amended, restated, supplemented, or modified from time to time, together with any and all related letter agreements, guaranties, and other ancillary agreements. |
12. | Seasons at Glenview – Grand Court Lease |
a. | Master Lease Agreement, by and between Ventas Realty Limited Partnership and BLC Adrian-GC, LLC, BLC Albuquerque-GC, LLC, BLC Dayton-GC, LLC, BLC Fort Myers-GC, LLC, dated as of January 28, 2004, as the same may have been amended, restated, supplemented, or modified from time to time, together with any and all related letter agreements, guaranties, and other ancillary agreements. |
13. | NHP Summerville ML-E |
a. | Master Lease, by and among Nationwide Health Properties, LLC (as successor by merger to Nationwide Health Properties, Inc.), and Summerville at Camelot Place LLC, Summerville at Hillen Vale LLC, Summerville at Ridgewood Gardens LLC, and Summerville at Lakeview LLC, dated as of October 2, 2006, as the same may have been amended, restated, supplemented, or modified from time to time, together with any and all related letter agreements, guaranties, and other ancillary agreements. |
Lease Year | Annual Rent Credit |
Effective Date through 12/31/2018 | $8,000,000* |
2019 | $8,000,000 |
2020 | $7,000,000 |
2021 and all remaining Lease Years during the Term | $5,000,000 |
1. | If, for the first Lease Year of the first Renewal Term, the Minimum Rent as established pursuant to clause (b) of Section 4.1.3 were $200,000,000 and the amount determined by clause (a) of Section 4.1.3 for such first Lease Year were $197,000,000, then the Rent Credit for such first Lease Year of such Renewal Term and for each Lease Year thereafter during such Renewal Term would be $200,000,000 minus $197,000,000= $3,000,000. |
2. | If, for the first Lease Year of the first Renewal Term, the Minimum Rent as established pursuant to clause (b) of Section 4.1.3 were $203,000,000 and the amount determined by clause (a) of Section 4.1.3 for such first Lease Year were $197,000,000, then the Rent Credit for such first Lease Year of such Renewal Term and for each Lease Year thereafter during such Renewal Term would be $5,000,000 since the difference of $203,000,000 minus $197,000,000 is greater than the maximum allowable Rent Credit of $5,000,000 pursuant to subsection (b)(ii) above. |
3. | If, for the first Lease Year of the first Renewal Term, the Minimum Rent as established pursuant to Section 4.1.3 were established by reference to clause (a) of Section 4.1.3 for such first Lease Year, then the Rent Credit for such first Lease Year of such Renewal Term and for each Lease Year thereafter during such Renewal Term would be $0 pursuant to the terms of subsection (b)(i) above. |
(a) | Any right, title or interest in the trademarks or tradenames with respect to the corporate name of Tenant or any of its affiliates (including, without limitation, “Emeritus”, “Brookdale”, “Brookdale Senior Living Inc.”, or any variation thereof), |
(b) | any items, tangible or intangible, consisting of “Proprietary Information” (as defined below) relating to a Facility, and |
(c) | any other assets that may be agreed upon between Tenant and a third-party successor operator in any operations transfer agreement contemplated hereunder. It is acknowledged and agreed that none of the right, title and interest in the trademarks, tradenames, symbols, logos, slogans, designs, insignia, emblems, devices, service marks and distinctive designs of buildings and signs, or combinations thereof, which are used to identify a Facility (including, without limitation, the name of such Facility), except for any trademark or tradename with respect to the corporate name of Tenant or any of its Affiliates included therein (collectively, the “Facility Proprietary Marks”), are included in Tenant’s Excluded Property. Solely for purposes of this definition, “Proprietary Information” shall mean (i) all proprietary information or intellectual property of Tenant or any of its Affiliates, except for (x) the specific information and property that pertain exclusively to a Facility or those served at such Facility (including, without limitation, the Facility Proprietary Marks) and (y) the books and records which relate exclusively to such Facility, (ii) all computer software and accompanying documentation (including all future upgrades, enhancements, additions, substitutions and modifications thereof), other than that which is commercially available, which are used by Tenant or any of its Affiliates in connection with the property management system and all future electronic systems developed by Tenant or any of its Affiliates for use with respect to a Facility or Tenant and its Affiliates, (iii) all manuals, brochures and directives used by Tenant or any of its Affiliates with respect to the procedures and techniques to be used in operating a Facility, and (iv) employee records which must remain confidential either under applicable legal requirements or under reasonable corporate policies of Tenant and its Affiliates. |
Portfolio Coverage Ratio: | Percentage |
> [***] | [***]% |
≤ [***] | [***]% |
To Guarantor: Brookdale Senior Living Inc. 111 Westwood Place, Suite 200 Brentwood, TN 37027 Attention: General Counsel |
With a copy to: Brookdale Senior Living Inc. 6737 W. Washington Street, Suite 2300 Milwaukee, WI 53214 Attention: Legal Department |
With a copy to: Skadden, Arps, Slate, Meagher & Flom LLP Four Times Square New York, New York 10036 Attn: Joseph A. Coco |
To Landlord: c/o Ventas, Inc. 500 North Hurstbourne Parkway Suite 200 Louisville, KY 40222 Attention: Lease Administration |
With a copy to: c/o Ventas, Inc. 353 North Clark Street Suite 3300 Chicago, IL 60654 Attention: Legal Department |
Tangible Net Worth / Consolidated Net Leverage Ratio: | Number of Months: |
Tangible Net Worth ≥ $[***] and Consolidated Net Leverage Ratio ≤ [***] | $[***], subject to adjustment pursuant to Section 16.6.2 |
Tangible Net Worth < $[***] or Consolidated Net Leverage Ratio > [***] | [***] |
Tangible Net Worth < $[***] or Consolidated Net Leverage Ratio > [***] | [***] |
Tangible Net Worth < $[***] or Consolidated Net Leverage Ratio > [***] | [***] |
Tangible Net Worth < $[***] or Consolidated Net Leverage Ratio > [***] | [***] |
Tangible Net Worth / Consolidated Net Leverage Ratio: | Number of Months: |
Tangible Net Worth ≥ $[***] and Consolidated Net Leverage Ratio ≤ [***] | [***] |
Tangible Net Worth < $[***] or Consolidated Net Leverage Ratio > [***] | [***] |
Tangible Net Worth < $[***] or Consolidated Net Leverage Ratio > [***] | [***] |
Tangible Net Worth < $[***] or Consolidated Net Leverage Ratio > [***] | [***] |
BROOKDALE SENIOR LIVING INC., a Delaware corporation By: /s/ George T. Hicks Name: George T. Hicks Title: Executive Vice President - Finance and Treasurer |
BROOKDALE LIVING COMMUNITIES OF ILLINOIS-GV, LLC, a Delaware limited liability company By: /s/ George T. Hicks Name: George T. Hicks Title: Executive Vice President and Treasurer |
BLC-THE HALLMARK, LLC, a Delaware limited liability company By: /s/ George T. Hicks Name: George T. Hicks Title: Executive Vice President and Treasurer |
BLC-KENWOOD OF LAKE VIEW, LLC, a Delaware limited liability company By: /s/ George T. Hicks Name: George T. Hicks Title: Executive Vice President and Treasurer |
BLC-GABLES AT FARMINGTON, LLC, a Delaware limited liability company By: /s/ George T. Hicks Name: George T. Hicks Title: Executive Vice President and Treasurer |
BLC-DEVONSHIRE OF HOFFMAN ESTATES, LLC, a Delaware limited liability company By: /s/ George T. Hicks Name: George T. Hicks Title: Executive Vice President and Treasurer |
BLC-THE BERKSHIRE OF CASTLETON, L.P., a Delaware limited partnership By: BLC-The Berkshire of Castleton, LLC, a Delaware limited liability company, its General Partner By: /s/ George T. Hicks Name: George T. Hicks Title: Executive Vice President and Treasurer |
BLC-SPRINGS AT EAST MESA, LLC, a Delaware limited liability company By: /s/ George T. Hicks Name: George T. Hicks Title: Executive Vice President and Treasurer |
BLC-RIVER BAY CLUB, LLC, a Delaware limited liability company By: /s/ George T. Hicks Name: George T. Hicks Title: Executive Vice President and Treasurer |
BLC-WOODSIDE TERRACE, L.P., a Delaware limited partnership By: BLC-Woodside Terrace, LLC, a Delaware limited liability company, its general partner By: /s/ George T. Hicks Name: George T. Hicks Title: Executive Vice President and Treasurer BLC-ATRIUM AT SAN JOSE, L.P., a Delaware limited partnership By:BLC-Atrium at San Jose, LLC, a Delaware limited liability company, its general partner By: /s/ George T. Hicks Name: George T. Hicks Title: Executive Vice President and Treasurer |
BLC-BROOKDALE PLACE OF SAN MARCOS, L.P., a Delaware limited partnership By:BLC-Brookdale Place of San Marcos, LLC, a Delaware limited liability company, its general partner By: /s/ George T. Hicks Name: George T. Hicks Title: Executive Vice President and Treasurer |
BLC-PONCE DE LEON, LLC, a Delaware limited liability company By: /s/ George T. Hicks Name: George T. Hicks Title: Executive Vice President and Treasurer |
BLC-PARK PLACE, LLC, a Delaware limited liability company By: /s/ George T. Hicks Name: George T. Hicks Title: Executive Vice President and Treasurer |
BLC-HAWTHORNE LAKES, LLC, a Delaware limited liability company By: /s/ George T. Hicks Name: George T. Hicks Title: Executive Vice President and Treasurer |
BLC-THE WILLOWS, LLC, a Delaware limited liability company By: /s/ George T. Hicks Name: George T. Hicks Title: Executive Vice President and Treasurer |
BLC-BRENDENWOOD, LLC, a Delaware limited liability company By: /s/ George T. Hicks Name: George T. Hicks Title: Executive Vice President and Treasurer |
BLC-CHATFIELD, LLC, a Delaware limited liability company By: /s/ George T. Hicks Name: George T. Hicks Title: Executive Vice President and Treasurer |
BROOKDALE LIVING COMMUNITIES OF FLORIDA, INC. a Delaware corporation By: /s/ George T. Hicks Name: George T. Hicks Title: Executive Vice President and Treasurer |
BROOKDALE LIVING COMMUNITIES OF ILLINOIS-DNC, LLC, a Delaware limited liability company By: /s/ George T. Hicks Name: George T. Hicks Title: Executive Vice President and Treasurer |
SW ASSISTED LIVING, LLC, a Delaware limited liability company By: /s/ George T. Hicks Name: George T. Hicks Title: Executive Vice President and Treasurer |
SUMMERVILLE AT FAIRWOOD MANOR, LLC, a Delaware limited liability company By: /s/ George T. Hicks Name: George T. Hicks Title: Executive Vice President and Treasurer |
SUMMERVILLE AT HERITAGE PLACE, LLC, a Delaware limited liability company By: /s/ George T. Hicks Name: George T. Hicks Title: Executive Vice President and Treasurer |
SUMMERVILLE 5 LLC, a Delaware limited liability company By: /s/ George T. Hicks Name: George T. Hicks Title: Executive Vice President and Treasurer |
SUMMERVILLE 4 LLC, a Delaware limited liability company By: /s/ George T. Hicks Name: George T. Hicks Title: Executive Vice President and Treasurer |
SUMMERVILLE 17 LLC, a Delaware limited liability company By: /s/ George T. Hicks Name: George T. Hicks Title: Executive Vice President and Treasurer |
SUMMERVILLE AT RIDGEWOOD GARDENS LLC, a Delaware limited liability company By: /s/ George T. Hicks Name: George T. Hicks Title: Executive Vice President and Treasurer |
ALS PROPERTIES TENANT II, LLC, a Delaware limited liability company By: /s/ George T. Hicks Name: George T. Hicks Title: Executive Vice President and Treasurer |
ALS LEASING, INC., a Delaware corporation By: /s/ George T. Hicks Name: George T. Hicks Title: Executive Vice President and Treasurer |
ASSISTED LIVING PROPERTIES, INC., a Kansas corporation By: /s/ George T. Hicks Name: George T. Hicks Title: Executive Vice President and Treasurer |
ALS PROPERTIES TENANT I, LLC, a Delaware limited liability company By: /s/ George T. Hicks Name: George T. Hicks Title: Executive Vice President and Treasurer |
BROOKDALE SENIOR LIVING COMMUNITIES, INC. a Delaware corporation (f/k/a Alterra Healthcare Corporation and Alternative Living Services, Inc.) By: /s/ George T. Hicks Name: George T. Hicks Title: Executive Vice President and Treasurer |
VENTAS REALTY, LIMITED PARTNERSHIP, a Delaware limited partnership By: Ventas, Inc., a Delaware corporation, its general partner By: /s/ John D. Cobb Name: John D. Cobb Title: Authorized Signatory |
PSLT-ALS PROPERTIES I, LLC, a Delaware limited liability company By: PSLT-ALS Properties Holdings, LLC, its sole member By: PSLT OP, L.P., its sole member By: PSLT GP, LLC, its general partner By: Ventas Provident, LLC, its sole member By: /s/ John D. Cobb Name: John D. Cobb Title: Authorized Signatory |
PSLT-ALS PROPERTIES II, LLC, a Delaware limited liability company By: PSLT-ALS Properties Holdings, LLC, its sole member By: PSLT OP, L.P., its sole member By: PSLT GP, LLC, its general partner By: Ventas Provident, LLC, its sole member By: /s/ John D. Cobb Name: John D. Cobb Title: Authorized Signatory |
PSLT-ALS PROPERTIES IV, LLC, a Delaware limited liability company By: /s/ John D. Cobb Name: John D. Cobb Title: Authorized Signatory |
PSLT-ALS PROPERTIES III, LLC, a Delaware limited liability company By: /s/ John D. Cobb Name: John D. Cobb Title: Authorized Signatory |
BROOKDALE LIVING COMMUNITIES OF ILLINOIS-2960, LLC, a Delaware limited liability company By: PSLT-BLC Properties Holdings, LLC, its sole member By: PSLT OP, L.P., its sole member By: PSLT GP, LLC, its general partner By: Ventas Provident, LLC, its sole member By: /s/ John D. Cobb Name: John D. Cobb Title: Authorized Signatory |
BROOKDALE LIVING COMMUNITIES OF ILLINOIS-HV, LLC, a Delaware limited liability company By: /s/ John D. Cobb Name: John D. Cobb Title: Authorized Signatory |
RIVER OAKS PARTNERS, an Illinois general partnership By: Brookdale Holdings, LLC, its managing partner By: PSLT-BLC Properties Holdings, LLC, its sole member By: PSLT OP, L.P., its sole member By: PSLT GP, LLC, its general partner By: Ventas Provident, LLC, its sole member By: /s/ John D. Cobb Name: John D. Cobb Title: Authorized Signatory |
BROOKDALE LIVING COMMUNITIES OF MINNESOTA, LLC, a Delaware limited liability company By: PSLT-BLC Properties Holdings, LLC, its sole member By: PSLT OP, L.P., its sole member By: PSLT GP, LLC, its general partner By: Ventas Provident, LLC, its sole member By: /s/ John D. Cobb Name: John D. Cobb Title: Authorized Signatory |
BROOKDALE LIVING COMMUNITIES OF CONNECTICUT, LLC, a Delaware limited liability company By: /s/ John D. Cobb Name: John D. Cobb Title: Authorized Signatory |
PSLT-BLC PROPERTIES HOLDINGS, LLC, a Delaware limited liability company By: PSLT OP, L.P., its sole member By: PSLT GP, LLC, its general partner By: Ventas Provident, LLC, its sole member By: /s/ John D. Cobb Name: John D. Cobb Title: Authorized Signatory |
THE PONDS OF PEMBROKE LIMITED PARTNERSHIP, an Illinois general partnership By: Brookdale Holdings, LLC, its general partner By: PSLT-BLC Properties Holdings, LLC, its sole member By: PSLT OP, L.P., its sole member By: PSLT GP, LLC, its general partner By: Ventas Provident, LLC, its sole member By: /s/ John D. Cobb Name: John D. Cobb Title: Authorized Signatory |
BROOKDALE LIVING COMMUNITIES OF ARIZONA-EM, LLC, a Delaware limited liability company By: PSLT-BLC Properties Holdings, LLC, its sole member By: PSLT OP, L.P., its sole member By: PSLT GP, LLC, its general partner By: Ventas Provident, LLC, its sole member By: /s/ John D. Cobb Name: John D. Cobb Title: Authorized Signatory |
BROOKDALE LIVING COMMUNITIES OF MASSACHUSETTS-RB, LLC, a Delaware limited liability company By: PSLT-BLC Properties Holdings, LLC, its sole member By: PSLT OP, L.P., its sole member By: PSLT GP, LLC, its general partner By: Ventas Provident, LLC, its sole member By: /s/ John D. Cobb Name: John D. Cobb Title: Authorized Signatory |
BROOKDALE LIVING COMMUNITIES OF CALIFORNIA-RC, LLC, a Delaware limited liability company By: PSLT-BLC Properties Holdings, LLC, its sole member By: PSLT OP, L.P., its sole member By: PSLT GP, LLC, its general partner By: Ventas Provident, LLC, its sole member By: /s/ John D. Cobb Name: John D. Cobb Title: Authorized Signatory |
BROOKDALE LIVING COMMUNITIES OF CALIFORNIA, LLC, a Delaware limited liability company By: PSLT-BLC Properties Holdings, LLC, its sole member By: PSLT OP, L.P., its sole member By: PSLT GP, LLC, its general partner By: Ventas Provident, LLC, its sole member By: /s/ John D. Cobb Name: John D. Cobb Title: Authorized Signatory |
BLC OF CALIFORNIA-SAN MARCOS, L.P., a Delaware limited partnership By: Brookdale Living Communities of California-San Marcos, LLC, its general partner By: PSLT-BLC Properties Holdings, LLC, its sole member By: PSLT OP, L.P., its sole member By: PSLT GP, LLC, its general partner By: Ventas Provident, LLC, its sole member By: /s/ John D. Cobb Name: John D. Cobb Title: Authorized Signatory |
BROOKDALE LIVING COMMUNITIES OF WASHINGTON-PP, LLC, a Delaware limited liability company By: PSLT-BLC Properties Holdings, LLC, its sole member By: PSLT OP, L.P., its sole member By: PSLT GP, LLC, its general partner By: Ventas Provident, LLC, its sole member By: /s/ John D. Cobb Name: John D. Cobb Title: Authorized Signatory |
BROOKDALE LIVING COMMUNITIES OF ILLINOIS-II, LLC, a Delaware limited liability company By: PSLT-BLC Properties Holdings, LLC, its sole member By: PSLT OP, L.P., its sole member By: PSLT GP, LLC, its general partner By: Ventas Provident, LLC, its sole member By: /s/ John D. Cobb Name: John D. Cobb Title: Authorized Signatory |
BROOKDALE LIVING COMMUNITIES OF NEW JERSEY, LLC, a Delaware limited liability company By: PSLT-BLC Properties Holdings, LLC, its sole member By: PSLT OP, L.P., its sole member By: PSLT GP, LLC, its general partner Ventas Provident, LLC, its sole member By: /s/ John D. Cobb Name: John D. Cobb Title: Authorized Signatory |
BROOKDALE LIVING COMMUNITIES OF FLORIDA-CL, LLC, a Delaware limited liability company By: PSLT-BLC Properties Holdings, LLC, its sole member By: PSLT OP, L.P., its sole member By: PSLT GP, LLC, its general partner Ventas Provident, LLC, its sole member By: /s/ John D. Cobb Name: John D. Cobb Title: Authorized Signatory |
NATIONWIDE HEALTH PROPERTIES, LLC, a Delaware limited liability company By: /s/ John D. Cobb Name: John D. Cobb Title: Authorized Signatory |
2010 UNION LIMITED PARTNERSHIP, a Washington limited partnership By: Nationwide Health Properties, LLC, its general partner By: /s/ John D. Cobb Name: John D. Cobb Title: Authorized Signatory |
NH TEXAS PROPERTIES LIMITED PARTNERSHIP, a Texas limited partnership By: MLD Texas Corporation, its general partner By: /s/ John D. Cobb Name: John D. Cobb Title: Authorized Signatory |
MLD PROPERTIES, INC., a Delaware corporation By: /s/ John D. Cobb Name: John D. Cobb Title: Authorized Signatory |
JER/NHP SENIOR LIVING ACQUISITION, LLC, a Delaware limited liability company By: /s/ John D. Cobb Name: John D. Cobb Title: Authorized Signatory |
JER/NHP SENIOR LIVING KANSAS, INC., a Kansas corporation By: /s/ John D. Cobb Name: John D. Cobb Title: Authorized Signatory |
JER/NHP SENIOR LIVING TEXAS, L.P., a Texas limited partnership By: JER/NHP Management Texas, LLC, its general partner By: /s/ John D. Cobb Name: John D. Cobb Title: Authorized Signatory |
MLD PROPERTIES LIMITED PARTNERSHIP, a Delaware limited partnership By: MLD Properties II, Inc., its general partner By: /s/ John D. Cobb Name: John D. Cobb Title: Authorized Signatory |
NHP MCCLAIN, LLC, a Delaware limited liability company By: /s/ John D. Cobb Name: John D. Cobb Title: Authorized Signatory |
VENTAS FAIRWOOD, LLC, a Delaware limited liability company By: /s/ John D. Cobb Name: John D. Cobb Title: Authorized Signatory |
VENTAS FRAMINGHAM, LLC, a Delaware limited liability company By: /s/ John D. Cobb Name: John D. Cobb Title: Authorized Signatory |
VENTAS WHITEHALL ESTATES, LLC, a Delaware limited liability company By: /s/ John D. Cobb Name: John D. Cobb Title: Authorized Signatory |
VTR-EMRTS HOLDINGS, LLC, a Delaware limited liability company By: /s/ John D. Cobb Name: John D. Cobb Title: Authorized Signatory |
1. | The parties identified as “Landlord” in the Combination Lease |
1. | The parties identified as “Tenant” in the Combination Lease |
1. | The Combination Lease |
1. | Ventas Trinity Finance, LP |
2. | Nationwide Health Properties, LLC |
3. | MLD Properties Limited Partnership |
4. | NHP McClain, LLC |
1. | Brookdale Senior Living Inc. |
2. | BLC Cedar Springs, LLC |
3. | BLC Victorian Manor, LLC |
4. | BLC Sand Point, LLC |
5. | Summerville at Camelot Place LLC |
6. | Summerville at Hillen Vale LLC |
7. | Summerville at Lakeview LLC |
8. | Summerville at North Hills LLC |
9. | The Inn at Medina LLC |
1. | Loan Agreement dated February 12, 2005 between Brookdale Senior Living Inc. and Ventas Trinity Finance, LP |
2. | $9,329,362.66 Promissory Note Secured by Mortgage and Security Agreement and Fixture Filing with Assignment of Leases and Rents dated July 1, 2014 made by BLC Cedar Springs, LLC and BLC Victorian Manor, LLC payable to the order of Nationwide Health Properties, LLC and MLD Properties Limited Partnership |
3. | Mortgage and Security Agreement and Fixture Filing with Assignment of Leases and Rents dated July 1, 2014 between BLC Cedar Springs, LLC and BLC Victorian Manor, LLC, as borrowers, and Nationwide Health Properties, LLC and MLD Properties Limited Partnership, as lenders |
4. | $7,694,000.00 Promissory Note Secured by Mortgage and Security Agreement and Fixture Filing with Assignment of Leases and Rents dated July 1, 2014 made by BLC Sand Point, LLC payable to the order of Nationwide Health Properties, LLC and MLD Properties Limited Partnership |
5. | Mortgage and Security Agreement and Fixture Filing with Assignment of Leases and Rents dated July 1, 2014 between BLC Sand Point, LLC, as borrower, and Nationwide Health Properties, LLC and MLD Properties Limited Partnership, as lenders |
6. | $78,447,904.06 Promissory Note Secured by Open-End Mortgage and Security Agreement and Fixture Filing with Assignment of Leases and Rents dated October 1, 2015 made by Summerville at Camelot Place LLC, Summerville at Hillen Vale LLC, Summerville at Lakeview LLC, Summerville at North Hills LLC and The Inn at Medina LLC payable to the order of Nationwide Health Properties, LLC and NHP McClain, LLC |
7. | Open-End Mortgage and Security Agreement and Fixture Filing With Assignment of Leases and Rents dated October 1, 2015 between Summerville at Camelot Place LLC, Summerville at Hillen Vale LLC, Summerville at Lakeview LLC, Summerville at North Hills LLC and The Inn at Medina LLC, as borrowers, and Nationwide Health Properties, LLC and NHP McClain, LLC, as lenders |
1. | PSLT-BLC Properties Holding, LLC |
2. | Ventas Provident, LLC |
3. | The landlords/lessors under the leases described below |
1. | Brookdale Provident Properties, LLC |
2. | For certain limited purposes, Brookdale Provident Management, LLC, successor-in-interest to Provident Senior Living Trust |
3. | Brookdale Living Communities, Inc. |
4. | Brookdale Senior Living Inc. |
5. | The tenants under the leases described below |
1. | Property Lease Agreement dated October 19, 2004, by and between River Oaks Partners, a Delaware limited partnership, as Landlord and BLC – The Heritage of Des Plaines, LLC, as Tenant, as amended by that certain First Amendment to Leases, dated February 11, 2009, and as otherwise amended, amended and restated, replaced, extended or joined in |
2. | Property Lease Agreement dated October 19, 2004, by and between Brookdale Living Communities of Minnesota, LLC, as Landlord and BLC – Edina Park Plaza, LLC, as Tenant, as amended by that certain First Amendment to Leases, dated February 11, 2009, and that certain Second Amendment to Property Lease Agreement, dated June 27, 2014, and as otherwise amended, amended and restated, replaced, extended or joined in |
3. | Property Lease Agreement dated October 19, 2004, by and between The Ponds of Pembroke Limited Partnership, L.P., a Delaware limited partnership, as Landlord and BLC – Devonshire of Lisle, LLC, as Tenant, as amended by that certain First Amendment to Leases, dated February 11, 2009, and as otherwise amended, amended and restated, replaced, extended or joined in |
4. | Letter Agreement re: Leases and Subleases between NHP, and affiliates thereof and Alterra and affiliates thereof, dated June 22, 2005 |
5. | Omnibus Amendment to Leases and Subleases and Consent to Transfer, dated December 2, 2003, by and among Alterra, as Tenant, and NHP, and NHP Silverwood Investments, NHP Westwood Investments, and 2010 Union Limited Partnership, as Landlord |
6. | Lease and Security Agreement, dated December 15, 1995 (as amended and modified, the "Villas McMinnville Lease"), between NHP, as Lessor, and Alterra, as successor-by merger to New Crossings International Corporation, as Lessee, as amended by that certain Acknowledgement, Consent and Amendment of Lease Documents dated as of May 23, 1996, that certain Second Amendment to Lease and Security Agreement dated as of April 7, 1997, that certain Third Amendment to Lease and Security Agreement dated as of December 16, 1997, that certain Fourth Amendment to Lease and Security Agreement dated July 30, 2013 and that certain Fifth Amendment to Lease and Security Agreement dated May 20, 2014, and as otherwise amended, amended and restated, replaced, extended or joined in |
7. | Letter Agreements, dated December 28, 1999, October 12, 2005, June 22, 2005 and July 27, 2006 |
8. | Second Amended and Restated Property Lease Agreement (ALS Group A), dated as of June 24, 2009 |
9. | Lease Combination Agreement and First Amendment to Lease (ALS Group A), dated October 22, 2009 |
10. | Lease Severance Agreement and Second Amendment to Lease, dated as of June 24, 2009 |
11. | Lease Severance Agreement and Third Amendment to Lease, dated as of October 22, 2009 |
12. | Amended and Restated Memorandum of Master Lease dated October 22, 2009 |
1. | Summerville 14 LLC |
2. | Summerville 15 LLC |
3. | Summerville 16 LLC |
1. | Master Lease Agreement No. 1, dated June 24, 2009 |
2. | Lease Severance and Amendment Agreement, dated June 24, 2009 |
Consolidated Net Income | ||
Plus (a) the following, without duplication, to the extent deducted in determining Consolidated Net Income for such period: | ||
(i) Provision for income taxes; | ||
(ii) Non-operating expense items (including, without limitation, equity in loss of unconsolidated ventures; debt modification and extinguishment costs; loss on sale of assets; and Consolidated Interest Expense); | ||
(iii) depreciation and amortization (including impairment charges); | ||
(iv) loss on sale of acquisition of communities (including loss on facility lease modification or termination); | ||
(v) straight-line lease expense, net of amortization of below market rents | ||
(vi) non-cash stock-based compensation expense; (vii) increase in future service obligation; (viii) Rent Expense; (ix) charges consistent with those identified in Guarantor’s supplemental information with its quarterly earnings reports (including, without limitation, transaction, organizational restructuring, strategic project, integration, transition, severance, retention, and recruiting costs) that are reasonable and specifically identifiable; (x) the amount of expenses recognized for any change in financial/accounting treatment of any of the BKD/VTR Documents resulting from the combination of certain leases into the 2018 Master Lease and/or any other modifications to nay of the other BKD/VTR Documents (equitably adjusted for any charges resulting therefrom); | ||
Subtotal Additions: | ||
minus (b) the following, in each case without duplication, to the extent included in determining Consolidated Net Income for such period: | ||
(i) benefit from income taxes; | ||
(ii) non-operating income items (including, without limitation, equity in earnings of unconsolidated ventures, gain on sale of assets and interest income); (iii) gain on sale or acquisitions of communities (including gain on facility lease modification or termination); (iv) straight-line lease income, net amortization of above market rents; (v) amortization of deferred gain; and (vi) reduction in service obligation | ||
Subtotal Deductions: | ||
Consolidated Adjusted EBITDAR (Net Income + Additions – Deductions): | ||
Debt of any Person shall mean, without duplication and whether or not contingent, all indebtedness and other obligations of such person and/or its Consolidated Subsidiaries in respect of: | ||
(i) borrowed money or obligations evidenced by bonds, notes, debentures or similar instruments (including subordinated debt) (excluding, for the avoidance of doubt, Capital Lease obligations); | ||
(ii) all reimbursement obligations in connection with uncollateralized letters of credit; | ||
(iii) amounts representing the balance deferred and unpaid of the purchase price of any property services (except any such balance that constitutes an accrued expense, trade payable, conditional sale obligation under any title retention agreement to a trade creditor, in each case incurred in the ordinary course of business); | ||
(iv) all net obligations under any Interest Rate Protection Agreement valued in accordance with GAAP; | ||
(v) all obligations to purchase, redeem, retire, defease or otherwise make any payment in respect of any Equity Interest, valued, in the case of a redeemable preferred interest, at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends; and | ||
(vi) any obligation to be liable for, or to pay, as obligor, guarantor or otherwise (other than for purposes of collection in the ordinary course of business), Debt of another Person (other than Guarantor or its Consolidated subsidiaries), including any such obligation secured by a Lien on any assets of Guarantor or any of its consolidated Subsidiaries, whether or not Guarantor or any of its consolidated Subsidiaries shall have assumed such obligations, to the extent of the lesser of (A) the amount of such obligations so secured or (B) the fair market value of the property subject to such encumbrance, but solely to the extent that the aggregate amount of such obligations under this clause (vi) is in excess of $[***]; | ||
to the extent, in the case of items of indebtedness or obligation under clauses (i) through (vi) above, that any such items would appear as a liability on the consolidated balance sheet of such Person and its Consolidated Subsidiaries in accordance with GAAP. | ||
Debt of Guarantor and its Consolidated Subsidiaries (total of i – vi above) | ||
Minus, without duplication, and as included in the consolidated balance sheet of Guarantor for the fiscal quarter most recently ended: | ||
(1) the amount of unrestricted cash of Guarantor and its Consolidated Subsidiaries (which shall include any cash utilized by Guarantor for additions to the Security Deposit (including any Cure Deposits) from and after the Effective Date pursuant to the terms of this Agreement to the extent such cash amounts have not been refunded or applied), and | ||
(2) marketable securities; (3) cash held as collateral against existing debt | ||
Total Adjusted Net Debt (Total Debt less 1, 2, and 3 above) | ||
Consolidated Net Consolidated Net Leverage Ratio | ||
Total Adjusted Net Debt | ||
Plus: the cash component of Rent Expense for the Trailing Four Quarter Period, multiplied by eight | ||
Plus: cash Capital Lease payments for the Trailing Four Quarter Period, multiplied by eight | ||
Total Lease Adjusted Net Debt | ||
Consolidated Adjusted EBITDAR (Pro Forma Transaction Adjusted, if applicable) | ||
Consolidated Net Leverage Ratio1 | ||
1Consolidated Net Leverage Ratio shall be calculated on a pro forma basis for any Subject Transactions that have occurred during the relevant period. Tangible Net Worth | ||
(i) total stockholders’ equity of Guarantor | ||
Minus | ||
(ii) total consolidated net intangible assets of Guarantor and its Consolidated Subsidiaries, in each case as shown on Guarantor’s balance sheet as of the last day of the fiscal quarter most recently ended on or prior to such date of determination | ||
Plus | ||
(iii) the aggregate amount of all Security Deposits retained by Ventas and its Affiliates pursuant to Section 14.7.3.2 as of the date of determination. | ||
Tangible Net Worth | ||
1. | I have reviewed this Quarterly Report on Form 10-Q of Brookdale Senior Living Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: | August 7, 2018 | /s/ Lucinda M. Baier | |
Lucinda M. Baier | |||
President and Chief Executive Officer |
1. | I have reviewed this Quarterly Report on Form 10-Q of Brookdale Senior Living Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: | August 7, 2018 | /s/ Teresa F. Sparks | |
Teresa F. Sparks | |||
Interim Chief Financial Officer |
Document and Entity Information - shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Aug. 03, 2018 |
|
Document and Entity Information [Abstract] | ||
Entity Registrant Name | Brookdale Senior Living Inc. | |
Entity Central Index Key | 0001332349 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 187,655,268 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q2 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2018 |
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Equity, Number of Shares, Par Value and Other Disclosures [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 50,000,000 | 50,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 400,000,000 | 400,000,000 |
Common stock, shares issued (in shares) | 196,976,288 | 194,454,329 |
Common stock, shares outstanding (in shares) | 193,797,887 | 191,275,928 |
Treasury stock, shares (in shares) | 3,178,401 | 3,178,401 |
Unvested Restricted Stock | ||
Equity, Number of Shares, Par Value and Other Disclosures [Abstract] | ||
Common stock, shares outstanding (in shares) | 6,145,795 | 4,770,097 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Income Statement [Abstract] | ||||
Depreciation and amortization | $ 105,316 | $ 105,673 | $ 208,484 | $ 220,552 |
Non-cash stock-based compensation expense | $ 6,269 | $ 7,246 | $ 14,675 | $ 15,020 |
CONDENSED CONSOLIDATED STATEMENT OF EQUITY - 6 months ended Jun. 30, 2018 - USD ($) $ in Thousands |
Total |
Common Stock |
Additional Paid-In- Capital |
Treasury Stock |
Accumulated Deficit |
Stockholders' Equity |
Noncontrolling Interest |
---|---|---|---|---|---|---|---|
Balances at beginning of period at Dec. 31, 2017 | $ 1,530,291 | $ 1,913 | $ 4,126,549 | $ (56,440) | $ (2,541,294) | $ 1,530,728 | $ (437) |
Balances at beginning of period (in shares) at Dec. 31, 2017 | 191,275,928 | 191,276,000 | |||||
Compensation expense related to restricted stock grants | $ 14,675 | 14,675 | 14,675 | ||||
Net income (loss) | (622,743) | (622,676) | (622,676) | (67) | |||
Issuance of common stock under Associate Stock Purchase Plan | 770 | $ 1 | 769 | 770 | |||
Issuance of common stock under Associate Stock Purchase Plan (in shares) | 111,000 | ||||||
Restricted stock, net | $ 28 | (28) | |||||
Restricted stock, net (in shares) | 2,805,000 | ||||||
Shares withheld for employee taxes | (2,715) | $ (4) | (2,711) | (2,715) | |||
Shares withheld for employee taxes (in shares) | (394,000) | ||||||
Other, net | 379 | 99 | 280 | 379 | |||
Balances at end of period at Jun. 30, 2018 | $ 920,657 | $ 1,938 | $ 4,139,353 | $ (56,440) | $ (3,163,690) | $ 921,161 | $ (504) |
Balances at end of period (in shares) at Jun. 30, 2018 | 193,797,887 | 193,798,000 |
Description of Business |
6 Months Ended |
---|---|
Jun. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business | Description of Business Brookdale Senior Living Inc. ("Brookdale" or the "Company") is the leading operator of senior living communities throughout the United States. The Company is committed to providing senior living solutions primarily within properties that are designed, purpose-built and operated to provide quality service, care and living accommodations for residents. The Company operates independent living, assisted living and dementia-care communities and continuing care retirement centers ("CCRCs"). Through its ancillary services programs, the Company also offers a range of home health, hospice, and outpatient therapy services to residents of many of its communities and to seniors living outside its communities. |
Summary of Significant Accounting Policies |
6 Months Ended | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2018 | ||||||||||||||||
Accounting Policies [Abstract] | ||||||||||||||||
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States ("US GAAP") for interim financial information pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") for quarterly reports on Form 10-Q. In the opinion of management, these financial statements include all adjustments necessary to present fairly the financial position, results of operations and cash flows of the Company as of June 30, 2018, and for all periods presented. The condensed consolidated financial statements are prepared on the accrual basis of accounting. All adjustments made have been of a normal and recurring nature. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. The Company believes that the disclosures included are adequate and provide a fair presentation of interim period results. Interim financial statements are not necessarily indicative of the financial position or operating results for an entire year. It is suggested that these interim financial statements be read in conjunction with the audited financial statements and the notes thereto, together with management's discussion and analysis of financial condition and results of operations, included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2017 filed with the SEC on February 22, 2018. Except for the changes for the impact of the recently adopted accounting pronouncements discussed in this Note, the Company has consistently applied its accounting policies to all periods presented in these condensed consolidated financial statements. Principles of Consolidation The condensed consolidated financial statements include the accounts of Brookdale and its consolidated subsidiaries. All significant intercompany balances and transactions have been eliminated. Investments in affiliated companies that the Company does not control, but has the ability to exercise significant influence over governance and operation, are accounted for by the equity method. The ownership interest of consolidated entities not wholly-owned by the Company are presented as noncontrolling interests in the accompanying condensed consolidated financial statements. Noncontrolling interest represents the share of consolidated entities owned by third parties. Noncontrolling interest is adjusted for the noncontrolling holder's share of additional contributions, distributions and the proportionate share of the net income or loss of each respective entity. The Company continually evaluates its potential variable interest entity ("VIE") relationships under certain criteria as provided for in Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 810, Consolidation ("ASC 810"). ASC 810 broadly defines a VIE as an entity with one or more of the following characteristics: (a) the total equity investment at risk is insufficient to finance the entity's activities without additional subordinated financial support; (b) as a group, the holders of the equity investment at risk lack (i) the ability to make decisions about the entity's activities through voting or similar rights, (ii) the obligation to absorb the expected losses of the entity, or (iii) the right to receive the expected residual returns of the entity; or (c) the equity investors have voting rights that are not proportional to their economic interests, and substantially all of the entity's activities either involve, or are conducted on behalf of, an investor that has disproportionately few voting rights. The Company performs this analysis on an ongoing basis and consolidates any VIEs for which the Company is determined to be the primary beneficiary, as determined by the Company's power to direct the VIE's activities and the obligation to absorb its losses or the right to receive its benefits, which are potentially significant to the VIE. Refer to Note 14 for more information about the Company's VIE relationships. Revenue Recognition Resident Fees Resident fee revenue is reported at the amount that reflects the consideration the Company expects to receive in exchange for the services provided. These amounts are due from residents or third-party payors and include variable consideration for retroactive adjustments, if any, under reimbursement programs. Performance obligations are determined based on the nature of the services provided. Resident fee revenue is recognized as performance obligations are satisfied. Under the Company's senior living residency agreements, which are generally for a term of 30 days to one year, the Company provides senior living services to residents for a stated daily or monthly fee. The Company recognizes revenue for housing services under residency agreements for independent living and assisted living services in accordance with the provisions of ASC Topic 840, Leases ("ASC 840"). The Company recognizes revenue for assisted living care, skilled nursing residency and inpatient therapy services, ancillary services, and personalized health services in accordance with the provisions of ASC Topic 606, Revenue from Contracts with Customers ("ASC 606"). The Company has determined that the senior living services included under the daily or monthly fee have the same timing and pattern of transfer and are a series of distinct services that are considered one performance obligation which is satisfied over time. Through its ancillary services programs, the Company enters into contracts to provide home health, hospice, and outpatient therapy services. The Company recognizes revenue for home health, hospice, and outpatient therapy services in accordance with the provisions of ASC 606. Each service provided under the contract is capable of being distinct, and thus, the services are considered individual and separate performance obligations which are satisfied as services are provided and revenue is recognized as services are provided. The Company receives revenue for services under various third-party payor programs which include Medicare, Medicaid, and other third-party payors. Settlements with third-party payors for retroactive adjustments due to audits, reviews or investigations are included in the determination of the estimated transaction price for providing services. The Company estimates the transaction price based on the terms of the contract with the payor, correspondence with the payor and historical payment trends, and retroactive adjustments are recognized in future periods as final settlements are determined. Management Services The Company manages certain communities under contracts which provide periodic management fee payments to the Company. Management fees are generally determined by an agreed upon percentage of gross revenues (as defined in the management agreement). Certain management contracts also provide for an annual incentive fee to be paid to the Company upon achievement of certain metrics identified in the contract. The Company recognizes revenue for community management services in accordance with the provisions of ASC 606. Although there are various management and operational activities performed by the Company under the contracts, the Company has determined that all community operations management activities are a single performance obligation, which is satisfied over time as the services are rendered. The Company estimates the amount of incentive fee revenue expected to be earned, if any, during the annual contract period and revenue is recognized as services are provided to the owners of the communities. The Company’s estimate of the transaction price for management services also includes the amount of reimbursement due from the owners of the communities for services provided and related costs incurred. Such revenue is included in "reimbursed costs incurred on behalf of managed communities" on the condensed consolidated statements of operations. The related costs are included in "costs incurred on behalf of managed communities" on the condensed consolidated statements of operations. Gain on Sale of Assets The Company regularly enters into real estate transactions which may include the disposal of certain communities, including the associated real estate. The Company recognizes income from real estate sales under ASC 610-20, Other Income - Gains and Losses from Derecognition of Nonfinancial Assets ("ASC 610-20"). Under ASC 610-20, income is recognized when the transfer of control occurs and the Company applies the five-step model for recognition to determine the amount of income to recognize for all real estate sales. The Company accounts for the sale of equity method investments under ASC 860, Transfers and Servicing ("ASC 860"). Under ASC 860, income is recognized when the transfer of control occurs and the Company has no continuing involvement with the transferred financial assets. Stock-Based Compensation The Company follows ASC 718, Compensation – Stock Compensation ("ASC 718") in accounting for its share-based payments. This guidance requires measurement of the cost of employee services received in exchange for stock compensation based on the grant-date fair value of the employee stock awards. This cost is recognized as compensation expense ratably over the employee’s requisite service period. Incremental compensation costs arising from subsequent modifications of awards after the grant date are recognized when incurred. Certain of the Company’s employee stock awards vest only upon the achievement of performance targets. ASC 718 requires recognition of compensation cost only when achievement of performance conditions is considered probable. Consequently, the Company’s determination of the amount of stock compensation expense requires judgment in estimating the probability of achievement of these performance targets. For all share-based awards with graded or cliff vesting other than awards with performance-based vesting conditions, the Company records compensation expense for the entire award on a straight-line basis (or, if applicable, on the accelerated method) over the requisite service period. For graded-vesting awards with performance-based vesting conditions, total compensation expense is recognized over the requisite service period for each separately vesting tranche of the award as if the award is, in substance, multiple awards once the performance target is deemed probable of achievement. Performance goals are evaluated quarterly. If such goals are not ultimately met or it is not probable the goals will be achieved, no compensation expense is recognized and any previously recognized compensation expense is reversed. Income Taxes Income taxes are accounted for under the asset and liability approach which requires recognition of deferred tax assets and liabilities for the differences between the financial reporting and tax basis of assets and liabilities. A valuation allowance reduces deferred tax assets when it is more likely than not that some portion or all of the deferred tax assets will not be realized. Fair Value of Financial Instruments ASC 820, Fair Value Measurements and Disclosures establishes a three-level valuation hierarchy for disclosure of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. Categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The three levels are defined as follows: Level 1 – Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2 – Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. Level 3 – Inputs to the valuation methodology are unobservable and significant to the fair value measurement. Cash and cash equivalents, marketable securities, and restricted cash are reflected in the accompanying condensed consolidated balance sheets at amounts considered by management to reasonably approximate fair value due to the short maturity. Marketable Securities Investments in commercial paper and corporate bond instruments with original maturities of greater than three months are classified as marketable securities. Goodwill and Intangible Assets The Company follows ASC 350, Goodwill and Other Intangible Assets, and tests goodwill for impairment annually during the fourth quarter or whenever indicators of impairment arise. Factors the Company considers important in its analysis of whether an indicator of impairment exists include a significant decline in the Company's stock price or market capitalization for a sustained period since the last testing date, significant underperformance relative to historical or projected future operating results and significant negative industry or economic trends. The Company first assesses qualitative factors to determine whether it is necessary to perform a quantitative goodwill impairment test. The quantitative goodwill impairment test is based upon a comparison of the estimated fair value of the reporting unit to which the goodwill has been assigned with the reporting unit's carrying value. The Company is not required to calculate the fair value of a reporting unit unless the Company determines, based on a qualitative assessment, that it is more likely than not that its fair value of a reporting unit is less than its carrying value. The fair values used in the quantitative goodwill impairment test are estimated based upon discounted future cash flow projections for the reporting unit. These cash flow projections are based upon a number of estimates and assumptions such as revenue and expense growth rates, capitalization rates and discount rates. The Company also considers market based measures such as earnings multiples in its analysis of estimated fair values of its reporting units. If the quantitative goodwill impairment test results in a reporting unit's carrying value exceeding its estimated fair value, an impairment charge will be recorded based on the difference in accordance with ASU 2017-04, Intangibles - Goodwill and Other, with the impairment charge limited to the amount of goodwill allocated to the reporting unit. Acquired intangible assets are initially valued at fair market value using generally accepted valuation methods appropriate for the type of intangible asset. Intangible assets with definite lives are amortized over their estimated useful lives and all intangible assets are reviewed for impairment if indicators of impairment arise. The evaluation of impairment for definite-lived intangibles is based upon a comparison of the carrying value of the asset to the estimated future undiscounted net cash flows expected to be generated by the asset. If estimated future undiscounted net cash flows are less than the carrying value of the asset, then the fair value of the asset is estimated. The impairment expense is determined by comparing the estimated fair value of the intangible asset to its carrying value, with any shortfall from fair value recognized as an expense in the current period. Indefinite-lived intangible assets are not amortized but are tested for impairment annually during the fourth quarter or more frequently as required. The impairment test consists of a comparison of the estimated fair value of the indefinite-lived intangible asset with its carrying value. If the carrying value exceeds its fair value, an impairment loss is recognized for that difference. Amortization of the Company's definite-lived intangible assets is computed using the straight-line method over the estimated useful lives of the assets, which are as follows:
Self-Insurance Liability Accruals The Company is subject to various legal proceedings and claims that arise in the ordinary course of its business. Although the Company maintains general liability and professional liability insurance policies for its owned, leased and managed communities under a master insurance program, the Company's current policies provide for deductibles for each and every claim. As a result, the Company is, in effect, self-insured for claims that are less than the deductible amounts. In addition, the Company maintains a high deductible workers compensation program and a self-insured employee medical program. The Company reviews the adequacy of its accruals related to these liabilities on an ongoing basis, using historical claims, actuarial valuations, third-party administrator estimates, consultants, advice from legal counsel and industry data, and adjusts accruals periodically. Estimated costs related to these self-insurance programs are accrued based on known claims and projected claims incurred but not yet reported. Subsequent changes in actual experience are monitored, and estimates are updated as information becomes available. During the six months ended June 30, 2018 and 2017, the Company reduced its estimate for the amount of expected losses for general liability and professional liability and workers compensation claims, based on recent historical claims experience. The reduction in these accrued reserves decreased facility operating expense by $6.3 million and $7.5 million for the three and six months ended June 30, 2018, respectively, and by $2.0 million and $5.6 million for the three and six months ended June 30, 2017, respectively. Lease Accounting The Company, as lessee, makes a determination with respect to each of its community leases as to whether each should be accounted for as an operating lease or capital lease. The classification criteria is based on estimates regarding the fair value of the leased community, minimum lease payments, effective cost of funds, the economic life of the community and certain other terms in the lease agreements. In a business combination, the Company assumes the lease classification previously determined by the prior lessee absent a modification, as determined by ASC 840, Leases ("ASC 840"), in the assumed lease agreement. Payments made under operating leases are accounted for in the Company's condensed consolidated statements of operations as lease expense for actual rent paid plus or minus a straight-line adjustment for estimated minimum lease escalators and amortization of deferred gains in situations where sale-leaseback transactions have occurred. For capital and financing lease obligation arrangements, a liability is established on the Company's condensed consolidated balance sheet representing the present value of the future minimum lease payments and a residual value for financing leases and a corresponding long-term asset is recorded in property, plant and equipment and leasehold intangibles in the condensed consolidated balance sheet. For capital lease assets, the asset is depreciated over the remaining lease term unless there is a bargain purchase option in which case the asset is depreciated over the useful life. For financing lease assets, the asset is depreciated over the useful life of the asset. Leasehold improvements purchased during the term of the lease are amortized over the shorter of their economic life or the lease term. All of the Company's leases contain fixed or formula-based rent escalators. To the extent that the escalator increases are tied to a fixed index or rate, lease payments are accounted for on a straight-line basis over the life of the lease. In addition, all rent-free or rent holiday periods are recognized in lease expense on a straight-line basis over the lease term, including the rent holiday period. Sale-leaseback accounting is applied to transactions in which an owned community is sold and leased back from the buyer if certain continuing involvement criteria are met. Under sale-leaseback accounting, the Company removes the community and related liabilities from the condensed consolidated balance sheet. Gain on the sale is deferred and recognized as a reduction of facility lease expense for operating leases and a reduction of interest expense for capital leases. In cases of sale-leaseback transactions in which the Company has continuing involvement, other than normal leasing activities, the Company does not record the sale until such involvement terminates. For leases in which the Company is involved with the construction of a building, the Company accounts for the leases during the construction period under the provisions of ASC 840. If the Company concludes that it has substantively all of the risks of ownership during construction of a leased property and therefore is deemed the owner of the project for accounting purposes, it records an asset and related financing obligation for the amount of total project costs related to construction in progress. Once construction is complete, the Company considers the requirements under ASC subtopic 840-40. If the arrangement qualifies for sale-leaseback accounting, the Company removes the assets and related liabilities from the condensed consolidated balance sheet. If the arrangement does not qualify for sale-leaseback accounting, the Company continues to amortize the financing obligation and depreciate the assets over the lease term. Recently Adopted Accounting Pronouncements In January 2017, the FASB issued Accounting Standards Update ("ASU") 2017-01, Business Combinations: Clarifying the Definition of a Business ("ASU 2017-01"). ASU 2017-01 clarifies the definition of a business to assist companies in determining whether transactions should be accounted for as an asset acquisition or a business combination. Under ASU 2017-01, if substantially all of the fair value of the assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business and the transaction is accounted for as an asset acquisition. Transaction costs associated with asset acquisitions are capitalized while those associated with business combinations are expensed as incurred. The Company adopted ASU 2017-01 on a prospective basis on January 1, 2018. The Company anticipates that the changes to the definition of a business may result in future acquisitions of real estate, communities or senior housing operating companies being accounted for as asset acquisitions. In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows: Restricted Cash, a consensus of the FASB Emerging Issues Task Force ("ASU 2016-18"). ASU 2016-18 intends to address the diversity in practice that exists in the classification and presentation of changes in restricted cash on the statement of cash flows. The amendments require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. The amendments are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. The Company adopted ASU 2016-18 on January 1, 2018 and the changes required by ASU 2016-18 were applied retrospectively to all periods presented. The Company has identified that the inclusion of the change in restricted cash within the retrospective presentation of the statements of cash flows resulted in a $1.1 million and $1.7 million decrease to the amount of net cash used in investing activities for the three and six months ended June 30, 2017, respectively. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows – Classification of Certain Cash Receipts and Cash Payments ("ASU 2016-15"). ASU 2016-15 clarifies how cash receipts and cash payments in certain transactions are presented in the statement of cash flows. Among other clarifications on the classification of certain transactions within the statement of cash flows, the amendments in ASU 2016-15 provide that debt prepayment and extinguishment costs will be classified within financing activities within the statement of cash flows. ASU 2016-15 is effective for the Company for the fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. The Company adopted ASU 2016-15 on January 1, 2018 and the changes in classification within the statement of cash flows were applied retrospectively to all periods presented. The Company's retrospective application resulted in a $0.7 million increase to the amount of net cash provided by operating activities and a $0.7 million decrease to the amount of net cash used in financing activities for each of the three and six months ended June 30, 2017. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers ("ASU 2014-09"). ASU 2014-09 affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets. The five step model defined by ASU 2014-09 requires the Company to (i) identify the contracts with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract and (v) recognize revenue when each performance obligation is satisfied. Revenue is recognized when promised goods or services are transferred to the customer in an amount that reflects the consideration expected in exchange for those goods or services. Additionally, ASU 2014-09 requires enhanced disclosure of revenue arrangements. ASU 2014-09 may be applied retrospectively to each prior period (full retrospective) or retrospectively with the cumulative effect recognized as of the date of initial application (modified retrospective). ASU 2014-09, as amended, is effective for the Company's fiscal year beginning January 1, 2018, and the Company adopted the new standard under the modified retrospective approach. Under the modified retrospective approach, the guidance is applied to the most current period presented, recognizing the cumulative effect of the adoption change as an adjustment to beginning retained earnings. The Company has determined that the adoption of ASU 2014-09 did not result in an adjustment to retained earnings as of January 1, 2018. The Company has determined that there will be a change to the amounts of resident fee revenue and facility operating expense with no net impact to the amount of income from operations, for the impact of implicit price concessions on the estimation of the transaction price. The Company recognized $896.0 million and $1,802.2 million of resident fee revenue and $627.1 million and $1,259.4 million of facility operating expense for the three and six months ended June 30, 2018, respectively. The impact to resident fee revenue and facility operating expense as a result of applying ASC 606 was a decrease of $2.1 million and $3.2 million for the three and six months ended June 30, 2018, respectively. The Company has determined that there will not be any significant change to the annual amount of revenue recognized for management fees under the Company’s community management agreements; however, the Company will recognize an estimated amount of incentive fee revenue earlier during the annual contract period. The Company has determined that there will be a change to the amounts presented for revenue recognized for reimbursed costs incurred on behalf of managed communities and reimbursed costs incurred on behalf of managed communities with no net impact to the amount of income from operations, as a result of the combination of all community operations management activities as a single performance obligation for each contract. The Company recognized $242.2 million and $504.4 million of revenue for reimbursed costs incurred on behalf of managed communities and $242.2 million and $504.4 million of reimbursed costs incurred on behalf of managed communities for the three and six months ended June 30, 2018, respectively, in accordance with ASU 2014-09. The impact to revenue for reimbursed costs incurred on behalf of managed communities and reimbursed costs incurred on behalf of managed communities as a result of applying ASC 606 was an increase of $11.3 million and $23.7 million for the three and six months ended June 30, 2018, respectively. Additionally, real estate sales are within the scope of ASU 2014-09, as amended by ASU 2017-05, Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets ("ASU 2017-05"). ASU 2017-05 clarifies the scope of subtopic 610-20 and adds guidance for partial sales of nonfinancial assets. Under ASU 2014-09 and ASU 2017-05, the income recognition for real estate sales is largely based on the transfer of control versus continuing involvement under the former guidance. As a result, more transactions may qualify as sales of real estate and gains or losses may be recognized sooner. The Company adopted ASU 2014-09, as amended by ASU 2017-5, under the modified retrospective approach as of January 1, 2018 and will apply the five step revenue model to all subsequent sales of real estate. Recently Issued Accounting Pronouncements Not Yet Adopted In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments ("ASU 2016-13"). ASU 2016-13 replaces the current incurred loss impairment methodology for credit losses with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. ASU 2016-13 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted for fiscal years beginning after December 15, 2018. The Company is currently evaluating the impact the adoption of ASU 2016-13 will have on its condensed consolidated financial statements and disclosures. In February 2016, the FASB issued ASU 2016-02, Leases ("ASU 2016-02"). ASU 2016-02 amends the existing accounting principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors. ASU 2016-02 requires a lessee to recognize a right-of-use asset and a lease liability on the balance sheet for most leases. Additionally, ASU 2016-02 makes targeted changes to lessor accounting and requires enhanced disclosure of lease arrangements. In July 2018, the FASB issued ASU 2018-11, Leases, Targeted Improvements ("ASU 2018-11"). ASU 2018-11 provides entities with a transition method option to not restate comparative periods presented, but to recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. In addition, ASU 2018-11 provides entities with a practical expedient allowing lessors to not separate nonlease components from the associated lease components when certain criteria are met. ASU 2016-02 and ASU 2018-11 are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, and early adoption is permitted. The Company plans to adopt these lease accounting standards effective January 1, 2019 utilizing a modified retrospective transition method with no adjustments to comparative periods presented. The Company anticipates that the adoption of ASU 2016-02 will result in the recognition of material lease liabilities and right-of use assets on the condensed consolidated balance sheet for these community operating leases. The Company is monitoring recent accounting standard setting activities of the FASB and the Company continues to evaluate the impact that the adoption of ASU 2016-02 and ASU 2018-11 will have on its condensed consolidated financial statements and disclosures. Reclassifications Certain prior period amounts have been reclassified to conform to the current financial statement presentation, with no effect on the Company's condensed consolidated financial position or results of operations. |
Earnings Per Share |
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Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share Basic earnings per share ("EPS") is calculated by dividing net income by the weighted average number of shares of common stock outstanding. Diluted EPS includes the components of basic EPS and also gives effect to dilutive common stock equivalents. For purposes of calculating basic and diluted earnings per share, vested restricted stock awards are considered outstanding. Under the treasury stock method, diluted EPS reflects the potential dilution that could occur if securities or other instruments that are convertible into common stock were exercised or could result in the issuance of common stock. Potentially dilutive common stock equivalents include unvested restricted stock, restricted stock units and convertible debt instruments and warrants. During the three and six months ended June 30, 2018 and 2017, the Company reported a consolidated net loss. As a result of the net loss, unvested restricted stock, restricted stock units and convertible debt instruments and warrants were antidilutive for each period and were not included in the computation of diluted weighted average shares. The weighted average restricted stock and restricted stock units excluded from the calculations of diluted net loss per share were 6.2 million and 5.5 million for the three months ended June 30, 2018 and 2017, respectively, and 6.6 million and 5.4 million for the six months ended June 30, 2018 and 2017, respectively. For the three and six months ended June 30, 2018 and 2017, the calculation of diluted weighted average shares excludes the impact of conversion of the principal amount of $316.3 million of the Company's 2.75% convertible senior notes which were repaid in cash at their maturity on June 15, 2018. Refer to Note 9 for more information about the Company's former convertible notes. As of June 30, 2017, the maximum number of shares issuable upon conversion of the notes was approximately 13.8 million (after giving effect to additional make-whole shares issuable upon conversion in connection with the occurrence of certain events). As of June 30, 2017, the maximum number of shares issuable upon conversion of the notes in excess of the amount of principal that would be settled in cash was approximately 3.0 million. In addition, the calculation of diluted weighted average shares excludes the impact of the exercise of warrants to acquire the Company's common stock. As of June 30, 2018 and 2017, the number of shares issuable upon exercise of the warrants was approximately 10.8 million. |
Acquisitions, Dispositions and Other Significant Transactions |
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Business Combinations [Abstract] | |||||||||||||||||||||
Acquisitions, Dispositions and Other Significant Transactions | Acquisitions, Dispositions and Other Significant Transactions The Company completed sales of six communities and termination of leases on 152 communities during the period from January 1, 2017 through June 30, 2018. For the 94 communities that the Company disposed through sales and lease terminations during the period from April 1, 2017 through June 30, 2018, the Company's condensed consolidated financial statements include resident fee revenue of $50.0 million and $94.5 million, facility operating expenses of $31.8 million and $68.7 million, and cash lease payments of $17.4 million and $24.8 million for the communities for the three months ended June 30, 2018 and 2017, respectively. For the 158 communities that the Company disposed through sales and lease terminations during the period from January 1, 2017 through June 30, 2018, the Company's condensed consolidated financial statements include resident fee revenue of $109.1 million and $259.7 million, facility operating expenses of $70.2 million and $183.9 million, and cash lease payments of $37.4 million and $72.1 million for the communities for the six months ended June 30, 2018 and 2017, respectively. The results of operations of the 158 communities were reported in the following segments within the condensed consolidated financial statements prior to their disposition dates: Assisted Living (125 communities), Retirement Centers (20 communities) and CCRCs-Rental (13 communities). The closings of the various pending transactions and expected sales of assets described below are subject to the satisfaction of various conditions, including (where applicable) the receipt of regulatory approvals. However, there can be no assurance that the transactions will close, or, if they do, when the actual closings will occur. HCP Master Lease Transaction and RIDEA Ventures Restructuring On November 2, 2017, the Company announced that it had entered into a definitive agreement for a multi-part transaction with HCP, Inc. ("HCP"). As part of such transaction, the Company entered into an Amended and Restated Master Lease and Security Agreement ("HCP Master Lease") with HCP effective as of November 1, 2017. The components of the multi-part transaction include:
Pursuant to the HCP Master Lease, 23 additional communities will be removed from the HCP Master Lease on or before November 1, 2018. However, if HCP has not transitioned operations and/or management of such communities to a third party prior to such date, the Company will continue to operate the foregoing 23 communities on an interim basis and such communities will, from and after such time, be reported in the Management Services segment. In addition to the foregoing 35 communities, the Company continues to lease 43 communities pursuant to the terms of the HCP Master Lease, which have the same lease rates and expiration and renewal terms as the applicable prior instruments, except that effective January 1, 2018, the Company received a $2.5 million annual rent reduction for two communities. The HCP Master Lease also provides that the Company may engage in certain change in control and other transactions without the need to obtain HCP's consent, subject to the satisfaction of certain conditions.
The Company financed the foregoing community acquisitions with non-recourse mortgage financing and proceeds from the sales of its ownership interest in the unconsolidated ventures. See Note 9 to the condensed consolidated financial statements for more information regarding the non-recourse mortgage financing. In addition, the Company obtained future annual cash rent reductions and waived management termination fees in the multi-part transaction. As a result, the Company reduced its lease liabilities by $9.7 million for the future annual cash rent reductions and recognized a $9.7 million deferred liability for the consideration received from HCP in advance of the termination of the management agreements for the 37 communities. As a result of the modification of the remaining lease term for communities subject to capital leases, the Company reduced the carrying value of capital lease obligations and assets under capital leases by $145.6 million in 2017. During the three months ended June 30, 2018, the results and financial position of the ten communities for which leases were terminated were deconsolidated from the Company prospectively upon termination of the lease obligations. The Company derecognized the $86.9 million carrying value of the assets under financing leases and the $93.5 million carrying value of financing lease obligations for three communities which were previously subject to sale-leaseback transactions in which the Company was deemed to have continuing involvement. The Company recognized a sale for these three communities and recorded a $6.5 million non-cash gain on sale of assets for the three months ended June 30, 2018. Additionally, the Company recognized a $1.9 million non-cash gain on lease termination for the derecognition of the net carrying value of the Company's assets and liabilities under operating and capital leases at the lease termination date. The terminations of leases for the 23 remaining communities expected in 2018 are anticipated to result in the Company recording a non-cash gain in fiscal 2018 for the amount by which the carrying value of the operating and capital and financing lease obligations for the 23 communities exceed the carrying value of the Company's assets under operating and capital and financing leases at the lease termination date. As of June 30, 2018, the $287.3 million carrying value of the lease obligations for the 23 communities exceed the $248.2 million carrying value of the assets under operating and capital and financing leases by approximately $39.1 million, primarily for 17 communities which were previously subject to sale-leaseback transactions in which the Company was deemed to have continuing involvement for accounting purposes. The results of operations for the 23 communities that will be disposed through lease terminations are reported within the following segments within the condensed consolidated financial statements: Retirement Centers (three communities), Assisted Living (19 communities), and CCRCs-Rental (one community). With respect to such 23 communities, the Company's condensed consolidated financial statements include resident fee revenue of $21.5 million and $21.8 million, facility operating expenses of $15.3 million and $14.5 million, and cash lease payments of $7.1 million and $7.5 million for the three months ended June 30, 2018 and 2017, respectively. The Company's condensed consolidated financial statements include resident fee revenue of $43.5 million and $44.7 million, facility operating expenses of $30.7 million and $28.9 million, and cash lease payments of $14.1 million and $15.0 million for the six months ended June 30, 2018 and 2017, respectively. For the 20 managed communities for which the Company's management may be terminated, the Company's condensed consolidated financial statements include management fees of $1.4 million for each of the three months ended June 30, 2018 and 2017. The Company's condensed consolidated financial statements include management fees of $2.7 million for each of the six months ended June 30, 2018 and 2017. Ventas Lease Portfolio Restructuring On April 26, 2018, the Company entered into several agreements to restructure a portfolio of 128 communities it leased from Ventas, Inc. and certain of its subsidiaries (collectively, "Ventas") as of such date, including a Master Lease and Security Agreement (the "Ventas Master Lease"). The Ventas Master Lease amended and restated prior leases comprising an aggregate portfolio of 107 communities into the Ventas Master Lease. Under the Ventas Master Lease and other agreements entered into on April 26, 2018, the 21 additional communities leased by the Company from Ventas pursuant to separate lease agreements have been or will be combined automatically into the Ventas Master Lease upon the first to occur of Ventas' election or the repayment of, or receipt of lender consent with respect to, mortgage debt underlying such communities. The Company and Ventas agreed to observe, perform and enforce such separate leases as if they had been combined into the Ventas Master Lease effective April 26, 2018, to the extent not in conflict with any mortgage debt underlying such communities. The transaction agreements with Ventas further provide that the Ventas Master Lease and certain other agreements between the Company and Ventas will be cross-defaulted. The initial term of the Ventas Master Lease ends December 31, 2025, with two 10-year extension options available to the Company. In the event of the consummation of a change of control transaction of the Company on or before December 31, 2025, the initial term of the Ventas Master Lease will be extended automatically through December 31, 2029. The Ventas Master Lease and separate lease agreements with Ventas, which are guaranteed at the parent level by the Company, provide for total rent in 2018 of $175.0 million for the 128 communities, including the pro-rata portion of an $8.0 million annual rent credit for 2018. The Company will receive an annual rent credit of $8.0 million in 2019, $7.0 million in 2020 and $5.0 million in 2021 and thereafter; provided, that if a change of control of the Company occurs prior to 2021, the annual rent credit will be reduced to $5.0 million. Effective on January 1, 2019, the annual minimum rent will be subject to an escalator equal to the lesser of 2.25% or four times the Consumer Price Index ("CPI") increase for the prior year (or zero if there was a CPI decrease). The Ventas Master Lease requires the Company to spend (or escrow with Ventas) a minimum of $2,000 per unit per 24-month period commencing with the 24-month period ending December 31, 2019 and thereafter each 24-month period ending December 31 during the lease term, subject to annual increases commensurate with the escalator beginning with the second lease year of the first extension term (if any). If a change of control of the Company occurs, the Company will be required, within 36 months following the closing of such transaction, to invest (or escrow with Ventas) an aggregate of $30.0 million in the communities for revenue-enhancing capital projects. Under the definitive agreements with Ventas, the Company, at the parent level, must satisfy certain financial covenants (including tangible net worth and leverage ratios) and may consummate a change of control transaction without the need for consent of Ventas so long as certain objective conditions are satisfied, including the post-transaction guarantor's satisfying certain enhanced minimum tangible net worth and maximum leverage ratio, having minimum levels of operational experience and reputation in the senior living industry, and paying a change of control fee of $25.0 million to Ventas. At the Company's option, which must be exercised on or before April 26, 2019, the Company may provide notice to Ventas of the Company's election to direct Ventas to market for sale one or more communities with up to approximately $30.0 million of annual minimum rent. Upon receipt of such notice, Ventas will be obligated to use commercially reasonable, diligent efforts to sell such communities on or before December 31, 2020 (subject to extension for regulatory purposes); provided, that Ventas' obligation to sell any such community will be subject to Ventas' receiving a purchase price in excess of a minimum sale price to be mutually agreed by the Company and Ventas and to certain other customary closing conditions. Upon any such sale, such communities will be removed from the Ventas Master Lease, and the annual minimum rent under the Ventas Master Lease will be reduced by the amount of the net sale proceeds received by Ventas multiplied by 6.25%. The Company estimated the fair value of each of the elements of the restructuring transactions. The fair value of the future lease payments is based upon historical and forecasted community cash flows and market data, including a management fee rate of 5% of revenue and a market supported lease coverage ratio. These assumptions are supported by independent market data and considered to be Level 3 measurements within the fair value hierarchy. The Company recognized a $125.7 million non-cash loss on lease modification in the three and six months ended June 30, 2018, primarily for the extensions of the triple-net lease obligations for communities with lease terms that are unfavorable to the Company given current market conditions on the amendment date in exchange for modifications to the change of control provisions and financial covenant provisions of the community leases. Welltower Lease and RIDEA Venture Restructuring On June 27, 2018 the Company announced that it had entered into definitive agreements with Welltower Inc. ("Welltower"). The components of the agreements include:
The Company also elected not to renew two master leases with Welltower scheduled to mature on September 30, 2018 (11 communities). After conclusion of the foregoing lease expirations, the Company will continue to operate 74 communities under triple-net leases with Welltower, and the Company's remaining lease agreements with Welltower will contain a change of control standard, which would allow the Company to engage in certain change of control and other transactions without the need to obtain Welltower's consent, subject to the satisfaction of certain conditions. The results of operations for the 37 communities that have been disposed through lease terminations are reported within the following segments within the condensed consolidated financial statements: Retirement Centers (8 communities) and Assisted Living (29 communities). With respect to such 37 communities, the Company's condensed consolidated financial statements include resident fee revenue of $43.5 million and $42.6 million, facility operating expenses of $26.8 million and $26.2 million, and cash lease payments of $15.2 million and $14.8 million for the three months ended June 30, 2018 and 2017, respectively. The Company's consolidated financial statements include resident fee revenue of $86.7 million and $85.8 million, facility operating expenses of $54.1 million and $51.8 million, and cash lease payments of $30.4 million and $29.6 million for the six months ended June 30, 2018 and 2017, respectively. For the 15 former venture communities for which the Company's management may be terminated, the Company's condensed consolidated financial statements include management fees of $1.1 million for each of the three months ended June 30, 2018 and 2017. The Company's condensed consolidated financial statements include management fees of $2.2 million for each of the six months ended June 30, 2018 and 2017. Formation of Venture with Blackstone On March 29, 2017, the Company and affiliates of Blackstone Real Estate Advisors VIII L.P. (collectively, "Blackstone") formed a venture (the "Blackstone Venture") that acquired 64 senior housing communities for a purchase price of $1.1 billion. The Company had previously leased the 64 communities from HCP under long-term lease agreements with a remaining average lease term of approximately 12 years. At the closing, the Blackstone Venture purchased the 64-community portfolio from HCP subject to the existing leases, and the Company contributed its leasehold interests for 62 communities and a total of $179.2 million in cash to purchase a 15% equity interest in the Blackstone Venture, terminate leases, and fund its share of closing costs. As of the formation date, the Company continued to operate two of the communities under lease agreements and began managing 60 of the communities on behalf of the venture under a management agreement with the venture. The two remaining leases will be terminated, pending certain conditions, at which point the Company will manage the communities; however, there can be no assurance that the terminations will occur or, if they do, when the actual terminations will occur. Two of the communities are managed by a third party for the venture. The results and financial position of the 62 communities for which leases were terminated were deconsolidated from the Company prospectively upon formation of the Blackstone Venture. The Company's interest in the venture is accounted for under the equity method of accounting. Under the terms of the venture agreement, the Company may be entitled to distributions which are less than or in excess of the Company's 15% equity interest based upon specified performance criteria. Initially, the Company determined that the contributed carrying value of the Company's investment was $66.8 million, representing the amount by which the $179.2 million cash contribution exceeded the carrying value of the Company's liabilities under operating, capital and financing leases contributed by the Company net of the carrying value of the assets under such operating, capital and financing leases. However, the Company estimated the fair value of its 15% equity interest in the Blackstone Venture at inception to be $47.1 million. As a result, the Company recorded a $19.7 million charge within asset impairment expense for the three months ended March 31, 2017 for the amount of the contributed carrying value in excess of the estimated fair value of the Company's investment. During the three months ended March 31, 2018, the Company recorded a $33.4 million non-cash impairment charge within asset impairment expense to reflect the amount by which the carrying value of the investment exceeded the estimated fair value. Additionally, these transactions related to the Blackstone Venture required the Company to record a significant increase to the Company's existing tax valuation allowance, after considering the change in the Company's future reversal of estimated timing differences resulting from these transactions, primarily due to removing the deferred positions related to the contributed leases. During the three months ended March, 31, 2017, the Company recorded a provision for income taxes to establish an additional $85.0 million of valuation allowance against its federal and state net operating loss carryforwards and tax credits as the Company anticipates these carryforwards and credits will not be utilized prior to expiration. See Note 13 for more information about the Company's deferred income taxes. Dispositions of Owned Communities During 2018 and Assets Held for Sale The Company began 2018 with 15 of its owned communities classified as held for sale as of December 31, 2017. During the six months ended June 30, 2018, the Company completed the sale of three communities, two of which were not previously included in assets held for sale, for net cash proceeds of $12.8 million and recognized a net gain on sale of assets of $1.9 million. The Company entered into an agreement to sell one additional community, which is classified as held for sale as of June 30, 2018. During the three and six months ended June 30, 2018, the Company recognized $9.2 million and $12.0 million, respectively, of impairment charges related to communities identified as held for sale, primarily due to changes in the estimated fair value. As of June 30, 2018, 15 communities were classified as held for sale, resulting in $141.1 million being recorded as assets held for sale and $50.2 million of mortgage debt being included in the current portion of long-term debt within the condensed consolidated balance sheet with respect to such communities. This debt will either be repaid with the proceeds from the sales or be assumed by the prospective purchasers. The results of operations of the 15 communities are reported in the following segments within the condensed consolidated financial statements: Retirement Centers (one community), Assisted Living (12 communities) and CCRCs-Rental (two communities). The 15 communities had resident fee revenue of $14.3 million and $15.0 million and facility operating expenses of $11.0 million and $10.9 million for the three months ended June 30, 2018 and 2017, respectively. The 15 communities had resident fee revenue of $29.0 million and $30.3 million and facility operating expenses of $22.0 million and $21.7 million for the six months ended June 30, 2018 and 2017, respectively. Dispositions of Owned Communities and Other Lease Terminations During 2017 During the year ended December 31, 2017, the Company completed the sale of three communities for net cash proceeds of $8.2 million, and the Company terminated leases for 43 communities otherwise than in connection with the transactions with HCP and Blackstone described above (including terminations of leases for 26 communities pursuant to the transactions with HCP announced in November 2016). |
Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements Marketable Securities As of June 30, 2018, marketable securities of $20.0 million are stated at fair value based on valuations provided by third-party pricing services and are classified within Level 2 of the valuation hierarchy. The Company recognized gains of $0.3 million and $1.5 million for marketable securities within interest income on the Company's condensed consolidated statements of operations for the three and six months ended June 30, 2018, respectively. Debt The Company estimates the fair value of its debt using a discounted cash flow analysis based upon the Company's current borrowing rate for debt with similar maturities and collateral securing the indebtedness. The Company had outstanding debt (excluding capital and financing lease obligations) with a carrying value of approximately $3.7 billion and $3.9 billion as of June 30, 2018 and December 31, 2017, respectively. Fair value of the debt approximates carrying value in all periods. The Company's fair value of debt disclosure is classified within Level 2 of the valuation hierarchy. Goodwill and Asset Impairment Expense The following is a summary of the goodwill and asset impairment expense.
Goodwill During the three months ended March 31, 2018, the Company identified qualitative indicators of impairment, including a significant decline in the Company's stock price and market capitalization for a sustained period during the three months ended March 31, 2018. Based upon the Company's qualitative assessment, the Company performed a quantitative goodwill impairment test as of March 31, 2018, which included a comparison of the estimated fair value of each reporting unit to which the goodwill has been assigned with the reporting unit's carrying value. In estimating the fair value of the reporting units for purposes of the quantitative goodwill impairment test, the Company utilized an income approach, which included future cash flow projections that are developed internally. Any estimates of future cash flow projections necessarily involve predicting unknown future circumstances and events and require significant management judgments and estimates. In arriving at the cash flow projections, the Company considered its historic operating results, approved budgets and business plans, future demographic factors, expected growth rates, and other factors. In using the income approach to estimate the fair value of reporting units for purposes of its goodwill impairment test, the Company made certain key assumptions. Those assumptions include future revenues, facility operating expenses, and cash flows, including sales proceeds that the Company would receive upon a sale of the communities using estimated capitalization rates, all of which are considered Level 3 inputs in accordance with ASC 820. The Company corroborated the estimated capitalization rates used in these calculations with capitalization rates observable from recent market transactions. Future cash flows are discounted at a rate that is consistent with a weighted average cost of capital from a market participant perspective. The weighted average cost of capital is an estimate of the overall after-tax rate of return required by equity and debt holders of a business enterprise. The Company also considered market based measures such as earnings multiples in its analysis of estimated fair values of its reporting units. Based on the results of the Company's quantitative goodwill impairment test, the Company determined that the carrying value of the Company's Assisted Living reporting unit exceeded its estimated fair value by more than the $351.7 million carrying value of goodwill as of March 31, 2018. As a result, the Company recorded a non-cash impairment charge of $351.7 million to goodwill within the Assisted Living operating segment for the three months ended March 31, 2018. Based on the results of the Company's quantitative goodwill impairment test, the Company determined that the estimated fair value of both the Company's Retirement Centers and Brookdale Ancillary Services reporting units exceeded their respective carrying values as of March 31, 2018. Determining the fair value of the Company's reporting units involves the use of significant estimates and assumptions, which the Company believes to be reasonable, that are unpredictable and inherently uncertain. These estimates and assumptions include revenue growth rates and operating margins used to calculate projected future cash flows and risk-adjusted discount rates. Future events may indicate differences from management's current judgments and estimates which could, in turn, result in future impairments. Future events that may result in impairment charges include increases in interest rates, which could impact capitalization and discount rates, differences in the projected occupancy rates and changes in the cost structure of existing communities. Significant adverse changes in the Company’s future revenues and/or operating margins, significant changes in the market for senior housing or the valuation of the real estate of senior living communities, as well as other events and circumstances, including but not limited to increased competition and changing economic or market conditions, including market control premiums, could result in changes in fair value and the determination that additional goodwill is impaired. Property, Plant and Equipment and Leasehold Intangibles During the three and six months ended June 30, 2018 and 2017, the Company evaluated property, plant and equipment and leasehold intangibles for impairment and identified properties with a carrying value of the assets in excess of the estimated future undiscounted net cash flows expected to be generated by the assets primarily due to an expectation that certain communities will be disposed of prior to their previously intended holding periods. As a result of this change in intent, the Company compared the estimated fair value of the assets to their carrying value for these identified properties and recorded an impairment charge for the excess of carrying value over estimated fair value. The estimates of fair values of the property, plant and equipment of these communities were determined based on valuations provided by third-party pricing services and are classified within Level 3 of the valuation hierarchy. The Company recorded property, plant and equipment and leasehold intangibles non-cash impairment charges in its operating results of $6.9 million and $1.4 million for the three months ended June 30, 2018 and 2017, respectively. The Company recorded property, plant and equipment and leasehold intangibles non-cash impairment charges in its operating results of $47.7 million and $2.4 million for the six months ended June 30, 2018 and 2017, respectively, primarily within the Assisted Living segment. Investment in Unconsolidated Ventures The Company evaluates realization of its investment in ventures accounted for using the equity method if circumstances indicate that the Company's investment is other than temporarily impaired. During the six months ended June 30, 2018 and 2017, the Company recorded non-cash impairment charges related to investments in unconsolidated ventures $33.4 million and $19.7 million, respectively. These impairment charges reflect the amount by which the carrying values of the investments exceeded their estimated fair value. Refer to Note 4 for more information about the formation and impairment of the Blackstone Venture during 2017. |
Stock-Based Compensation |
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Jun. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation | Stock-Based Compensation Grants of restricted shares under the Company's 2014 Omnibus Incentive Plan were as follows:
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Goodwill and Other Intangible Assets, Net |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Other Intangible Assets, Net | Goodwill and Other Intangible Assets, Net The following is a summary of the carrying value of goodwill by operating segment.
Goodwill is tested for impairment annually with a test date of October 1 or sooner if indicators of impairment are present. The Company determined no impairment was necessary for the three months ended June 30, 2018. Factors the Company considers important in its analysis, which could trigger an impairment of such assets, include significant underperformance relative to historical or projected future operating results, significant negative industry or economic trends, a significant decline in the Company's stock price for a sustained period and a decline in its market capitalization below net book value. A change in anticipated operating results or the other metrics indicated above could necessitate further analysis of potential impairment at an interval prior to the Company's annual measurement date. Refer to Note 5 for information on impairment expense for goodwill. The following is a summary of other intangible assets.
Amortization expense related to definite-lived intangible assets for the three months ended June 30, 2018 and 2017 was $0.8 million and $3.0 million, respectively, and for the six months ended June 30, 2018 and 2017 was $1.7 million and $3.9 million, respectively. Health care licenses were determined to be indefinite-lived intangible assets and are not subject to amortization. The community purchase options are not currently amortized, but will be added to the cost basis of the related communities if the option is exercised, and will then be depreciated over the estimated useful life of the community. |
Property, Plant and Equipment and Leasehold Intangibles, Net |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment and Leasehold Intangibles, Net | Property, Plant and Equipment and Leasehold Intangibles, Net As of June 30, 2018 and December 31, 2017, net property, plant and equipment and leasehold intangibles, which include assets under capital and financing leases, consisted of the following:
Long-lived assets with definite useful lives are depreciated or amortized on a straight-line basis over their estimated useful lives (or, in certain cases, the shorter of their estimated useful lives or the lease term) and are tested for impairment whenever indicators of impairment arise. Refer to Note 5 for information on impairment expense for property, plant and equipment and leasehold intangibles. For the three months ended June 30, 2018 and 2017, the Company recognized depreciation and amortization expense on its property, plant and equipment and leasehold intangibles of $115.3 million and $117.9 million, respectively, and for the six months ended June 30, 2018 and 2017, the Company recognized depreciation and amortization expense on its property, plant and equipment and leasehold intangibles of $228.7 million and $244.5 million, respectively. |
Debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | Debt Long-term Debt and Capital and Financing Lease Obligations Long-term debt and capital and financing lease obligations consist of the following:
As of June 30, 2018 and December 31, 2017, the current portion of long-term debt within the Company's condensed consolidated financial statements includes $50.2 million and $30.1 million, respectively, of mortgage notes payable secured by assets held for sale. This debt will be either assumed by the prospective purchasers or be repaid with the proceeds from the sales. Refer to Note 4 for more information about the Company's assets held for sale. Credit Facilities On December 19, 2014, the Company entered into a Fourth Amended and Restated Credit Agreement with General Electric Capital Corporation (which has since assigned its interest to Capital One Financial Corporation), as administrative agent, lender and swingline lender, and the other lenders from time to time parties thereto. The agreement currently provides for a total commitment amount of $400.0 million, comprised of a $400.0 million revolving credit facility (with a $50.0 million sublimit for letters of credit and a $50.0 million swingline feature to permit same day borrowing) and an option to increase the revolving credit facility by an additional $250.0 million, subject to obtaining commitments for the amount of such increase from acceptable lenders. The maturity date is January 3, 2020, and amounts drawn under the facility bear interest at 90-day LIBOR plus an applicable margin from a range of 2.50% to 3.50%. The applicable margin varies based on the percentage of the total commitment drawn, with a 2.50% margin at utilization equal to or lower than 35%, a 3.25% margin at utilization greater than 35% but less than or equal to 50%, and a 3.50% margin at utilization greater than 50%. The quarterly commitment fee on the unused portion of the facility is 0.25% per annum when the outstanding amount of obligations (including revolving credit, swingline and term loans and letter of credit obligations) is greater than or equal to 50% of the total commitment amount or 0.35% per annum when such outstanding amount is less than 50% of the total commitment amount. Amounts drawn on the facility may be used to finance acquisitions, fund working capital and capital expenditures and for other general corporate purposes. The facility is secured by a first priority mortgage on certain of the Company's communities. In addition, the agreement permits the Company to pledge the equity interests in subsidiaries that own other communities (rather than mortgaging such communities), provided that loan availability from pledged assets cannot exceed 10% of loan availability from mortgaged assets. The availability under the line will vary from time to time as it is based on borrowing base calculations related to the appraised value and performance of the communities securing the facility. The agreement contains typical affirmative and negative covenants, including financial covenants with respect to minimum consolidated fixed charge coverage and minimum consolidated tangible net worth. A violation of any of these covenants could result in a default under the credit agreement, which would result in termination of all commitments under the agreement and all amounts owing under the agreement becoming immediately due and payable and/or could trigger cross default provisions in our other outstanding debt and lease agreements. As of June 30, 2018, no borrowings were outstanding on the revolving credit facility and $41.7 million of letters of credit were outstanding under this credit facility. The Company also had separate unsecured letter of credit facilities of up to $66.2 million in the aggregate as of June 30, 2018. Letters of credit totaling $66.1 million had been issued under these separate facilities as of June 30, 2018. 2018 Financings In April 2018, the Company obtained $247.6 million of debt secured by the non-recourse first mortgages on 11 communities. Sixty percent of the principal amount bears interest at a fixed rate of 4.55%, and the remaining forty percent of the principal amount bears interest at a variable rate equal to the 30-day LIBOR plus a margin of 189 basis points. The debt matures in May 2028. The $247.6 million of proceeds from the financing were primarily utilized to fund the acquisition of five communities from HCP and to repay $43.0 million of outstanding mortgage debt scheduled to mature in May 2018. See Note 4 to the condensed consolidated financial statements for more information regarding the acquisitions of communities from HCP. Convertible Debt In June 2011, the Company completed a registered offering of $316.3 million aggregate principal amount of 2.75% convertible senior notes due June 15, 2018 (the "Notes"). The Company repaid $316.3 million in cash to settle the Notes at their maturity on June 15, 2018. Financial Covenants Certain of the Company’s debt documents contain restrictions and financial covenants, such as those requiring the Company to maintain prescribed minimum net worth and stockholders’ equity levels and debt service ratios, and requiring the Company not to exceed prescribed leverage ratios, in each case on a consolidated, portfolio-wide, multi-community, single-community and/or entity basis. In addition, the Company’s debt documents generally contain non-financial covenants, such as those requiring the Company to comply with Medicare or Medicaid provider requirements. The Company’s failure to comply with applicable covenants could constitute an event of default under the applicable debt documents. Many of the Company’s debt and lease documents contain cross-default provisions so that a default under one of these instruments could cause a default under other debt and lease documents (including documents with other lenders or lessors). Furthermore, the Company’s debt is secured by its communities and, in certain cases, a guaranty by the Company and/or one or more of its subsidiaries. As of June 30, 2018, the Company is in compliance with the financial covenants of its outstanding debt and lease agreements. |
Litigation |
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Jun. 30, 2018 | |
Litigation [Abstract] | |
Litigation | Litigation The Company has been and is currently involved in litigation and claims, including putative class action claims from time to time, incidental to the conduct of its business which are generally comparable to other companies in the senior living and healthcare industries. Certain claims and lawsuits allege large damage amounts and may require significant costs to defend and resolve. As a result, the Company maintains general liability and professional liability insurance policies in amounts and with coverage and deductibles the Company believes are adequate, based on the nature and risks of its business, historical experience and industry standards. The Company's current policies provide for deductibles for each claim. Accordingly, the Company is, in effect, self-insured for claims that are less than the deductible amounts and for claims or portions of claims that are not covered by such policies. Similarly, the senior living and healthcare industries are continuously subject to scrutiny by governmental regulators, which could result in litigation related to regulatory compliance matters. In addition, as a result of the Company's participation in the Medicare and Medicaid programs, the Company is subject to various governmental reviews, audits and investigations, including but not limited to audits under various government programs, such as the Recovery Act Contractors (RAC), Zone Program Integrity Contractors (ZPIC), and Unified Program Integrity Contractors (UPIC) programs. The costs to respond to and defend such reviews, audits and investigations may be significant, and an adverse determination could result in citations, sanctions and other criminal or civil fines and penalties, the refund of overpayments, payment suspensions, termination of participation in Medicare and Medicaid programs, and/or damage to the Company's business reputation. |
Supplemental Disclosure of Cash Flow Information |
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Supplemental Cash Flow Elements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Disclosure of Cash Flow Information | Supplemental Disclosure of Cash Flow Information
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated statement of cash flows that sums to the total of the same such amounts shown in the condensed consolidated statement of cash flows.
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Facility Operating Leases |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Facility Operating Leases | Facility Operating Leases As of June 30, 2018, the Company operated 385 communities under long-term leases (258 operating leases and 127 capital and financing leases). The substantial majority of the Company's lease arrangements are structured as master leases. Under a master lease, numerous communities are leased through an indivisible lease. The Company typically guarantees the performance and lease payment obligations of its subsidiary lessees under master leases. Due to the nature of such master leases, it is difficult to restructure the composition of such leased portfolios or economic terms of the leases without the consent of the applicable landlord. In addition, an event of default related to an individual property or limited number of properties within a master lease portfolio may result in a default on the entire master lease portfolio. The community leases contain other customary terms, which may include assignment and change of control restrictions, maintenance and capital expenditure obligations, termination provisions and financial covenants, such as those requiring the Company to maintain prescribed minimum net worth and stockholders' equity levels and lease coverage ratios, and not to exceed prescribed leverage ratios, in each case on a consolidated, portfolio-wide, multi-community, single-community and/or entity basis. In addition, the Company's lease documents generally contain non-financial covenants, such as those requiring the Company to comply with Medicare or Medicaid provider requirements. The Company's failure to comply with applicable covenants could constitute an event of default under the applicable lease documents. Many of the Company's debt and lease documents contain cross-default provisions so that a default under one of these instruments could cause a default under other debt and lease documents (including documents with other lenders and lessors). Certain leases contain cure provisions, which generally allow the Company to post an additional lease security deposit if the required covenant is not met. Furthermore, the Company's leases are secured by its communities and, in certain cases, a guaranty by the Company and/or one or more of its subsidiaries. As of June 30, 2018, the Company is in compliance with the financial covenants of its long-term leases. A summary of facility lease expense and the impact of straight-line adjustment and amortization of (above) below market rents and deferred gains are as follows:
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Income Taxes |
6 Months Ended |
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Jun. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The difference between the statutory tax rate and the Company's effective tax rates for the three and six months ended June 30, 2018 and June 30, 2017 reflects a decrease in the Company's federal statutory tax rate from 35% to 21% as a result of the Tax Act and a decrease in the valuation allowance recorded in 2018 as compared to 2017. These decreases were offset by the elimination of deductibility for qualified performance-based compensation of covered employees in 2018 as a result of the Tax Act, the negative tax benefit on the vesting of restricted stock, a direct result of the Company's lower stock price in 2018, and the non-deductible write-off of goodwill. The valuation allowance during the three and six months ended June 30, 2018 reflects an additional allowance of $30.3 million and $54.9 million, respectively, established against the current period operating loss and is reflective of the Company's quarterly calculation of the reversal of existing tax assets and liabilities and the impact of the Company's acquisitions, dispositions, and other significant transactions, including the impact of the Tax Act which allows for the unlimited carryover of net operating losses created in 2018 and beyond. The increase in the valuation allowance during the six months ended June 30, 2017 was comprised of multiple components. The increase included $85.0 million related to the removal of future timing differences as a result of the formation of the Blackstone Venture and termination of leases associated therewith. In addition, the Company increased its valuation allowance by $48.5 million upon the adoption of ASU 2016-09. The $48.5 million offset the increase to the Company's net operating loss carryforward position previously reflected in an additional paid-in capital pool, and accordingly, did not impact the current period income tax position. The remaining change of approximately $27.0 million for the six months ended June 30, 2017 reflects the allowance established against that period's operating loss. The Company recorded an aggregate deferred federal, state and local tax benefit of $46.4 million and $55.9 million as a result of the operating loss for the three and six months ended June 30, 2018, respectively, which was offset by an increase in the valuation allowance of $30.3 million and $54.9 million, respectively. The change in the valuation allowance for the three and six months ended June 30, 2018 is the result of the anticipated reversal of future tax liabilities offset by future tax deductions. The Company recorded an aggregate deferred federal, state, and local tax benefit of $18.2 million and $31.7 million as a result of the operating loss for the three and six months ended June 30, 2017, respectively, which was offset by an increase in the valuation allowance of $15.2 million and $27.0 million, respectively. The Company evaluates its deferred tax assets each quarter to determine if a valuation allowance is required based on whether it is more likely than not that some portion of the deferred tax asset would not be realized. The Company's valuation allowance as of June 30, 2018 and December 31, 2017 is $391.0 million and $336.1 million, respectively. For the year ended December 31, 2017, the Company estimated the impact of the Tax Act on state income taxes reflected in its income tax benefit. Reasonable estimates for the Company's state and local provision continue to be made based on the Company's analysis of tax reform. These provisional amounts have not been adjusted for the three and six months ended June 30, 2018 but may be adjusted in future periods during 2018 when additional information is obtained. In addition, the Tax Act limits the annual deductibility of a corporation's net interest expense unless it elects to be exempt from such deductibility limitation under the real property trade or business exception. The Company plans to elect the real property trade or business exception in 2018. As such, the Company will be required to apply the alternative depreciation system ("ADS") to all current and future residential real property and qualified improvement property assets. This change did not have a material effect for the three and six months ended June 30, 2018 but will impact future tax depreciation deductions and may impact the Company's valuation allowance. The Company is unable to estimate the future impact of this change at this time. Additional information that may affect the Company's provisional amounts would include further clarification and guidance on how the Internal Revenue Service will implement tax reform and further clarification and guidance on how state taxing authorities will implement tax reform and the related effect on the Company's state and local income tax returns, state and local net operating losses and corresponding valuation allowances. The Company recorded interest charges related to its tax contingency reserve for cash tax positions for the three and six months ended June 30, 2018 and June 30, 2017 which are included in income tax expense or benefit for the period. Tax returns for years 2013 through 2016 are subject to future examination by tax authorities. In addition, the net operating losses from prior years are subject to adjustment under examination. |
Variable Interest Entities |
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Equity Method Investments and Joint Ventures [Abstract] | |||||||||||||||||||||||||||||||||||||
Variable Interest Entities | Variable Interest Entities As of June 30, 2018, the Company has equity interests in unconsolidated VIEs. The Company has determined that it does not have the power to direct the activities of the VIEs that most significantly impact the VIEs' economic performance and is not the primary beneficiary of these VIEs in accordance with ASC 810. The Company's interests in the VIEs are, therefore, accounted for under the equity method of accounting. The Company holds a 51% equity interest, and HCP owns a 49% interest, in a venture that owns and operates entry fee CCRCs (the "CCRC Venture"). The CCRC Venture's opco has been identified as a VIE. The equity members of the CCRC Venture's opco share certain operating rights, and the Company acts as manager to the CCRC Venture opco. However, the Company does not consolidate this VIE because it does not have the ability to control the activities that most significantly impact this VIE's economic performance. The assets of the CCRC Venture opco primarily consist of the CCRCs that it owns and leases, resident fees receivable, notes receivable and cash and cash equivalents. The obligations of the CCRC Venture opco primarily consist of community lease obligations, mortgage debt, accounts payable, accrued expenses and refundable entrance fees. The Company holds a 15% equity ownership interest in the Blackstone Venture. The Blackstone Venture has been identified as a VIE due to the Company lacking substantive participation rights in the management of the venture and the Company lacking kick-out rights over the managing member. The equity members of the Blackstone Venture share certain operating rights and the Company acts as manager to 60 communities owned by the Blackstone Venture. However, the Company does not consolidate this VIE because it does not have the ability to control the activities that most significantly impact the economic performance of the VIE. The assets of the Blackstone Venture primarily consist of senior housing communities, resident fees receivable and cash and cash equivalents. The obligations of the Blackstone Venture primarily consist of long-term mortgage debt, accounts payable and accrued expenses. As of June 30, 2018, the Company leases two communities from the Blackstone Venture with annual lease payments of approximately $2.6 million. Under the terms of the lease agreements, the Company may be required to purchase the two leased communities for an amount equal to the greater of the fair market value of the communities or $33.8 million if there is an event of default under the lease agreement. The carrying value and classification of the related assets, liabilities and maximum exposure to loss as a result of the Company's involvement with these VIEs are summarized below as of June 30, 2018 (in millions):
As of June 30, 2018, the Company is not required to provide financial support, through a liquidity arrangement or otherwise, to its unconsolidated VIEs. |
Revenue |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue | Revenue Disaggregation of Revenue The Company disaggregates its revenue from contracts with customers by payor source, as the Company believes it best depicts how the nature, amount, timing and uncertainty of its revenue and cash flows are affected by economic factors. See details on a reportable segment basis in the table below.
The Company has not further disaggregated management fee revenues and revenue for reimbursed costs incurred on behalf of managed communities as the economic factors affecting the nature, timing, amount, and uncertainty of revenue and cash flows do not significantly vary within each respective revenue category. Contract Balances The payment terms and conditions within the Company's revenue-generating contracts vary by contract type and payor source, although terms generally include payment to be made within 30 days. Resident fee revenue for recurring and routine monthly services is generally billed monthly in advance. Resident fee revenue for standalone or certain ancillary services is generally billed monthly in arrears. Additionally, non-refundable community fees are generally billed and collected in advance or upon move-in of a resident under residency agreements for independent living and assisted living services. Amounts of revenue that are collected from residents in advance are recognized as deferred revenue until the performance obligations are satisfied. The Company had total deferred revenue (included within refundable entrance fees and deferred revenue, deferred liabilities, and other liabilities within the condensed consolidated balance sheets) of $115.6 million and $112.4 million, including $58.3 million and $49.7 million of monthly resident fees billed and received in advance, as of June 30, 2018 and December 31, 2017, respectively. For the six months ended June 30, 2018, the Company recognized $68.9 million of revenue that was included in the deferred revenue balance as of January 1, 2018. The Company applies the practical expedient in ASC 606-10-50-14 and does not disclose amounts for remaining performance obligations that have original expected durations of one year or less. For the three and six months ended June 30, 2018, the Company recognized $4.4 million and $8.9 million of charges within facility operating expenses within the condensed consolidated statement of operations for additions to the allowance for doubtful accounts. |
Segment Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | Segment Information As of June 30, 2018 the Company has five reportable segments: Retirement Centers; Assisted Living; CCRCs-Rental; Brookdale Ancillary Services; and Management Services. Operating segments are defined as components of an enterprise that engage in business activities from which it may earn revenues and incur expenses; for which separate financial information is available; and whose operating results are regularly reviewed by the chief operating decision maker to assess the performance of the individual segment and make decisions about resources to be allocated to the segment. Retirement Centers. The Company's Retirement Centers segment includes owned or leased communities that are primarily designed for middle to upper income seniors generally age 75 and older who desire an upscale residential environment providing the highest quality of service. The majority of the Company's retirement center communities consist of both independent living and assisted living units in a single community, which allows residents to "age-in-place" by providing them with a continuum of senior independent and assisted living services. Assisted Living. The Company's Assisted Living segment includes owned or leased communities that offer housing and 24-hour assistance with activities of daily life to mid-acuity frail and elderly residents. Assisted living communities include both freestanding, multi-story communities and freestanding single story communities. The Company also operates memory care communities, which are freestanding assisted living communities specially designed for residents with Alzheimer's disease and other dementias. CCRCs-Rental. The Company's CCRCs-Rental segment includes large owned or leased communities that offer a variety of living arrangements and services to accommodate all levels of physical ability and health. Most of the Company's CCRCs have independent living, assisted living and skilled nursing available on one campus or within the immediate market, and some also include memory care and Alzheimer's units. Brookdale Ancillary Services. The Company's Brookdale Ancillary Services segment includes the home health, hospice, and outpatient therapy services, as well as education and wellness programs, provided to residents of many of the Company's communities and to seniors living outside of the Company's communities. The Brookdale Ancillary Services segment does not include the inpatient therapy services provided in the Company's skilled nursing units, which are included in the Company's CCRCs-Rental segment. Management Services. The Company's Management Services segment includes communities operated by the Company pursuant to management agreements. In some of the cases, the controlling financial interest in the community is held by third parties and, in other cases, the community is owned in a venture structure in which the Company has an ownership interest. Under the management agreements for these communities, the Company receives management fees as well as reimbursed expenses, which represent the reimbursement of expenses it incurs on behalf of the owners. The accounting policies of the Company's reportable segments are the same as those described in the summary of significant accounting policies in Note 2. The following table sets forth selected segment financial and operating data:
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Summary of Significant Accounting Policies (Policies) |
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Accounting Policies [Abstract] | ||||||||||||||||
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States ("US GAAP") for interim financial information pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") for quarterly reports on Form 10-Q. In the opinion of management, these financial statements include all adjustments necessary to present fairly the financial position, results of operations and cash flows of the Company as of June 30, 2018, and for all periods presented. The condensed consolidated financial statements are prepared on the accrual basis of accounting. All adjustments made have been of a normal and recurring nature. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. The Company believes that the disclosures included are adequate and provide a fair presentation of interim period results. Interim financial statements are not necessarily indicative of the financial position or operating results for an entire year. It is suggested that these interim financial statements be read in conjunction with the audited financial statements and the notes thereto, together with management's discussion and analysis of financial condition and results of operations, included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2017 filed with the SEC on February 22, 2018. Except for the changes for the impact of the recently adopted accounting pronouncements discussed in this Note, the Company has consistently applied its accounting policies to all periods presented in these condensed consolidated financial statements. |
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Principles of Consolidation | Principles of Consolidation The condensed consolidated financial statements include the accounts of Brookdale and its consolidated subsidiaries. All significant intercompany balances and transactions have been eliminated. Investments in affiliated companies that the Company does not control, but has the ability to exercise significant influence over governance and operation, are accounted for by the equity method. The ownership interest of consolidated entities not wholly-owned by the Company are presented as noncontrolling interests in the accompanying condensed consolidated financial statements. Noncontrolling interest represents the share of consolidated entities owned by third parties. Noncontrolling interest is adjusted for the noncontrolling holder's share of additional contributions, distributions and the proportionate share of the net income or loss of each respective entity. The Company continually evaluates its potential variable interest entity ("VIE") relationships under certain criteria as provided for in Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 810, Consolidation ("ASC 810"). ASC 810 broadly defines a VIE as an entity with one or more of the following characteristics: (a) the total equity investment at risk is insufficient to finance the entity's activities without additional subordinated financial support; (b) as a group, the holders of the equity investment at risk lack (i) the ability to make decisions about the entity's activities through voting or similar rights, (ii) the obligation to absorb the expected losses of the entity, or (iii) the right to receive the expected residual returns of the entity; or (c) the equity investors have voting rights that are not proportional to their economic interests, and substantially all of the entity's activities either involve, or are conducted on behalf of, an investor that has disproportionately few voting rights. The Company performs this analysis on an ongoing basis and consolidates any VIEs for which the Company is determined to be the primary beneficiary, as determined by the Company's power to direct the VIE's activities and the obligation to absorb its losses or the right to receive its benefits, which are potentially significant to the VIE. Refer to Note 14 for more information about the Company's VIE relationships. |
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Revenue Recognition | Revenue Recognition Resident Fees Resident fee revenue is reported at the amount that reflects the consideration the Company expects to receive in exchange for the services provided. These amounts are due from residents or third-party payors and include variable consideration for retroactive adjustments, if any, under reimbursement programs. Performance obligations are determined based on the nature of the services provided. Resident fee revenue is recognized as performance obligations are satisfied. Under the Company's senior living residency agreements, which are generally for a term of 30 days to one year, the Company provides senior living services to residents for a stated daily or monthly fee. The Company recognizes revenue for housing services under residency agreements for independent living and assisted living services in accordance with the provisions of ASC Topic 840, Leases ("ASC 840"). The Company recognizes revenue for assisted living care, skilled nursing residency and inpatient therapy services, ancillary services, and personalized health services in accordance with the provisions of ASC Topic 606, Revenue from Contracts with Customers ("ASC 606"). The Company has determined that the senior living services included under the daily or monthly fee have the same timing and pattern of transfer and are a series of distinct services that are considered one performance obligation which is satisfied over time. Through its ancillary services programs, the Company enters into contracts to provide home health, hospice, and outpatient therapy services. The Company recognizes revenue for home health, hospice, and outpatient therapy services in accordance with the provisions of ASC 606. Each service provided under the contract is capable of being distinct, and thus, the services are considered individual and separate performance obligations which are satisfied as services are provided and revenue is recognized as services are provided. The Company receives revenue for services under various third-party payor programs which include Medicare, Medicaid, and other third-party payors. Settlements with third-party payors for retroactive adjustments due to audits, reviews or investigations are included in the determination of the estimated transaction price for providing services. The Company estimates the transaction price based on the terms of the contract with the payor, correspondence with the payor and historical payment trends, and retroactive adjustments are recognized in future periods as final settlements are determined. Management Services The Company manages certain communities under contracts which provide periodic management fee payments to the Company. Management fees are generally determined by an agreed upon percentage of gross revenues (as defined in the management agreement). Certain management contracts also provide for an annual incentive fee to be paid to the Company upon achievement of certain metrics identified in the contract. The Company recognizes revenue for community management services in accordance with the provisions of ASC 606. Although there are various management and operational activities performed by the Company under the contracts, the Company has determined that all community operations management activities are a single performance obligation, which is satisfied over time as the services are rendered. The Company estimates the amount of incentive fee revenue expected to be earned, if any, during the annual contract period and revenue is recognized as services are provided to the owners of the communities. The Company’s estimate of the transaction price for management services also includes the amount of reimbursement due from the owners of the communities for services provided and related costs incurred. Such revenue is included in "reimbursed costs incurred on behalf of managed communities" on the condensed consolidated statements of operations. The related costs are included in "costs incurred on behalf of managed communities" on the condensed consolidated statements of operations. Gain on Sale of Assets The Company regularly enters into real estate transactions which may include the disposal of certain communities, including the associated real estate. The Company recognizes income from real estate sales under ASC 610-20, Other Income - Gains and Losses from Derecognition of Nonfinancial Assets ("ASC 610-20"). Under ASC 610-20, income is recognized when the transfer of control occurs and the Company applies the five-step model for recognition to determine the amount of income to recognize for all real estate sales. The Company accounts for the sale of equity method investments under ASC 860, Transfers and Servicing ("ASC 860"). Under ASC 860, income is recognized when the transfer of control occurs and the Company has no continuing involvement with the transferred financial assets. |
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Stock-Based Compensation | Stock-Based Compensation The Company follows ASC 718, Compensation – Stock Compensation ("ASC 718") in accounting for its share-based payments. This guidance requires measurement of the cost of employee services received in exchange for stock compensation based on the grant-date fair value of the employee stock awards. This cost is recognized as compensation expense ratably over the employee’s requisite service period. Incremental compensation costs arising from subsequent modifications of awards after the grant date are recognized when incurred. Certain of the Company’s employee stock awards vest only upon the achievement of performance targets. ASC 718 requires recognition of compensation cost only when achievement of performance conditions is considered probable. Consequently, the Company’s determination of the amount of stock compensation expense requires judgment in estimating the probability of achievement of these performance targets. For all share-based awards with graded or cliff vesting other than awards with performance-based vesting conditions, the Company records compensation expense for the entire award on a straight-line basis (or, if applicable, on the accelerated method) over the requisite service period. For graded-vesting awards with performance-based vesting conditions, total compensation expense is recognized over the requisite service period for each separately vesting tranche of the award as if the award is, in substance, multiple awards once the performance target is deemed probable of achievement. Performance goals are evaluated quarterly. If such goals are not ultimately met or it is not probable the goals will be achieved, no compensation expense is recognized and any previously recognized compensation expense is reversed. |
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Income Taxes | Income Taxes Income taxes are accounted for under the asset and liability approach which requires recognition of deferred tax assets and liabilities for the differences between the financial reporting and tax basis of assets and liabilities. A valuation allowance reduces deferred tax assets when it is more likely than not that some portion or all of the deferred tax assets will not be realized. |
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Fair Value of Financial Instruments | Fair Value of Financial Instruments ASC 820, Fair Value Measurements and Disclosures establishes a three-level valuation hierarchy for disclosure of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. Categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The three levels are defined as follows: Level 1 – Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2 – Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. Level 3 – Inputs to the valuation methodology are unobservable and significant to the fair value measurement. Cash and cash equivalents, marketable securities, and restricted cash are reflected in the accompanying condensed consolidated balance sheets at amounts considered by management to reasonably approximate fair value due to the short maturity. |
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Marketable Securities | Marketable Securities Investments in commercial paper and corporate bond instruments with original maturities of greater than three months are classified as marketable securities. |
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Goodwill and Intangible Assets | Goodwill and Intangible Assets The Company follows ASC 350, Goodwill and Other Intangible Assets, and tests goodwill for impairment annually during the fourth quarter or whenever indicators of impairment arise. Factors the Company considers important in its analysis of whether an indicator of impairment exists include a significant decline in the Company's stock price or market capitalization for a sustained period since the last testing date, significant underperformance relative to historical or projected future operating results and significant negative industry or economic trends. The Company first assesses qualitative factors to determine whether it is necessary to perform a quantitative goodwill impairment test. The quantitative goodwill impairment test is based upon a comparison of the estimated fair value of the reporting unit to which the goodwill has been assigned with the reporting unit's carrying value. The Company is not required to calculate the fair value of a reporting unit unless the Company determines, based on a qualitative assessment, that it is more likely than not that its fair value of a reporting unit is less than its carrying value. The fair values used in the quantitative goodwill impairment test are estimated based upon discounted future cash flow projections for the reporting unit. These cash flow projections are based upon a number of estimates and assumptions such as revenue and expense growth rates, capitalization rates and discount rates. The Company also considers market based measures such as earnings multiples in its analysis of estimated fair values of its reporting units. If the quantitative goodwill impairment test results in a reporting unit's carrying value exceeding its estimated fair value, an impairment charge will be recorded based on the difference in accordance with ASU 2017-04, Intangibles - Goodwill and Other, with the impairment charge limited to the amount of goodwill allocated to the reporting unit. Acquired intangible assets are initially valued at fair market value using generally accepted valuation methods appropriate for the type of intangible asset. Intangible assets with definite lives are amortized over their estimated useful lives and all intangible assets are reviewed for impairment if indicators of impairment arise. The evaluation of impairment for definite-lived intangibles is based upon a comparison of the carrying value of the asset to the estimated future undiscounted net cash flows expected to be generated by the asset. If estimated future undiscounted net cash flows are less than the carrying value of the asset, then the fair value of the asset is estimated. The impairment expense is determined by comparing the estimated fair value of the intangible asset to its carrying value, with any shortfall from fair value recognized as an expense in the current period. Indefinite-lived intangible assets are not amortized but are tested for impairment annually during the fourth quarter or more frequently as required. The impairment test consists of a comparison of the estimated fair value of the indefinite-lived intangible asset with its carrying value. If the carrying value exceeds its fair value, an impairment loss is recognized for that difference. Amortization of the Company's definite-lived intangible assets is computed using the straight-line method over the estimated useful lives of the assets, which are as follows:
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Self-Insurance Liability Accruals | Self-Insurance Liability Accruals The Company is subject to various legal proceedings and claims that arise in the ordinary course of its business. Although the Company maintains general liability and professional liability insurance policies for its owned, leased and managed communities under a master insurance program, the Company's current policies provide for deductibles for each and every claim. As a result, the Company is, in effect, self-insured for claims that are less than the deductible amounts. In addition, the Company maintains a high deductible workers compensation program and a self-insured employee medical program. The Company reviews the adequacy of its accruals related to these liabilities on an ongoing basis, using historical claims, actuarial valuations, third-party administrator estimates, consultants, advice from legal counsel and industry data, and adjusts accruals periodically. Estimated costs related to these self-insurance programs are accrued based on known claims and projected claims incurred but not yet reported. Subsequent changes in actual experience are monitored, and estimates are updated as information becomes available. During the six months ended June 30, 2018 and 2017, the Company reduced its estimate for the amount of expected losses for general liability and professional liability and workers compensation claims, based on recent historical claims experience. The reduction in these accrued reserves decreased facility operating expense by $6.3 million and $7.5 million for the three and six months ended June 30, 2018, respectively, and by $2.0 million and $5.6 million for the three and six months ended June 30, 2017, respectively. |
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Lease Accounting | Lease Accounting The Company, as lessee, makes a determination with respect to each of its community leases as to whether each should be accounted for as an operating lease or capital lease. The classification criteria is based on estimates regarding the fair value of the leased community, minimum lease payments, effective cost of funds, the economic life of the community and certain other terms in the lease agreements. In a business combination, the Company assumes the lease classification previously determined by the prior lessee absent a modification, as determined by ASC 840, Leases ("ASC 840"), in the assumed lease agreement. Payments made under operating leases are accounted for in the Company's condensed consolidated statements of operations as lease expense for actual rent paid plus or minus a straight-line adjustment for estimated minimum lease escalators and amortization of deferred gains in situations where sale-leaseback transactions have occurred. For capital and financing lease obligation arrangements, a liability is established on the Company's condensed consolidated balance sheet representing the present value of the future minimum lease payments and a residual value for financing leases and a corresponding long-term asset is recorded in property, plant and equipment and leasehold intangibles in the condensed consolidated balance sheet. For capital lease assets, the asset is depreciated over the remaining lease term unless there is a bargain purchase option in which case the asset is depreciated over the useful life. For financing lease assets, the asset is depreciated over the useful life of the asset. Leasehold improvements purchased during the term of the lease are amortized over the shorter of their economic life or the lease term. All of the Company's leases contain fixed or formula-based rent escalators. To the extent that the escalator increases are tied to a fixed index or rate, lease payments are accounted for on a straight-line basis over the life of the lease. In addition, all rent-free or rent holiday periods are recognized in lease expense on a straight-line basis over the lease term, including the rent holiday period. Sale-leaseback accounting is applied to transactions in which an owned community is sold and leased back from the buyer if certain continuing involvement criteria are met. Under sale-leaseback accounting, the Company removes the community and related liabilities from the condensed consolidated balance sheet. Gain on the sale is deferred and recognized as a reduction of facility lease expense for operating leases and a reduction of interest expense for capital leases. In cases of sale-leaseback transactions in which the Company has continuing involvement, other than normal leasing activities, the Company does not record the sale until such involvement terminates. For leases in which the Company is involved with the construction of a building, the Company accounts for the leases during the construction period under the provisions of ASC 840. If the Company concludes that it has substantively all of the risks of ownership during construction of a leased property and therefore is deemed the owner of the project for accounting purposes, it records an asset and related financing obligation for the amount of total project costs related to construction in progress. Once construction is complete, the Company considers the requirements under ASC subtopic 840-40. If the arrangement qualifies for sale-leaseback accounting, the Company removes the assets and related liabilities from the condensed consolidated balance sheet. If the arrangement does not qualify for sale-leaseback accounting, the Company continues to amortize the financing obligation and depreciate the assets over the lease term. |
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Recently Adopted Accounting Pronouncements/Recently Issued Accounting Pronouncements Not Yet Adopted | Recently Adopted Accounting Pronouncements In January 2017, the FASB issued Accounting Standards Update ("ASU") 2017-01, Business Combinations: Clarifying the Definition of a Business ("ASU 2017-01"). ASU 2017-01 clarifies the definition of a business to assist companies in determining whether transactions should be accounted for as an asset acquisition or a business combination. Under ASU 2017-01, if substantially all of the fair value of the assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business and the transaction is accounted for as an asset acquisition. Transaction costs associated with asset acquisitions are capitalized while those associated with business combinations are expensed as incurred. The Company adopted ASU 2017-01 on a prospective basis on January 1, 2018. The Company anticipates that the changes to the definition of a business may result in future acquisitions of real estate, communities or senior housing operating companies being accounted for as asset acquisitions. In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows: Restricted Cash, a consensus of the FASB Emerging Issues Task Force ("ASU 2016-18"). ASU 2016-18 intends to address the diversity in practice that exists in the classification and presentation of changes in restricted cash on the statement of cash flows. The amendments require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. The amendments are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. The Company adopted ASU 2016-18 on January 1, 2018 and the changes required by ASU 2016-18 were applied retrospectively to all periods presented. The Company has identified that the inclusion of the change in restricted cash within the retrospective presentation of the statements of cash flows resulted in a $1.1 million and $1.7 million decrease to the amount of net cash used in investing activities for the three and six months ended June 30, 2017, respectively. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows – Classification of Certain Cash Receipts and Cash Payments ("ASU 2016-15"). ASU 2016-15 clarifies how cash receipts and cash payments in certain transactions are presented in the statement of cash flows. Among other clarifications on the classification of certain transactions within the statement of cash flows, the amendments in ASU 2016-15 provide that debt prepayment and extinguishment costs will be classified within financing activities within the statement of cash flows. ASU 2016-15 is effective for the Company for the fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. The Company adopted ASU 2016-15 on January 1, 2018 and the changes in classification within the statement of cash flows were applied retrospectively to all periods presented. The Company's retrospective application resulted in a $0.7 million increase to the amount of net cash provided by operating activities and a $0.7 million decrease to the amount of net cash used in financing activities for each of the three and six months ended June 30, 2017. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers ("ASU 2014-09"). ASU 2014-09 affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets. The five step model defined by ASU 2014-09 requires the Company to (i) identify the contracts with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract and (v) recognize revenue when each performance obligation is satisfied. Revenue is recognized when promised goods or services are transferred to the customer in an amount that reflects the consideration expected in exchange for those goods or services. Additionally, ASU 2014-09 requires enhanced disclosure of revenue arrangements. ASU 2014-09 may be applied retrospectively to each prior period (full retrospective) or retrospectively with the cumulative effect recognized as of the date of initial application (modified retrospective). ASU 2014-09, as amended, is effective for the Company's fiscal year beginning January 1, 2018, and the Company adopted the new standard under the modified retrospective approach. Under the modified retrospective approach, the guidance is applied to the most current period presented, recognizing the cumulative effect of the adoption change as an adjustment to beginning retained earnings. The Company has determined that the adoption of ASU 2014-09 did not result in an adjustment to retained earnings as of January 1, 2018. The Company has determined that there will be a change to the amounts of resident fee revenue and facility operating expense with no net impact to the amount of income from operations, for the impact of implicit price concessions on the estimation of the transaction price. The Company recognized $896.0 million and $1,802.2 million of resident fee revenue and $627.1 million and $1,259.4 million of facility operating expense for the three and six months ended June 30, 2018, respectively. The impact to resident fee revenue and facility operating expense as a result of applying ASC 606 was a decrease of $2.1 million and $3.2 million for the three and six months ended June 30, 2018, respectively. The Company has determined that there will not be any significant change to the annual amount of revenue recognized for management fees under the Company’s community management agreements; however, the Company will recognize an estimated amount of incentive fee revenue earlier during the annual contract period. The Company has determined that there will be a change to the amounts presented for revenue recognized for reimbursed costs incurred on behalf of managed communities and reimbursed costs incurred on behalf of managed communities with no net impact to the amount of income from operations, as a result of the combination of all community operations management activities as a single performance obligation for each contract. The Company recognized $242.2 million and $504.4 million of revenue for reimbursed costs incurred on behalf of managed communities and $242.2 million and $504.4 million of reimbursed costs incurred on behalf of managed communities for the three and six months ended June 30, 2018, respectively, in accordance with ASU 2014-09. The impact to revenue for reimbursed costs incurred on behalf of managed communities and reimbursed costs incurred on behalf of managed communities as a result of applying ASC 606 was an increase of $11.3 million and $23.7 million for the three and six months ended June 30, 2018, respectively. Additionally, real estate sales are within the scope of ASU 2014-09, as amended by ASU 2017-05, Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets ("ASU 2017-05"). ASU 2017-05 clarifies the scope of subtopic 610-20 and adds guidance for partial sales of nonfinancial assets. Under ASU 2014-09 and ASU 2017-05, the income recognition for real estate sales is largely based on the transfer of control versus continuing involvement under the former guidance. As a result, more transactions may qualify as sales of real estate and gains or losses may be recognized sooner. The Company adopted ASU 2014-09, as amended by ASU 2017-5, under the modified retrospective approach as of January 1, 2018 and will apply the five step revenue model to all subsequent sales of real estate. Recently Issued Accounting Pronouncements Not Yet Adopted In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments ("ASU 2016-13"). ASU 2016-13 replaces the current incurred loss impairment methodology for credit losses with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. ASU 2016-13 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted for fiscal years beginning after December 15, 2018. The Company is currently evaluating the impact the adoption of ASU 2016-13 will have on its condensed consolidated financial statements and disclosures. In February 2016, the FASB issued ASU 2016-02, Leases ("ASU 2016-02"). ASU 2016-02 amends the existing accounting principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors. ASU 2016-02 requires a lessee to recognize a right-of-use asset and a lease liability on the balance sheet for most leases. Additionally, ASU 2016-02 makes targeted changes to lessor accounting and requires enhanced disclosure of lease arrangements. In July 2018, the FASB issued ASU 2018-11, Leases, Targeted Improvements ("ASU 2018-11"). ASU 2018-11 provides entities with a transition method option to not restate comparative periods presented, but to recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. In addition, ASU 2018-11 provides entities with a practical expedient allowing lessors to not separate nonlease components from the associated lease components when certain criteria are met. ASU 2016-02 and ASU 2018-11 are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, and early adoption is permitted. The Company plans to adopt these lease accounting standards effective January 1, 2019 utilizing a modified retrospective transition method with no adjustments to comparative periods presented. The Company anticipates that the adoption of ASU 2016-02 will result in the recognition of material lease liabilities and right-of use assets on the condensed consolidated balance sheet for these community operating leases. The Company is monitoring recent accounting standard setting activities of the FASB and the Company continues to evaluate the impact that the adoption of ASU 2016-02 and ASU 2018-11 will have on its condensed consolidated financial statements and disclosures. |
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Reclassifications | Reclassifications Certain prior period amounts have been reclassified to conform to the current financial statement presentation, with no effect on the Company's condensed consolidated financial position or results of operations. |
Summary of Significant Accounting Policies (Tables) |
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Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of definite-lived intangible assets | Amortization of the Company's definite-lived intangible assets is computed using the straight-line method over the estimated useful lives of the assets, which are as follows:
The following is a summary of other intangible assets.
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Fair Value Measurements (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements, Nonrecurring | The following is a summary of the goodwill and asset impairment expense.
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Stock-Based Compensation (Tables) |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Current year grants of restricted shares | Grants of restricted shares under the Company's 2014 Omnibus Incentive Plan were as follows:
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Goodwill and Other Intangible Assets, Net (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of changes in the carrying amount of goodwill | The following is a summary of the carrying value of goodwill by operating segment.
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Schedule of definite-lived intangible assets | Amortization of the Company's definite-lived intangible assets is computed using the straight-line method over the estimated useful lives of the assets, which are as follows:
The following is a summary of other intangible assets.
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Schedule of indefinite-lived intangible assets | The following is a summary of other intangible assets.
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Property, Plant and Equipment and Leasehold Intangibles, Net (Tables) |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, plant and equipment and leasehold intangibles, net | As of June 30, 2018 and December 31, 2017, net property, plant and equipment and leasehold intangibles, which include assets under capital and financing leases, consisted of the following:
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Debt (Tables) |
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Schedule of debt | Long-term debt and capital and financing lease obligations consist of the following:
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Supplemental Disclosure of Cash Flow Information (Tables) |
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Elements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental cash flow information |
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated statement of cash flows that sums to the total of the same such amounts shown in the condensed consolidated statement of cash flows.
|
Facility Operating Leases (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of facility operating leases | A summary of facility lease expense and the impact of straight-line adjustment and amortization of (above) below market rents and deferred gains are as follows:
|
Variable Interest Entities (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||
Equity Method Investments and Joint Ventures [Abstract] | |||||||||||||||||||||||||||||||||||||
Schedule of Variable Interest Entities | The carrying value and classification of the related assets, liabilities and maximum exposure to loss as a result of the Company's involvement with these VIEs are summarized below as of June 30, 2018 (in millions):
|
Revenue (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Revenue | The Company disaggregates its revenue from contracts with customers by payor source, as the Company believes it best depicts how the nature, amount, timing and uncertainty of its revenue and cash flows are affected by economic factors. See details on a reportable segment basis in the table below.
|
Segment Information (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of segment reporting information | The following table sets forth selected segment financial and operating data:
|
Fair Value Measurements - Goodwill and Asset Impairment (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Goodwill | $ 351,652 | |||
Property, plant and equipment and leasehold intangibles, net | $ 6,900 | $ 1,400 | 47,700 | $ 2,400 |
Investment in unconsolidated ventures | 33,400 | 19,700 | ||
Goodwill and asset impairment | 16,103 | 1,559 | 446,466 | 22,265 |
Nonrecurring | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Goodwill | 0 | 0 | 351,700 | 0 |
Property, plant and equipment and leasehold intangibles, net | 6,900 | 1,400 | 47,700 | 2,400 |
Investment in unconsolidated ventures | 0 | 0 | 33,400 | 19,700 |
Other intangible assets, net | 0 | 0 | 1,700 | 0 |
Assets held for sale | 9,200 | 200 | 12,000 | 200 |
Goodwill and asset impairment | $ 16,100 | $ 1,600 | $ 446,500 | $ 22,300 |
Stock-Based Compensation (Details) - Unvested Restricted Stock - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Mar. 31, 2018 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Restricted Shares Granted (in shares) | 169 | 3,387 |
Value Per Share (in dollars per share) | $ 7.19 | $ 9.10 |
Total value of restricted shares granted | $ 1,214 | $ 30,823 |
Goodwill and Other Intangible Assets, Net - Goodwill (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended |
---|---|---|
Mar. 31, 2018 |
Jun. 30, 2018 |
|
Goodwill [Roll Forward] | ||
Balance at January 1, 2018 | $ 505,783 | $ 505,783 |
Impairment | (351,652) | |
Balance at June 30, 2018 | 154,131 | |
Retirement Centers | ||
Goodwill [Roll Forward] | ||
Balance at January 1, 2018 | 27,321 | 27,321 |
Impairment | 0 | |
Balance at June 30, 2018 | 27,321 | |
Assisted Living | ||
Goodwill [Roll Forward] | ||
Balance at January 1, 2018 | 351,652 | 351,652 |
Impairment | (351,700) | (351,652) |
Balance at June 30, 2018 | 0 | |
Brookdale Ancillary Services | ||
Goodwill [Roll Forward] | ||
Balance at January 1, 2018 | $ 126,810 | 126,810 |
Impairment | 0 | |
Balance at June 30, 2018 | $ 126,810 |
Goodwill and Other Intangible Assets, Net - Additional Information (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Amortization expense related to definite-lived intangible assets | $ 0.8 | $ 3.0 | $ 1.7 | $ 3.9 |
Debt - Debt (Details) - USD ($) $ in Millions |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
15 Communities Held For Sale | Disposal Group, Held-for-sale or Disposed of by Sale, Not Discontinued Operations | Mortgage notes payable | ||
Debt Instrument [Line Items] | ||
Mortgage debt | $ 50.2 | $ 30.1 |
Supplemental Disclosure of Cash Flow Information - Additional Information (Details) - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Supplemental Cash Flow Elements [Abstract] | ||
Net cash paid for termination of operating leases | $ 46,600 | |
Net cash paid for capital leases | $ 10,548 | $ 552 |
Supplemental Disclosure of Cash Flow Information - Cash and Restricted Cash (Details) - USD ($) $ in Thousands |
Jun. 30, 2018 |
Dec. 31, 2017 |
Jun. 30, 2017 |
Dec. 31, 2016 |
---|---|---|---|---|
Supplemental Cash Flow Elements [Abstract] | ||||
Cash and cash equivalents | $ 126,637 | $ 222,647 | ||
Restricted cash | 39,015 | 37,189 | ||
Long-term restricted cash | 25,010 | 22,710 | ||
Total cash, cash equivalents and restricted cash shown in the condensed consolidated statement of cash flows | $ 190,662 | $ 282,546 | $ 214,174 | $ 277,322 |
Facility Operating Leases (Details) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018
USD ($)
lease
|
Jun. 30, 2017
USD ($)
|
Jun. 30, 2018
USD ($)
lease
|
Jun. 30, 2017
USD ($)
|
|
Commitments and Contingencies Disclosure [Abstract] | ||||
Number of communities operated under long-term leases | lease | 385 | 385 | ||
Number of operating leases | lease | 258 | 258 | ||
Number of capital and financing leases | lease | 127 | 127 | ||
Schedule of facility operating lease expense [Abstract] | ||||
Cash basis payment | $ 87,115 | $ 90,599 | $ 176,708 | $ 185,203 |
Straight-line (income) expense | (2,430) | (3,119) | (8,595) | (6,126) |
Amortization of (above) below market lease, net | (1,636) | (1,697) | (3,574) | (3,394) |
Amortization of deferred gain | (1,089) | (1,093) | (2,179) | (2,186) |
Facility lease expense | $ 81,960 | $ 84,690 | $ 162,360 | $ 173,497 |
Income Taxes (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
Dec. 31, 2017 |
|
Valuation Allowance [Line Items] | ||||||
Change in valuation allowance | $ 27.0 | |||||
Deferred federal, state and local tax benefit | $ 46.4 | $ 18.2 | $ 55.9 | 31.7 | ||
Valuation allowance | 391.0 | 391.0 | $ 336.1 | |||
Formation of the Blackstone Venture | ||||||
Valuation Allowance [Line Items] | ||||||
Change in valuation allowance | $ 85.0 | 85.0 | ||||
Adoption Of Accounting Standards Update 2016-09 [Member] | ||||||
Valuation Allowance [Line Items] | ||||||
Change in valuation allowance | 48.5 | |||||
Federal and State [Member] | ||||||
Valuation Allowance [Line Items] | ||||||
Change in valuation allowance | $ 30.3 | $ 15.2 | $ 54.9 | $ 27.0 |
Variable Interest Entities (Details) $ in Millions |
Mar. 29, 2017
community
|
Jun. 30, 2018
USD ($)
community
|
---|---|---|
CCRC Venture opco | ||
Variable Interest Entity [Line Items] | ||
Percentage ownership in unconsolidated joint ventures | 51.00% | |
Maximum Exposure to Loss | $ 25.4 | |
Carrying Amount | $ 25.4 | |
Blackstone Venture | ||
Variable Interest Entity [Line Items] | ||
Percentage ownership in unconsolidated joint ventures | 15.00% | |
Number of communities managed | community | 60 | |
Number of communities leased | community | 2 | 2 |
Lease payments | $ 2.6 | |
Fair market value of communities | $ 33.8 | |
HCP, Inc. | CCRC Venture opco | ||
Variable Interest Entity [Line Items] | ||
Percentage ownership in unconsolidated joint ventures | 49.00% |
Revenue - Additional Information (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | |
---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2018 |
Dec. 31, 2017 |
|
Disaggregation of Revenue [Line Items] | |||
Monthly resident fees | $ 58.3 | $ 58.3 | $ 49.7 |
Revenue recognized | 68.9 | ||
Additions for allowance for doubtful accounts | 4.4 | 8.9 | |
Deferred Revenue and Credits | |||
Disaggregation of Revenue [Line Items] | |||
Deferred revenue | $ 115.6 | $ 115.6 | $ 112.4 |
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