Ventas (VTR) has reached mutually beneficial agreements with Brookdale Senior Living regarding all assets under the current Master Lease between Ventas and Brookdale. The Master Lease was previously set to expire on December 31, 2025. The agreements enable Ventas to accelerate the conversion of forty-four select large-scale senior housing communities – the SHOP Communities – to its Senior Housing Operating Portfolio, or SHOP, starting September 1, 2025. Brookdale has agreed to cooperate in the transition process. 65 senior housing communities, which represent approximately 40% of the Master Lease units, will remain in the Master Lease with Brookdale for an extended 10-year term commencing January 1, 2026 with initial cash rent of $64M, a 38% increase above current cash rent. Cash rent for the Leased Communities will escalate 3% annually over the remaining term. Brookdale is obligated to pay annual contractual cash rent of $48M on these assets in 2025. Ventas has agreed to invest $35M in capital expenditures, at an expected return of approximately 8%, in Ventas’s master lease communities over three years commencing in 2025. The remaining eleven senior housing communities covered by the Master Lease are intended to be sold in 2025. Ventas will retain the proceeds from the sales. The anticipated cash and GAAP rent/NOI impacts in 2024 are expected to be immaterial. Upon transition of each SHOP Community to a new operator, which is expected to occur beginning September 1, 2025, no further rent will be payable by Brookdale, and Ventas will receive the NOI from that community going forward.
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