x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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20-3068069
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(State or other jurisdiction
of incorporation or organization)
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(I.R.S. Employer Identification No.)
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111 Westwood Place, Suite 400, Brentwood, Tennessee
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37027
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer
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x
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Accelerated filer
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¨
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Non-accelerated filer
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¨
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(Do not check if a smaller reporting company)
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Smaller reporting company
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¨
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Emerging growth company
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¨
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PAGE
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PART I.
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FINANCIAL INFORMATION
|
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Item 1.
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Item 2.
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Item 3.
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Item 4.
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PART II.
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Item 1.
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Item 1A.
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Item 2.
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Item 6.
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March 31,
2018 |
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December 31,
2017 |
||||
Assets
|
(Unaudited)
|
|
|
||||
Current assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
335,412
|
|
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$
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222,647
|
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Marketable securities
|
174,649
|
|
|
291,796
|
|
||
Cash and escrow deposits – restricted
|
32,393
|
|
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37,189
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|
||
Accounts receivable, net
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125,473
|
|
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128,961
|
|
||
Assets held for sale
|
88,505
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|
|
106,435
|
|
||
Prepaid expenses and other current assets, net
|
135,639
|
|
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114,844
|
|
||
Total current assets
|
892,071
|
|
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901,872
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|
||
Property, plant and equipment and leasehold intangibles, net
|
5,775,496
|
|
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5,852,145
|
|
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Cash and escrow deposits – restricted
|
27,756
|
|
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22,710
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|
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Investment in unconsolidated ventures
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77,839
|
|
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129,794
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|
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Goodwill
|
154,131
|
|
|
505,783
|
|
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Other intangible assets, net
|
60,659
|
|
|
67,977
|
|
||
Other assets, net
|
199,476
|
|
|
195,168
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|
||
Total assets
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$
|
7,187,428
|
|
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$
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7,675,449
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Liabilities and Equity
|
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Current liabilities
|
|
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Current portion of long-term debt
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$
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535,470
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|
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$
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495,413
|
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Current portion of capital and financing lease obligations
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69,536
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|
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107,088
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|
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Trade accounts payable
|
73,358
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|
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91,825
|
|
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Accrued expenses
|
309,998
|
|
|
329,966
|
|
||
Refundable entrance fees and deferred revenue
|
72,954
|
|
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68,358
|
|
||
Tenant security deposits
|
2,989
|
|
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3,126
|
|
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Total current liabilities
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1,064,305
|
|
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1,095,776
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|
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Long-term debt, less current portion
|
3,342,840
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3,375,324
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|
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Capital and financing lease obligations, less current portion
|
1,187,549
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|
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1,164,466
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|
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Deferred liabilities
|
213,912
|
|
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224,304
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|
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Deferred tax liability
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85,776
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|
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70,644
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Other liabilities
|
213,485
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|
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214,644
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Total liabilities
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6,107,867
|
|
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6,145,158
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|
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Preferred stock, $0.01 par value, 50,000,000 shares authorized at March 31, 2018 and December 31, 2017; no shares issued and outstanding
|
—
|
|
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—
|
|
||
Common stock, $0.01 par value, 400,000,000 shares authorized at March 31, 2018 and December 31, 2017; 196,976,099 and 194,454,329 shares issued and 193,797,698 and 191,275,928 shares outstanding (including 6,230,895 and 4,770,097 unvested restricted shares), respectively
|
1,938
|
|
|
1,913
|
|
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Additional paid-in-capital
|
4,132,747
|
|
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4,126,549
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|
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Treasury stock, at cost; 3,178,401 shares at March 31, 2018 and December 31, 2017
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(56,440
|
)
|
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(56,440
|
)
|
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Accumulated deficit
|
(2,998,201
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)
|
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(2,541,294
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)
|
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Total Brookdale Senior Living Inc. stockholders' equity
|
1,080,044
|
|
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1,530,728
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Noncontrolling interest
|
(483
|
)
|
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(437
|
)
|
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Total equity
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1,079,561
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1,530,291
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Total liabilities and equity
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$
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7,187,428
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$
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7,675,449
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Three Months Ended
March 31, |
||||||
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2018
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2017
|
||||
Revenue
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|
||||
Resident fees
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$
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906,266
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$
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1,016,927
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Management fees
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18,681
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15,894
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Reimbursed costs incurred on behalf of managed communities
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262,287
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183,945
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Total revenue
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1,187,234
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1,216,766
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Expense
|
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Facility operating expense (excluding depreciation and amortization of $103,168 and $114,879, respectively)
|
632,325
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674,542
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|
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General and administrative expense (including non-cash stock-based compensation expense of $8,406 and $7,774, respectively)
|
76,710
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65,560
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|
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Transaction costs
|
4,725
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7,593
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|
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Facility lease expense
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80,400
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|
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88,807
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|
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Depreciation and amortization
|
114,255
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|
|
127,487
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|
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Goodwill and asset impairment
|
430,363
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20,706
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|
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Costs incurred on behalf of managed communities
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262,287
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183,945
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Total operating expense
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1,601,065
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1,168,640
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|
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Income (loss) from operations
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(413,831
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)
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48,126
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Interest income
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2,983
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|
631
|
|
||
Interest expense:
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|
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|
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Debt
|
(45,727
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)
|
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(40,573
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)
|
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Capital and financing lease obligations
|
(22,931
|
)
|
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(49,859
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)
|
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Amortization of deferred financing costs and debt premium (discount)
|
(3,956
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)
|
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(2,591
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)
|
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Change in fair value of derivatives
|
74
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|
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(46
|
)
|
||
Debt modification and extinguishment costs
|
(35
|
)
|
|
(61
|
)
|
||
Equity in (loss) earnings of unconsolidated ventures
|
(4,243
|
)
|
|
981
|
|
||
Gain (loss) on sale of assets, net
|
43,431
|
|
|
(603
|
)
|
||
Other non-operating income
|
2,586
|
|
|
1,662
|
|
||
Income (loss) before income taxes
|
(441,649
|
)
|
|
(42,333
|
)
|
||
Provision for income taxes
|
(15,585
|
)
|
|
(84,028
|
)
|
||
Net income (loss)
|
(457,234
|
)
|
|
(126,361
|
)
|
||
Net (income) loss attributable to noncontrolling interest
|
46
|
|
|
57
|
|
||
Net income (loss) attributable to Brookdale Senior Living Inc. common stockholders
|
$
|
(457,188
|
)
|
|
$
|
(126,304
|
)
|
|
|
|
|
||||
Basic and diluted net income (loss) per share attributable to Brookdale Senior Living Inc. common stockholders
|
$
|
(2.45
|
)
|
|
$
|
(0.68
|
)
|
|
|
|
|
||||
Weighted average shares used in computing basic and diluted net income (loss) per share
|
186,880
|
|
|
185,689
|
|
|
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
|
—
|
|
|
—
|
|
|
8,406
|
|
|
—
|
|
|
—
|
|
|
8,406
|
|
|
—
|
|
|
8,406
|
|
|||||||
Net income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(457,188
|
)
|
|
(457,188
|
)
|
|
(46
|
)
|
|
(457,234
|
)
|
|||||||
Issuance of common stock under Associate Stock Purchase Plan
|
62
|
|
|
1
|
|
|
371
|
|
|
—
|
|
|
—
|
|
|
372
|
|
|
—
|
|
|
372
|
|
|||||||
Restricted stock, net
|
2,841
|
|
|
28
|
|
|
(28
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Shares withheld for employee taxes
|
(381
|
)
|
|
(4
|
)
|
|
(2,614
|
)
|
|
—
|
|
|
—
|
|
|
(2,618
|
)
|
|
—
|
|
|
(2,618
|
)
|
|||||||
Other
|
—
|
|
|
—
|
|
|
63
|
|
|
—
|
|
|
281
|
|
|
344
|
|
|
—
|
|
|
344
|
|
|||||||
Balances at
March 31, 2018 |
193,798
|
|
|
$
|
1,938
|
|
|
$
|
4,132,747
|
|
|
$
|
(56,440
|
)
|
|
$
|
(2,998,201
|
)
|
|
$
|
1,080,044
|
|
|
$
|
(483
|
)
|
|
$
|
1,079,561
|
|
|
Three Months Ended
March 31, |
||||||
|
2018
|
|
2017
|
||||
Cash Flows from Operating Activities
|
|
|
|
||||
Net income (loss)
|
$
|
(457,234
|
)
|
|
$
|
(126,361
|
)
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
|
|
||
Debt modification and extinguishment costs
|
35
|
|
|
61
|
|
||
Depreciation and amortization, net
|
118,211
|
|
|
130,078
|
|
||
Goodwill and asset impairment
|
430,363
|
|
|
20,706
|
|
||
Equity in loss (earnings) of unconsolidated ventures
|
4,243
|
|
|
(981
|
)
|
||
Distributions from unconsolidated ventures from cumulative share of net earnings
|
408
|
|
|
439
|
|
||
Amortization of deferred gain
|
(1,090
|
)
|
|
(1,093
|
)
|
||
Amortization of entrance fees
|
(501
|
)
|
|
(1,198
|
)
|
||
Proceeds from deferred entrance fee revenue
|
1,109
|
|
|
1,927
|
|
||
Deferred income tax provision
|
15,037
|
|
|
83,310
|
|
||
Straight-line lease (income) expense
|
(6,165
|
)
|
|
(3,007
|
)
|
||
Change in fair value of derivatives
|
(74
|
)
|
|
46
|
|
||
(Gain) loss on sale of assets, net
|
(43,431
|
)
|
|
603
|
|
||
Non-cash stock-based compensation expense
|
8,406
|
|
|
7,774
|
|
||
Non-cash interest expense on financing lease obligations
|
3,383
|
|
|
6,156
|
|
||
Amortization of (above) below market lease, net
|
(1,938
|
)
|
|
(1,697
|
)
|
||
Non-cash management contract termination fee
|
(2,242
|
)
|
|
—
|
|
||
Other
|
(156
|
)
|
|
(1,398
|
)
|
||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||
Accounts receivable, net
|
3,488
|
|
|
3,556
|
|
||
Prepaid expenses and other assets, net
|
(24,807
|
)
|
|
(8,630
|
)
|
||
Accounts payable and accrued expenses
|
(21,370
|
)
|
|
(51,627
|
)
|
||
Tenant refundable fees and security deposits
|
(137
|
)
|
|
(297
|
)
|
||
Deferred revenue
|
12,426
|
|
|
8,406
|
|
||
Net cash provided by operating activities
|
37,964
|
|
|
66,773
|
|
||
Cash Flows from Investing Activities
|
|
|
|
|
|
||
Change in lease security deposits and lease acquisition deposits, net
|
(2,015
|
)
|
|
(420
|
)
|
||
Sale of marketable securities, net
|
118,273
|
|
|
—
|
|
||
Additions to property, plant and equipment and leasehold intangibles, net
|
(66,592
|
)
|
|
(48,928
|
)
|
||
Acquisition of assets, net of related payables and cash received
|
(27,330
|
)
|
|
—
|
|
||
Investment in unconsolidated ventures
|
(8,434
|
)
|
|
(185,971
|
)
|
||
Distributions received from unconsolidated ventures
|
2,037
|
|
|
1,807
|
|
||
Proceeds from sale of assets, net
|
75,060
|
|
|
31,675
|
|
||
Property insurance proceeds
|
156
|
|
|
1,398
|
|
||
Other
|
—
|
|
|
696
|
|
||
Net cash provided by (used in) investing activities
|
91,155
|
|
|
(199,743
|
)
|
||
Cash Flows from Financing Activities
|
|
|
|
|
|
||
Proceeds from debt
|
30,168
|
|
|
34,455
|
|
||
Repayment of debt and capital and financing lease obligations
|
(44,001
|
)
|
|
(52,273
|
)
|
||
Payment of financing costs, net of related payables
|
(248
|
)
|
|
(328
|
)
|
||
Proceeds from refundable entrance fees, net of refunds
|
223
|
|
|
(902
|
)
|
||
Payments of employee taxes for withheld shares
|
(2,618
|
)
|
|
(5,112
|
)
|
||
Other
|
372
|
|
|
599
|
|
||
Net cash used in financing activities
|
(16,104
|
)
|
|
(23,561
|
)
|
||
Net increase (decrease) in cash and cash equivalents and restricted cash and escrow deposits
|
113,015
|
|
|
(156,531
|
)
|
||
Cash and cash equivalents and restricted cash and escrow deposits at beginning of period
|
282,546
|
|
|
277,322
|
|
||
Cash and cash equivalents and restricted cash and escrow deposits at end of period
|
$
|
395,561
|
|
|
$
|
120,791
|
|
Asset Category
|
|
Estimated
Useful Life
(in years)
|
Trade names
|
|
2 – 5
|
Other
|
|
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 Master Lease. Pursuant to the agreements, following March 31, 2018, the Company acquired
two
communities for an aggregate purchase price of
$35.4 million
and leases with respect to
four
communities were terminated, and at the closings such communities were removed from the Master Lease. Pursuant to the Master Lease,
29
additional communities will be removed from the Master Lease on or before November 1, 2018. However, if HCP has not transitioned operations and/or management of such communities
|
•
|
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
$42.3 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
during 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
ten
such communities were terminated by HCP during the three months ended March 31, 2018 (for which the Company recognized a
$2.2 million
non-cash management contract termination gain), and the Company expects the termination of management agreements on the remaining
27
communities to occur in stages throughout 2018.
|
|
Three Months Ended March 31,
|
||||||
(in millions)
|
2018
|
|
2017
|
||||
Goodwill
|
$
|
351.7
|
|
|
$
|
—
|
|
Property, plant and equipment and leasehold intangibles, net
|
40.8
|
|
|
1.0
|
|
||
Investment in unconsolidated ventures
|
33.4
|
|
|
19.7
|
|
||
Other intangible assets, net
|
1.7
|
|
|
—
|
|
||
Assets held for sale
|
2.8
|
|
|
—
|
|
||
Goodwill and asset impairment
|
$
|
430.4
|
|
|
$
|
20.7
|
|
(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
|
|
(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 March 31, 2018
|
$
|
27,321
|
|
|
$
|
—
|
|
|
$
|
126,810
|
|
|
$
|
154,131
|
|
|
March 31, 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
|
|
|
(24,361
|
)
|
|
3,439
|
|
|||
Management contracts
|
10,680
|
|
|
(7,448
|
)
|
|
3,232
|
|
|||
Total
|
$
|
92,468
|
|
|
$
|
(31,809
|
)
|
|
$
|
60,659
|
|
|
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)
|
March 31, 2018
|
|
December 31, 2017
|
||||
Land
|
$
|
452,677
|
|
|
$
|
449,295
|
|
Buildings and improvements
|
4,941,781
|
|
|
4,923,621
|
|
||
Leasehold improvements
|
130,337
|
|
|
124,850
|
|
||
Furniture and equipment
|
1,035,909
|
|
|
1,006,889
|
|
||
Resident and leasehold operating intangibles
|
597,828
|
|
|
594,748
|
|
||
Construction in progress
|
55,747
|
|
|
74,678
|
|
||
Assets under capital and financing leases
|
1,738,167
|
|
|
1,742,384
|
|
||
|
8,952,446
|
|
|
8,916,465
|
|
||
Accumulated depreciation and amortization
|
(3,176,950
|
)
|
|
(3,064,320
|
)
|
||
Property, plant and equipment and leasehold intangibles, net
|
$
|
5,775,496
|
|
|
$
|
5,852,145
|
|
(in thousands)
|
March 31, 2018
|
|
December 31, 2017
|
||||
Mortgage notes payable due 2018 through 2047; weighted average interest rate of 4.64% for the three months ended March 31, 2018, less debt discount and deferred financing costs of $17.1 million and $16.6 million as of March 31, 2018 and December 31, 2017, respectively (weighted average interest rate of 4.59% in 2017)
|
$
|
3,482,476
|
|
|
$
|
3,497,762
|
|
Capital and financing lease obligations payable through 2032; weighted average interest rate of 7.24% for the three months ended March 31, 2018 (weighted average interest rate of 6.75% in 2017)
|
1,257,085
|
|
|
1,271,554
|
|
||
Convertible notes payable in aggregate principal amount of $316.3 million, less debt discount and deferred financing costs of $2.6 million and $6.4 million as of March 31, 2018 and December 31, 2017, respectively, interest at 2.75% per annum, due June 15, 2018
|
313,626
|
|
|
309,853
|
|
||
Notes payable issued to finance insurance premiums, weighted average interest rate of 3.44% for the three months ended March 31, 2018
|
19,859
|
|
|
—
|
|
||
Other notes payable, weighted average interest rate of 5.95% for the three months ended March 31, 2018 (weighted average interest rate of 5.98% in 2017) and maturity dates ranging from 2020 to 2021
|
62,349
|
|
|
63,122
|
|
||
Total long-term debt and capital and financing lease obligations
|
5,135,395
|
|
|
5,142,291
|
|
||
Less current portion
|
605,006
|
|
|
602,501
|
|
||
Total long-term debt and capital and financing lease obligations, less current portion
|
$
|
4,530,389
|
|
|
$
|
4,539,790
|
|
|
Three Months Ended
March 31, |
||||||
(in thousands)
|
2018
|
|
2017
|
||||
Supplemental Disclosure of Cash Flow Information:
|
|
|
|
||||
Interest paid
|
$
|
62,721
|
|
|
$
|
81,094
|
|
Income taxes paid, net of refunds
|
$
|
(128
|
)
|
|
$
|
(107
|
)
|
|
|
|
|
||||
Additions to property, plant and equipment and leasehold intangibles, net:
|
|
|
|
|
|
||
Property, plant and equipment and leasehold intangibles, net
|
$
|
49,496
|
|
|
$
|
43,830
|
|
Accounts payable
|
17,096
|
|
|
5,098
|
|
||
Net cash paid
|
$
|
66,592
|
|
|
$
|
48,928
|
|
Acquisition of assets, net of related payables:
|
|
|
|
|
|
||
Property, plant and equipment and leasehold intangibles, net
|
$
|
32,126
|
|
|
$
|
—
|
|
Other intangible assets, net
|
(4,796
|
)
|
|
—
|
|
||
Net cash paid
|
$
|
27,330
|
|
|
$
|
—
|
|
Proceeds from sale of assets, net:
|
|
|
|
|
|
||
Prepaid expenses and other assets
|
$
|
(579
|
)
|
|
$
|
(356
|
)
|
Assets held for sale
|
(18,758
|
)
|
|
(5,621
|
)
|
||
Property, plant and equipment and leasehold intangibles, net
|
(978
|
)
|
|
—
|
|
||
Investments in unconsolidated ventures
|
(20,084
|
)
|
|
(26,301
|
)
|
||
Refundable entrance fees and deferred revenue
|
8,345
|
|
|
—
|
|
||
Other liabilities
|
425
|
|
|
—
|
|
||
(Gain) loss on sale of assets, net
|
(43,431
|
)
|
|
603
|
|
||
Net cash received
|
$
|
(75,060
|
)
|
|
$
|
(31,675
|
)
|
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
|
(3,336
|
)
|
|
(14,122
|
)
|
||
Property, plant and equipment and leasehold intangibles, net
|
3,336
|
|
|
14,016
|
|
||
Net
|
$
|
—
|
|
|
$
|
—
|
|
|
March 31, 2018
|
|
December 31, 2017
|
||||
Reconciliation of cash and cash equivalents and restricted cash and escrow deposits:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
335,412
|
|
|
$
|
222,647
|
|
Cash and escrow deposits – restricted
|
32,393
|
|
|
37,189
|
|
||
Long-term cash and escrow deposits – restricted
|
27,756
|
|
|
22,710
|
|
||
Total cash and cash equivalents and restricted cash and escrow deposits shown in the condensed consolidated statement of cash flows
|
$
|
395,561
|
|
|
$
|
282,546
|
|
|
Three Months Ended
March 31, |
||||||
(in thousands)
|
2018
|
|
2017
|
||||
Cash basis payment
|
$
|
89,593
|
|
|
$
|
94,604
|
|
Straight-line (income) expense
|
(6,165
|
)
|
|
(3,007
|
)
|
||
Amortization of (above) below market lease, net
|
(1,938
|
)
|
|
(1,697
|
)
|
||
Amortization of deferred gain
|
(1,090
|
)
|
|
(1,093
|
)
|
||
Facility lease expense
|
$
|
80,400
|
|
|
$
|
88,807
|
|
VIE Type
|
Asset Type
|
Maximum Exposure
to Loss
|
|
Carrying Value
|
||||
CCRC Venture opco
|
Investment in unconsolidated ventures
|
$
|
31.3
|
|
|
$
|
31.3
|
|
RIDEA Venture
|
Investment in unconsolidated ventures
|
$
|
20.6
|
|
|
$
|
20.6
|
|
|
Three Months Ended March 31, 2018
|
||||||||||||||||||
(in thousands)
|
Retirement Centers
|
|
Assisted Living
|
|
CCRCs-Rental
|
|
Brookdale Ancillary Services
|
|
Total
|
||||||||||
Private pay
|
$
|
157,507
|
|
|
$
|
514,264
|
|
|
$
|
70,721
|
|
|
$
|
269
|
|
|
$
|
742,761
|
|
Government reimbursement
|
890
|
|
|
18,016
|
|
|
23,706
|
|
|
92,627
|
|
|
135,239
|
|
|||||
Other third-party payor programs
|
—
|
|
|
—
|
|
|
10,642
|
|
|
17,624
|
|
|
28,266
|
|
|||||
Total resident fee revenue
|
$
|
158,397
|
|
|
$
|
532,280
|
|
|
$
|
105,069
|
|
|
$
|
110,520
|
|
|
$
|
906,266
|
|
|
Three Months Ended March 31, 2017
|
||||||||||||||||||
(in thousands)
|
Retirement Centers
|
|
Assisted Living
|
|
CCRCs-Rental
|
|
Brookdale Ancillary Services
|
|
Total
|
||||||||||
Private pay
|
$
|
171,617
|
|
|
$
|
569,953
|
|
|
$
|
94,623
|
|
|
$
|
151
|
|
|
$
|
836,344
|
|
Government reimbursement
|
1,003
|
|
|
20,584
|
|
|
32,828
|
|
|
98,534
|
|
|
152,949
|
|
|||||
Other third-party payor programs
|
—
|
|
|
—
|
|
|
14,347
|
|
|
13,287
|
|
|
27,634
|
|
|||||
Total resident fee revenue
|
$
|
172,620
|
|
|
$
|
590,537
|
|
|
$
|
141,798
|
|
|
$
|
111,972
|
|
|
$
|
1,016,927
|
|
|
Three Months Ended
March 31, |
||||||
(in thousands)
|
2018
|
|
2017
|
||||
Revenue:
|
|
|
|
||||
Retirement Centers
(1)
|
$
|
158,397
|
|
|
$
|
172,620
|
|
Assisted Living
(1)
|
532,280
|
|
|
590,537
|
|
||
CCRCs-Rental
(1)
|
105,069
|
|
|
141,798
|
|
||
Brookdale Ancillary Services
(1)
|
110,520
|
|
|
111,972
|
|
||
Management Services
(2)
|
280,968
|
|
|
199,839
|
|
||
|
$
|
1,187,234
|
|
|
$
|
1,216,766
|
|
Segment Operating Income:
(3)
|
|
|
|
|
|
||
Retirement Centers
|
$
|
64,422
|
|
|
$
|
74,002
|
|
Assisted Living
|
176,538
|
|
|
217,439
|
|
||
CCRCs-Rental
|
24,663
|
|
|
35,315
|
|
||
Brookdale Ancillary Services
|
8,318
|
|
|
15,629
|
|
||
Management Services
|
18,681
|
|
|
15,894
|
|
||
|
292,622
|
|
|
358,279
|
|
||
|
|
|
|
||||
General and administrative (including non-cash stock-based compensation expense)
|
76,710
|
|
|
65,560
|
|
||
Transaction costs
|
4,725
|
|
|
7,593
|
|
||
Facility lease expense
|
80,400
|
|
|
88,807
|
|
||
Depreciation and amortization
|
114,255
|
|
|
127,487
|
|
||
Goodwill and asset impairment
|
430,363
|
|
|
20,706
|
|
||
Income (loss) from operations
|
$
|
(413,831
|
)
|
|
$
|
48,126
|
|
|
As of
|
||||||
(in thousands)
|
March 31, 2018
|
|
December 31, 2017
|
||||
Total assets:
|
|
|
|
||||
Retirement Centers
|
$
|
1,255,585
|
|
|
$
|
1,266,076
|
|
Assisted Living
|
4,134,795
|
|
|
4,535,114
|
|
||
CCRCs-Rental
|
637,545
|
|
|
667,234
|
|
||
Brookdale Ancillary Services
|
248,763
|
|
|
257,257
|
|
||
Corporate and Management Services
|
910,740
|
|
|
949,768
|
|
||
|
$
|
7,187,428
|
|
|
$
|
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 Master Lease. Pursuant to the agreements, following March 31, 2018, we acquired
two
communities (
208
units) for an aggregate purchase price of
$35.4 million
and leases with respect to four communities (493 units) were terminated, and at the closing such communities were removed from the Master Lease. Pursuant to the Master Lease, an additional 29 communities (2,630 units) will be removed from the 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, we will continue to operate the foregoing 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, we continue to lease
43
communities pursuant to the terms of the Master Lease, which have the same lease rates and expiration and renewal terms as the applicable prior instruments, except that effective January 1, 2018, we received a
$2.5 million
annual rent reduction for
two
communities. The Master Lease also provides
|
•
|
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
$42.3 million
gain on sale). We provided management services to
59
communities (
9,585
units) on behalf of the
two
unconsolidated 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
during 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 is entitled to sell or transition operations and/or management of
37
of such communities. Management agreements for
ten
such communities (938 units) were terminated by HCP during the three months ended March 31, 2018 (for which we recognized a
$2.2 million
non-cash management contract termination gain), and we expect the termination of management agreements on the remaining
27
communities (4,584 units) to occur in stages throughout 2018.
|
|
Three Months Ended March 31, 2018
|
||||||||||
(in thousands)
|
Actual Results
|
|
Amounts Attributable to Completed Dispositions
|
|
Actual Results Less Amounts Attributable to Completed Dispositions
|
||||||
Resident fees
|
|
|
|
|
|
||||||
Retirement Centers
|
$
|
158,397
|
|
|
$
|
2
|
|
|
$
|
158,395
|
|
Assisted Living
|
532,280
|
|
|
167
|
|
|
532,113
|
|
|||
CCRCs-Rental
|
105,069
|
|
|
1,986
|
|
|
103,083
|
|
|||
Senior housing resident fees
|
$
|
795,746
|
|
|
$
|
2,155
|
|
|
$
|
793,591
|
|
Facility operating expense
|
|
|
|
|
|
||||||
Retirement Centers
|
$
|
93,975
|
|
|
$
|
(42
|
)
|
|
$
|
94,017
|
|
Assisted Living
|
355,742
|
|
|
20
|
|
|
355,722
|
|
|||
CCRCs-Rental
|
80,406
|
|
|
2,110
|
|
|
78,296
|
|
|||
Senior housing facility operating expense
|
$
|
530,123
|
|
|
$
|
2,088
|
|
|
$
|
528,035
|
|
Cash lease payments
|
$
|
130,255
|
|
|
$
|
—
|
|
|
$
|
130,255
|
|
|
Three Months Ended March 31, 2017
|
||||||||||
(in thousands)
|
Actual Results
|
|
Amounts Attributable to Completed Dispositions
|
|
Actual Results Less Amounts Attributable to Completed Dispositions
|
||||||
Resident fees
|
|
|
|
|
|
||||||
Retirement Centers
|
$
|
172,620
|
|
|
$
|
13,915
|
|
|
$
|
158,705
|
|
Assisted Living
|
590,537
|
|
|
55,574
|
|
|
534,963
|
|
|||
CCRCs-Rental
|
141,798
|
|
|
38,121
|
|
|
103,677
|
|
|||
Senior housing resident fees
|
$
|
904,955
|
|
|
$
|
107,610
|
|
|
$
|
797,345
|
|
Facility operating expense
|
|
|
|
|
|
||||||
Retirement Centers
|
$
|
98,618
|
|
|
$
|
8,798
|
|
|
$
|
89,820
|
|
Assisted Living
|
373,098
|
|
|
41,013
|
|
|
332,085
|
|
|||
CCRCs-Rental
|
106,483
|
|
|
31,171
|
|
|
75,312
|
|
|||
Senior housing facility operating expense
|
$
|
578,199
|
|
|
$
|
80,982
|
|
|
$
|
497,217
|
|
Cash lease payments
|
$
|
155,555
|
|
|
$
|
27,847
|
|
|
$
|
127,708
|
|
|
Three Months Ended March 31,
|
|
Twelve Months Ended December 31,
|
||
|
2018
|
|
2017
|
||
Number of communities
|
|
|
|
||
Retirement Centers
|
—
|
|
|
10
|
|
Assisted Living
|
2
|
|
|
86
|
|
CCRCs-Rental
|
1
|
|
|
12
|
|
Total
|
3
|
|
|
108
|
|
Total units
|
|
|
|
||
Retirement Centers
|
—
|
|
|
2,078
|
|
Assisted Living
|
74
|
|
|
5,858
|
|
CCRCs-Rental
|
236
|
|
|
2,389
|
|
Total
|
310
|
|
|
10,325
|
|
(in thousands)
|
Amounts Attributable to Planned Dispositions
|
||
Resident fees
|
|
||
Retirement Centers
|
$
|
7,273
|
|
Assisted Living
|
33,695
|
|
|
CCRCs - Rental
|
3,926
|
|
|
Senior housing resident fees
|
$
|
44,894
|
|
Facility operating expense
|
|
||
Retirement Centers
|
$
|
4,760
|
|
Assisted Living
|
23,803
|
|
|
CCRCs-Rental
|
3,960
|
|
|
Senior housing facility operating expense
|
$
|
32,523
|
|
Cash lease payments
|
$
|
11,760
|
|
|
Three Months Ended
March 31, |
|
Increase
(Decrease) |
|||||||||||
(in millions)
|
2018
|
|
2017
|
|
Amount
|
|
Percent
|
|||||||
Total revenues
|
$
|
1,187.2
|
|
|
$
|
1,216.8
|
|
|
$
|
(29.6
|
)
|
|
(2.4
|
)%
|
Facility operating expense
|
$
|
632.3
|
|
|
$
|
674.5
|
|
|
$
|
(42.2
|
)
|
|
(6.3
|
)%
|
Net income (loss)
|
$
|
(457.2
|
)
|
|
$
|
(126.4
|
)
|
|
$
|
330.9
|
|
|
NM
|
|
Net income (loss) attributable to Brookdale Senior Living Inc. common stockholders
|
$
|
(457.2
|
)
|
|
$
|
(126.3
|
)
|
|
$
|
330.9
|
|
|
NM
|
|
Adjusted EBITDA
(1)
|
$
|
130.0
|
|
|
$
|
198.3
|
|
|
$
|
(68.3
|
)
|
|
(34.4
|
)%
|
Net cash provided by operating activities
|
$
|
38.0
|
|
|
$
|
66.8
|
|
|
$
|
(28.8
|
)
|
|
(43.1
|
)%
|
Adjusted Free Cash Flow
(1)
|
$
|
5.5
|
|
|
$
|
63.5
|
|
|
$
|
(58.0
|
)
|
|
(91.4
|
)%
|
(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
March 31, |
|
Increase (Decrease)
|
|||||||||||
|
2018
|
|
2017
|
|
Amount
|
|
Percent
(6)
|
|||||||
Statement of Operations Data:
|
|
|
|
|
|
|
|
|||||||
Revenue
|
|
|
|
|
|
|
|
|||||||
Resident fees
|
|
|
|
|
|
|
|
|||||||
Retirement Centers
|
$
|
158,397
|
|
|
$
|
172,620
|
|
|
$
|
(14,223
|
)
|
|
(8.2
|
)%
|
Assisted Living
|
532,280
|
|
|
590,537
|
|
|
(58,257
|
)
|
|
(9.9
|
)%
|
|||
CCRCs-Rental
|
105,069
|
|
|
141,798
|
|
|
(36,729
|
)
|
|
(25.9
|
)%
|
|||
Brookdale Ancillary Services
|
110,520
|
|
|
111,972
|
|
|
(1,452
|
)
|
|
(1.3
|
)%
|
|||
Total resident fees
|
906,266
|
|
|
1,016,927
|
|
|
(110,661
|
)
|
|
(10.9
|
)%
|
|||
Management services
(1)
|
280,968
|
|
|
199,839
|
|
|
81,129
|
|
|
40.6
|
%
|
|||
Total revenue
|
1,187,234
|
|
|
1,216,766
|
|
|
(29,532
|
)
|
|
(2.4
|
)%
|
|||
Expense
|
|
|
|
|
|
|
|
|
|
|
|
|||
Facility operating expense
|
|
|
|
|
|
|
|
|
|
|
|
|||
Retirement Centers
|
93,975
|
|
|
98,618
|
|
|
(4,643
|
)
|
|
(4.7
|
)%
|
|||
Assisted Living
|
355,742
|
|
|
373,098
|
|
|
(17,356
|
)
|
|
(4.7
|
)%
|
|||
CCRCs-Rental
|
80,406
|
|
|
106,483
|
|
|
(26,077
|
)
|
|
(24.5
|
)%
|
|||
Brookdale Ancillary Services
|
102,202
|
|
|
96,343
|
|
|
5,859
|
|
|
6.1
|
%
|
|||
Total facility operating expense
|
632,325
|
|
|
674,542
|
|
|
(42,217
|
)
|
|
(6.3
|
)%
|
|||
General and administrative expense
|
76,710
|
|
|
65,560
|
|
|
11,150
|
|
|
17.0
|
%
|
|||
Transaction costs
|
4,725
|
|
|
7,593
|
|
|
(2,868
|
)
|
|
(37.8
|
)%
|
|||
Facility lease expense
|
80,400
|
|
|
88,807
|
|
|
(8,407
|
)
|
|
(9.5
|
)%
|
|||
Depreciation and amortization
|
114,255
|
|
|
127,487
|
|
|
(13,232
|
)
|
|
(10.4
|
)%
|
|||
Goodwill and asset impairment
|
430,363
|
|
|
20,706
|
|
|
409,657
|
|
|
NM
|
|
|||
Costs incurred on behalf of managed communities
|
262,287
|
|
|
183,945
|
|
|
78,342
|
|
|
42.6
|
%
|
|||
Total operating expense
|
1,601,065
|
|
|
1,168,640
|
|
|
432,425
|
|
|
37.0
|
%
|
|||
Income (loss) from operations
|
(413,831
|
)
|
|
48,126
|
|
|
(461,957
|
)
|
|
NM
|
|
|||
Interest income
|
2,983
|
|
|
631
|
|
|
2,352
|
|
|
NM
|
|
|||
Interest expense
|
(72,540
|
)
|
|
(93,069
|
)
|
|
(20,529
|
)
|
|
(22.1
|
)%
|
|||
Debt modification and extinguishment costs
|
(35
|
)
|
|
(61
|
)
|
|
(26
|
)
|
|
(42.6
|
)%
|
|||
Equity in (loss) earnings of unconsolidated ventures
|
(4,243
|
)
|
|
981
|
|
|
5,224
|
|
|
NM
|
|
|||
Gain (loss) on sale of assets, net
|
43,431
|
|
|
(603
|
)
|
|
(44,034
|
)
|
|
NM
|
|
|||
Other non-operating income
|
2,586
|
|
|
1,662
|
|
|
924
|
|
|
55.6
|
%
|
|||
Income (loss) before income taxes
|
(441,649
|
)
|
|
(42,333
|
)
|
|
399,316
|
|
|
NM
|
|
|||
Provision for income taxes
|
(15,585
|
)
|
|
(84,028
|
)
|
|
68,443
|
|
|
81.5
|
%
|
|||
Net income (loss)
|
(457,234
|
)
|
|
(126,361
|
)
|
|
330,873
|
|
|
NM
|
|
|||
Net (income) loss attributable to noncontrolling interest
|
46
|
|
|
57
|
|
|
(11
|
)
|
|
(19.3
|
)%
|
|||
Net income (loss) attributable to Brookdale Senior Living Inc. common stockholders
|
$
|
(457,188
|
)
|
|
$
|
(126,304
|
)
|
|
$
|
330,884
|
|
|
NM
|
|
|
Three Months Ended
March 31, |
|
Increase (Decrease)
|
|||||||||||
|
2018
|
|
2017
|
|
Amount
|
|
Percent
(6)
|
|||||||
Selected Operating and Other Data:
|
|
|
|
|
|
|
|
|||||||
Total number of communities (period end)
|
1,010
|
|
|
1,052
|
|
|
(42
|
)
|
|
(4.0
|
)%
|
|||
Total units operated
(2)
|
|
|
|
|
|
|
|
|
|
|
||||
Period end
|
99,109
|
|
|
102,470
|
|
|
(3,361
|
)
|
|
(3.3
|
)%
|
|||
Weighted average
|
100,256
|
|
|
102,564
|
|
|
(2,308
|
)
|
|
(2.3
|
)%
|
|||
Owned/leased communities units
(2)
|
|
|
|
|
|
|
|
|
|
|
||||
Period end
|
66,355
|
|
|
71,186
|
|
|
(4,831
|
)
|
|
(6.8
|
)%
|
|||
Weighted average
|
66,557
|
|
|
76,862
|
|
|
(10,305
|
)
|
|
(13.4
|
)%
|
|||
Total RevPAR
(3)
|
$
|
4,527
|
|
|
$
|
4,405
|
|
|
$
|
122
|
|
|
2.8
|
%
|
RevPAR
(4)
|
$
|
3,983
|
|
|
$
|
3,919
|
|
|
$
|
64
|
|
|
1.6
|
%
|
Owned/leased communities occupancy rate (weighted average)
|
84.4
|
%
|
|
85.3
|
%
|
|
(0.9
|
)%
|
|
(1.1
|
)%
|
|||
RevPOR
(5)
|
$
|
4,717
|
|
|
$
|
4,597
|
|
|
$
|
120
|
|
|
2.6
|
%
|
Selected Segment Operating and Other Data:
|
|
|
|
|
|
|
|
|
|
|
|
|||
Retirement Centers
|
|
|
|
|
|
|
|
|
|
|
||||
Number of communities (period end)
|
84
|
|
|
86
|
|
|
(2
|
)
|
|
(2.3
|
)%
|
|||
Total units
(2)
|
|
|
|
|
|
|
|
|
|
|
||||
Period end
|
15,045
|
|
|
16,071
|
|
|
(1,026
|
)
|
|
(6.4
|
)%
|
|||
Weighted average
|
15,045
|
|
|
17,108
|
|
|
(2,063
|
)
|
|
(12.1
|
)%
|
|||
RevPAR
(4)
|
$
|
3,509
|
|
|
$
|
3,363
|
|
|
$
|
146
|
|
|
4.3
|
%
|
Occupancy rate (weighted average)
|
87.7
|
%
|
|
88.0
|
%
|
|
(0.3
|
)%
|
|
(0.3
|
)%
|
|||
RevPOR
(5)
|
$
|
4,004
|
|
|
$
|
3,823
|
|
|
$
|
181
|
|
|
4.7
|
%
|
Assisted Living
|
|
|
|
|
|
|
|
|
|
|
|
|||
Number of communities (period end)
|
681
|
|
|
720
|
|
|
(39
|
)
|
|
(5.4
|
)%
|
|||
Total units
(2)
|
|
|
|
|
|
|
|
|
|
|
||||
Period end
|
44,728
|
|
|
47,296
|
|
|
(2,568
|
)
|
|
(5.4
|
)%
|
|||
Weighted average
|
44,773
|
|
|
50,540
|
|
|
(5,767
|
)
|
|
(11.4
|
)%
|
|||
RevPAR
(4)
|
$
|
3,963
|
|
|
$
|
3,895
|
|
|
$
|
68
|
|
|
1.7
|
%
|
Occupancy rate (weighted average)
|
83.4
|
%
|
|
84.7
|
%
|
|
(1.3
|
)%
|
|
(1.5
|
)%
|
|||
RevPOR
(5)
|
$
|
4,750
|
|
|
$
|
4,600
|
|
|
$
|
150
|
|
|
3.3
|
%
|
CCRCs-Rental
|
|
|
|
|
|
|
|
|
|
|
||||
Number of communities (period end)
|
27
|
|
|
32
|
|
|
(5
|
)
|
|
(15.6
|
)%
|
|||
Total units
(2)
|
|
|
|
|
|
|
|
|
|
|
||||
Period end
|
6,582
|
|
|
7,819
|
|
|
(1,237
|
)
|
|
(15.8
|
)%
|
|||
Weighted average
|
6,739
|
|
|
9,214
|
|
|
(2,475
|
)
|
|
(26.9
|
)%
|
|||
RevPAR
(4)
|
$
|
5,172
|
|
|
$
|
5,086
|
|
|
$
|
86
|
|
|
1.7
|
%
|
Occupancy rate (weighted average)
|
84.1
|
%
|
|
83.5
|
%
|
|
0.6
|
%
|
|
0.7
|
%
|
|||
RevPOR
(5)
|
$
|
6,160
|
|
|
$
|
6,091
|
|
|
$
|
69
|
|
|
1.1
|
%
|
Management Services
|
|
|
|
|
|
|
|
|
|
|
||||
Number of communities (period end)
|
218
|
|
|
214
|
|
|
4
|
|
|
1.9
|
%
|
|||
Total units
(2)
|
|
|
|
|
|
|
|
|
|
|
||||
Period end
|
32,754
|
|
|
31,284
|
|
|
1,470
|
|
|
4.7
|
%
|
|||
Weighted average
|
33,699
|
|
|
25,702
|
|
|
7,997
|
|
|
31.1
|
%
|
|||
Occupancy rate (weighted average)
|
84.2
|
%
|
|
86.3
|
%
|
|
(2.1
|
)%
|
|
(2.4
|
)%
|
(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 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.
|
(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
|
|
Three Months Ended
March 31, |
|
Increase
(Decrease)
|
|||||||||||
(in thousands)
|
2018
|
|
2017
|
|
Amount
|
|
Percent
|
|||||||
Net cash provided by operating activities
|
$
|
37,964
|
|
|
$
|
66,773
|
|
|
$
|
(28,809
|
)
|
|
(43.1
|
)%
|
Net cash provided by (used in) investing activities
|
91,155
|
|
|
(199,743
|
)
|
|
290,898
|
|
|
NM
|
|
|||
Net cash used in financing activities
|
(16,104
|
)
|
|
(23,561
|
)
|
|
(7,457
|
)
|
|
(31.6
|
)%
|
|||
Net increase (decrease) in cash and cash equivalents and restricted cash and escrow deposits
|
113,015
|
|
|
(156,531
|
)
|
|
269,546
|
|
|
NM
|
|
|||
Cash and cash equivalents and restricted cash and escrow deposits at beginning of period
|
282,546
|
|
|
277,322
|
|
|
5,224
|
|
|
1.9
|
%
|
|||
Cash and cash equivalents and restricted cash and escrow deposits at end of period
|
$
|
395,561
|
|
|
$
|
120,791
|
|
|
$
|
274,770
|
|
|
227.5
|
%
|
•
|
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, including repayment of the
$316.3 million
outstanding principal amount of our
2.75%
convertible senior notes due
June 15, 2018
, 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)
|
Three Months Ended
March 31, 2018
|
||
Community-level capital expenditures, net
(1)
|
$
|
33.9
|
|
Corporate
(2)
|
7.8
|
|
|
Non-development capital expenditures, net
(3)
|
$
|
41.7
|
|
|
|
||
Development capital expenditures, net
(4)
|
5.4
|
|
|
Total capital expenditures, net
|
$
|
47.1
|
|
(1)
|
Reflects the amount invested, net of lessor reimbursements of
$1.8 million
.
|
(2)
|
Includes
$1.8 million
of remediation costs at our communities resulting from Hurricanes Harvey and Irma and excludes reimbursement from our property and casualty insurance policies of approximately
$0.3 million
.
|
(3)
|
Amount is included in Adjusted Free Cash Flow.
|
(4)
|
Reflects the amount invested, net of lessor reimbursements of
$0.6 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
March 31, |
||||||
(in thousands)
|
2018
|
|
2017
|
||||
Net income (loss)
|
$
|
(457,234
|
)
|
|
$
|
(126,361
|
)
|
Provision for income taxes
|
15,585
|
|
|
84,028
|
|
||
Equity in loss (earnings) of unconsolidated ventures
|
4,243
|
|
|
(981
|
)
|
||
Debt modification and extinguishment costs
|
35
|
|
|
61
|
|
||
(Gain) loss on sale of assets
|
(43,431
|
)
|
|
603
|
|
||
Other non-operating income
|
(2,586
|
)
|
|
(1,662
|
)
|
||
Interest expense
|
72,540
|
|
|
93,069
|
|
||
Interest income
|
(2,983
|
)
|
|
(631
|
)
|
||
Income (loss) from operations
|
(413,831
|
)
|
|
48,126
|
|
||
Depreciation and amortization
|
114,255
|
|
|
127,487
|
|
||
Goodwill and asset impairment
|
430,363
|
|
|
20,706
|
|
||
Straight-line lease (income) expense
|
(6,165
|
)
|
|
(3,007
|
)
|
||
Amortization of (above) below market lease, net
|
(1,938
|
)
|
|
(1,697
|
)
|
||
Amortization of deferred gain
|
(1,090
|
)
|
|
(1,093
|
)
|
||
Non-cash stock-based compensation expense
|
8,406
|
|
|
7,774
|
|
||
Adjusted EBITDA
(1)
|
$
|
130,000
|
|
|
$
|
198,296
|
|
(1)
|
For the
three
months ended
March 31, 2018
, the calculation of Adjusted EBITDA includes
$4.7 million
and
$12.4 million
of transaction and organizational restructuring costs, respectively. For the
three
months ended
March 31, 2017
, the calculation of Adjusted EBITDA includes
$7.6 million
and
$0.2 million
of transaction and strategic project costs, 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
March 31, |
||||||
(in thousands)
|
2018
|
|
2017
|
||||
Net cash provided by operating activities
|
$
|
37,964
|
|
|
$
|
66,773
|
|
Net cash provided by (used in) investing activities
|
91,155
|
|
|
(199,743
|
)
|
||
Net cash used in financing activities
|
(16,104
|
)
|
|
(23,561
|
)
|
||
Net increase (decrease) in cash and cash equivalents and restricted cash and escrow deposits
|
$
|
113,015
|
|
|
$
|
(156,531
|
)
|
|
|
|
|
||||
Net cash provided by operating activities
|
$
|
37,964
|
|
|
$
|
66,773
|
|
Changes in operating assets and liabilities
|
30,400
|
|
|
48,592
|
|
||
Proceeds from refundable entrance fees, net of refunds
|
223
|
|
|
(902
|
)
|
||
Lease financing debt amortization
|
(21,114
|
)
|
|
(17,248
|
)
|
||
Distributions from unconsolidated ventures from cumulative share of net earnings
|
(408
|
)
|
|
(439
|
)
|
||
Non-development capital expenditures, net
|
(41,736
|
)
|
|
(34,722
|
)
|
||
Property insurance proceeds
|
156
|
|
|
1,398
|
|
||
Adjusted Free Cash Flow
(1)
|
$
|
5,485
|
|
|
$
|
63,452
|
|
|
Three Months Ended
March 31, |
||||||
(in thousands)
|
2018
|
|
2017
|
||||
Net cash provided by operating activities
|
$
|
50,262
|
|
|
$
|
59,924
|
|
Net cash used in investing activities
|
(14,642
|
)
|
|
(1,144,115
|
)
|
||
Net cash (used in) provided by financing activities
|
(23,279
|
)
|
|
1,145,059
|
|
||
Net increase in cash and cash equivalents and restricted cash and escrow deposits
|
$
|
12,341
|
|
|
$
|
60,868
|
|
|
|
|
|
||||
Net cash provided by operating activities
|
$
|
50,262
|
|
|
$
|
59,924
|
|
Changes in operating assets and liabilities
|
1,119
|
|
|
2,086
|
|
||
Proceeds from refundable entrance fees, net of refunds
|
(6,712
|
)
|
|
(4,365
|
)
|
||
Non-development capital expenditures, net
|
(20,061
|
)
|
|
(17,027
|
)
|
||
Property insurance proceeds
|
901
|
|
|
393
|
|
||
Adjusted Free Cash Flow of unconsolidated ventures
|
$
|
25,509
|
|
|
$
|
41,011
|
|
|
|
|
|
||||
Brookdale weighted average ownership percentage
|
22.8
|
%
|
|
21.3
|
%
|
||
Brookdale's proportionate share of Adjusted Free Cash Flow of unconsolidated ventures
|
$
|
5,824
|
|
|
$
|
8,750
|
|
(a)
|
Not applicable.
|
(b)
|
Not applicable.
|
(c)
|
The following table contains information regarding purchases of our common stock made during the three months ended
March 31, 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) |
|||||
1/1/2018 - 1/31/2018
|
—
|
|
|
—
|
|
|
—
|
|
|
90,360
|
|
|
2/1/2018 - 2/28/2018
|
373,417
|
|
|
$
|
6.80
|
|
|
—
|
|
|
90,360
|
|
3/1/2018 - 3/31/2018
|
11,371
|
|
|
7.00
|
|
|
—
|
|
|
90,360
|
|
|
Total
|
384,788
|
|
|
$
|
6.80
|
|
|
—
|
|
|
|
(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
March 31, 2018
, and approximately
$90.4 million
remained available under the repurchase program as of
March 31, 2018
.
|
|
|
|
Exhibit No.
|
|
Description
|
|
|
|
3.1
|
|
|
3.2
|
|
|
3.3
|
|
|
4.1
|
|
|
4.2
|
|
|
4.3
|
|
|
4.4
|
|
10.1
|
|
|
10.2
|
|
|
10.3
|
|
|
10.4
|
|
|
10.5
|
|
|
10.6
|
|
|
10.7
|
|
|
10.8
|
|
|
10.9
|
|
|
10.10
|
|
|
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.
|
|
BROOKDALE SENIOR LIVING INC.
|
|
|
|
(Registrant)
|
|
|
|
|
|
|
|
By:
|
/s/ Lucinda M. Baier
|
|
|
Name:
|
Lucinda M. Baier
|
|
|
Title:
|
President and Chief Executive Officer
(Principal Executive Officer)
|
|
|
Date:
|
May 8, 2018
|
|
|
|
|
|
(1)
|
The amount awarded to the Company’s named executive officers was $350,000 for Cedric T. Coco and $450,000 for Mary Sue Patchett.
|
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:
|
May 8, 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:
|
May 8, 2018
|
|
/s/ Teresa F. Sparks
|
|
|
|
Teresa F. Sparks
|
|
|
|
Interim Chief Financial Officer
|