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HCP generates $332M proceeds from JV exit, trims Brookdale exposure

HCP Inc. pocketed $332 million proceeds from the sale of its remaining investments in the RIDEA II senior housing joint venture and disclosed progress on deals involving 93 communities that will reduce its concentration of properties operated by Brookdale Senior Living Inc.

The healthcare real estate investment trust divested its investment in the venture, which owns 49 communities, to an investor group led by Columbia Pacific Advisors LLC. Of the communities, 46 were managed by Brookdale.

In November 2017, the REIT announced plans to sell or transition 68 Brookdale communities. HCP agreed to sell a 22-asset portfolio of Brookdale-managed senior housing communities to an institutional investor for $428 million. The transaction, which includes 2,781 units, is set to close in the third quarter, subject to certain conditions.

In relation to its deal to transfer the management of 24 senior housing communities to Atria Senior Living Inc. from Brookdale, HCP has transferred 18 of the properties as of June 4. The company transitioned a further community to operating partner Sonata Senior Living.

The remaining 21 Brookdale-managed communities, covered in HCP's master transactions and cooperation agreement with Brookdale, are slated for sale or transition to other parties in 2018, according to a release.

The REIT, which received the right to terminate management agreements on its remaining 20 consolidated seniors housing operating properties managed by Brookdale, gave updates on sale deals involving 25 Brookdale assets.

HCP sold five communities, comprising 353 units, for $32 million. It also agreed to sell, in three separate transactions, 15 communities, comprising 1,433 units, for a total of $98 million. These three deals are expected to close in the third quarter, while five additional assets will be sold or transitioned in 2018.

HCP said pricing on the $863 million worth of sale transactions completed or under contract in 2018 reflects a 7.1% blended cap rate on trailing-12-month property earnings before interest, taxes, depreciation, amortization, and restructure or rent costs.