Brookdale President and CEO Cindy Baier was tapped by the National Investment Center (NIC) to be a panelist (this week) (on October 18) at the 2018 NIC Fall Conference. The topic, “Optimizing the Capital Stack for Changing Market Conditions”, was an opportunity for Cindy to highlight Brookdale’s recent successes in restructuring leases with our three largest REIT partners. Brookdale had pursued a win-win approach with Ventas, HCP, and Welltower and the resulting agreements and transactions have been beneficial for all.
During her remarks, Cindy pointed out that creating a transaction that works for both the Operator and the REIT requires significant creativity. She said that Brookdale has been successful by understanding the objectives for both parties and by seeking ways to achieve them. There are several possible paths:
- The most straightforward transaction is paying a termination fee to exit a lease before its normal maturity.
- Modifying the lease structures to co-invest CapEx can improve the alignment between operators and REIT partners.
- Allowing the operator to buy assets out of the RIDEA structure while exiting other assets has been successful.
Cindy shared that, from Brookdale’s perspective, one size does not fit all and that success comes from a creative review of possibilities with an intention of a win-win agreement.