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8-K
BROOKDALE SENIOR LIVING INC. filed this Form 8-K on 04/23/2014
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8-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 OR 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) April 23, 2014 (April 23, 2014)

 

 

BROOKDALE SENIOR LIVING INC.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   001-32641   20-3068069
(State or other jurisdiction
of incorporation)
 

(Commission

File Number)

  (IRS Employer
Identification No.)

 

111 Westwood Place, Suite 400, Brentwood, Tennessee   37027
(Address of principal executive offices)   (Zip Code)

Registrant’s telephone number, including area code (615) 221-2250

(Former name or former address, if changed since last report.)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

  x Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

  ¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

  ¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

  ¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 


Item 8.01 Other Events.

On April 23, 2014, Brookdale Senior Living Inc., a Delaware corporation (the “Company”), and HCP, Inc., a Maryland corporation, jointly issued a press release, and the Company released a presentation, in each case in connection with the parties’ entry into a Master Contribution and Transactions Agreement. Copies of the press release and presentation are attached hereto as Exhibits 99.1 and 99.2, respectively, and are incorporated herein by reference.

 

Item 9.01 Financial Statements and Exhibits.

 

(d) Exhibits.

 

Exhibit

No.

  

Description

99.1    Press Release, dated April 23, 2014
99.2    Presentation, dated April 23, 2014

 

2


SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date: April 23, 2014     BROOKDALE SENIOR LIVING INC.
    By:  

/s/ Chad C. White

    Name:   Chad C. White
    Title:  

Vice President, Co-General Counsel

and Secretary


BROOKDALE SENIOR LIVING INC.

EXHIBIT INDEX

 

Exhibit

No.

  

Description

99.1    Press Release, dated April 23, 2014
99.2    Presentation, dated April 23, 2014

 

4

EX-99.1

Exhibit 99.1

 

LOGO

BROOKDALE AND HCP EXPAND RELATIONSHIP BY CREATING A $1.2 BILLION CCRC JOINT VENTURE AND AMENDING EXISTING EMERITUS LEASES

NASHVILLE, Tenn. and LONG BEACH, Calif., Apr. 23, 2014 — Brookdale Senior Living (NYSE:BKD) and HCP (NYSE:HCP) (together, the “Companies”) today announced an agreement to enhance and solidify their long-term relationship by creating a new strategic joint venture that will own and operate entry fee continuing care retirement communities (“CCRCs”). At inception, the joint venture will own 14 CCRC campuses valued at $1.2 billion, with Brookdale continuing to manage these communities. In addition, the Companies have agreed to amend leases on 202 HCP-owned senior housing communities currently operated by Emeritus Corporation (NYSE:ESC). The closing of these transactions is conditioned upon the closing of the pending merger between Brookdale and Emeritus.

Andy Smith, Brookdale’s Chief Executive Officer, said, “We are very excited about strengthening our relationship with HCP as we partner to create an industry leading entry fee CCRC joint venture. Combining the capital strengths of HCP with Brookdale’s operating platform forms a compelling investment vehicle for our existing entry fee CCRCs and provides for growth in this fragmented asset class. The modifications to the Emeritus leases should improve upon the previously-announced projected benefits of our pending merger. They bring forward the future value of the imbedded purchase options through lower rent and escalators and reduced lease leverage in a 153-community triple-net portfolio, while creating a 49-community RIDEA joint venture. In addition to improving the economics of our transformational merger with Emeritus, this transaction adheres to our long-term strategy of delivering the best, high-quality solutions for the growing population of seniors and their families.”

“We are proud to expand our strategic relationship with Brookdale, which upon the completion of the Emeritus merger will become the nation’s largest senior living operator,” said Lauralee Martin, President and CEO of HCP. “We are pleased to partner with Brookdale and create the largest CCRC platform in the healthcare REIT sector providing attractive future growth opportunities. The announcement today also allows us to fully retain the real estate value on a portfolio of 52 properties, by eliminating the reinvestment risk related to all existing Emeritus and Brookdale purchase options with HCP. It also reinforces our investment philosophy of creating significant value for our operating partners through real estate driven transactions while providing our shareholders with attractive risk adjusted returns.”

 

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BROOKDALE AND HCP EXPAND RELATIONSHIP TO FORM A NEW CCRC JOINT VENTURE

The Companies have agreed to create a new strategic joint venture (“CCRC JV”) to own and operate entry fee CCRCs. The CCRC JV will initially be seeded with a 14-campus portfolio valued at $1.2 billion before in-place refundable entry fee obligations. Primarily located in Florida, the portfolio encompasses approximately 7,000 units across a diversified care mix of 67% independent living, 18% skilled nursing, 11% assisted living and 4% memory care. Brookdale and HCP will own 51% and 49%, respectively, of the CCRC JV based on each company’s respective contributions at closing:

 

    Brookdale will contribute eight of its owned campuses, as well as its leasehold rights including purchase options on three HCP-owned properties (comprising two campuses).

 

    HCP will contribute those three properties leased to Brookdale and $334 million of cash, which will be used to acquire from third parties four additional entry fee CCRCs currently managed by Brookdale.

Brookdale has a successful operating history with the CCRC portfolio, having managed a number of these communities for many years, and will continue to manage all properties post closing under a long-term management agreement.

EXCHANGE OF EMERITUS’ PURCHASE OPTIONS AND RELATED LEASE AMENDMENT

As part of this transaction, all existing Emeritus purchase options encompassing 49 HCP properties will be cancelled at closing; in exchange, all triple-net leases between HCP and Emeritus covering 202 senior housing properties will be amended contemporaneously, resulting in two portfolios:

 

    RIDEA Portfolio: 49 non-stabilized properties (of which 19 will relate to cancelled purchase options) will be converted to a RIDEA structure and contributed to a joint venture (“RIDEA JV”), with Brookdale managing the communities and acquiring a 20% ownership in the venture to create an alignment of interests. This pool of unencumbered properties was selected for its attractive future growth profile. The Companies have jointly developed strategic plans for these communities and, upon the closing of Brookdale’s merger with Emeritus, will immediately begin investing significant capital improvements intended to increase occupancy and operating performance of the portfolio.

 

    NNN–leased Portfolio: Brookdale will enter into amended triple-net, master leases for the remaining 153 properties (of which 30 will relate to cancelled purchase options) all guaranteed by the credit of Brookdale Senior Living. The leases will have an average initial term of 15 years, plus two 10-year extension options. The leases provide total base rent in 2014 of $158 million, unchanged from the existing rent, but contain reduced future rent payments and escalations compared to those currently in-place. HCP will make available up to $100 million in capital improvements through 2017 to upgrade the portfolio, earning additional rent at a market yield as funding occurs.

 

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The operating performance during 2013 for each of the two portfolios is summarized as follows:

 

Portfolio

   Properties      Units      % Located
in Top 100
MSAs
    Occupancy     Monthly
Rate/Unit
     NOI
Margin
 

RIDEA JV

     49         5,400         78     80   $ 4,978         23

NNN-leased

     153         12,800         63     91   $ 4,019         32
  

 

 

    

 

 

           
     202         18,200             

ADDITIONAL INFORMATION

All transactions described herein are contingent upon the closing of Brookdale’s pending merger with Emeritus, anticipated to occur in the third quarter of 2014, and are subject to customary closing conditions including regulatory approvals and lender consents. There can be no assurance that the transactions will close or, if they do, when the closing will occur.

Brookdale and HCP have posted supplemental information relating to the transactions on the Investor Relations section of each company’s website – www.brookdale.com and www.hcpi.com. This information will also be furnished by each company in a Form 8-K to be filed with the SEC. The contents of each of the Brookdale and HCP websites (including the presentations referred to herein) are not, and shall not be deemed to be, part of this press release or any other report or document that either Brookdale or HCP files with the SEC.

ABOUT BROOKDALE SENIOR LIVING

Brookdale Senior Living Inc. is a leading owner and operator of senior living communities throughout the United States. The Company is committed to providing senior living solutions within properties that are designed, purpose-built and operated to provide the highest-quality service, care and living accommodations for residents. Currently Brookdale operates independent living, assisted living, and dementia-care communities and continuing care retirement centers, with 648 communities in 36 states and the ability to serve approximately 67,000 residents. Through its ancillary services programs, the Company also offers a range of outpatient therapy, home health, personalized living and hospice services. After its pending merger with Emeritus Corporation, Brookdale will operate approximately 1,161 communities in 46 states with the capacity to serve approximately 113,000 residents.

 

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ABOUT HCP

HCP, Inc. is a fully integrated real estate investment trust (REIT) that invests primarily in real estate serving the healthcare industry in the United States. HCP’s portfolio of assets is diversified among five distinct sectors: senior housing, post-acute/skilled nursing, life science, medical office and hospital. A publicly traded company since 1985, HCP: (i) was the first healthcare REIT selected to the S&P 500 index; (ii) has increased its dividend per share for 29 consecutive years; (iii) is the only REIT included in the S&P 500 Dividend Aristocrats index; and (iv) is a global leader in sustainability as a member of the CDP, Dow Jones and FTSE4Good sustainability leadership indices, and the Global and North American healthcare sector leader for GRESB. For more information regarding HCP, visit the Company’s website at www.hcpi.com.

CONTACTS

 

Brookdale Senior Living Inc.      HCP, Inc.
Investors:    Ross Roadman (615) 564-8104      Timothy M. Schoen
   rroadman@brookdaleliving.com      Executive Vice President & Chief Financial Officer
Media:    Julie Davis (615) 564-8225      (562) 733-5309
   jkdavis@brookdaleliving.com      investorrelations@hcpi.com

HCP FORWARD-LOOKING STATEMENTS

“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: The statements made by or on behalf of HCP in this release or relating hereto which are not historical facts are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements include, among other things, statements regarding anticipated outcomes relating to the proposed CCRC JV and the Brookdale and Emeritus merger transaction and the potential benefits of an expanded relationship and joint ventures between HCP and Brookdale. These statements are made as of the date hereof, are not guarantees of future performance and are subject to known and unknown risks, uncertainties, assumptions and other factors — many of which are out of HCP’s control and difficult to forecast — that could cause actual results to differ materially from those set forth in or implied by such forward-looking statements. These risks and uncertainties include but are not limited to: HCP’s ability to complete the transactions described above on the currently proposed terms or at all; the risk that HCP may not be able to achieve the benefits of the investments described above within expected time-frames or within expected cost projections; risks relating to the merger of Brookdale and Emeritus, including in respect of the satisfaction of closing conditions to the merger, unanticipated difficulties relating to the merger, the risk that regulatory approvals required for the merger are not obtained or are obtained subject to unanticipated conditions, uncertainties as to the timing of the merger, litigation relating to the merger, the impact of the transaction on each party’s relationships with its residents,

 

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employees and third parties, and the parties’ inability to obtain, or delays in obtaining, cost savings and synergies from the merger; changes in global, national and local economic conditions, including a prolonged period of weak economic growth; volatility or uncertainty in the capital markets, including changes in the availability and cost of capital (impacted by changes in interest rates and the value of HCP’s common stock), which may adversely impact HCP’s ability to consummate transactions or reduce the earnings from potential transactions; HCP’s ability to manage its indebtedness level and changes in the terms of such indebtedness; the effect on healthcare providers, including Brookdale and Emeritus, of the recently enacted and pending Congressional legislation addressing entitlement programs and related services, including Medicare and Medicaid, which may result in future reductions in reimbursements; the ability of operators, tenants and borrowers, including Brookdale and Emeritus, to conduct their respective businesses in a manner sufficient to maintain or increase their revenues and to generate sufficient income to make rent and loan payments to HCP and HCP’s ability to recover investments made, if applicable, in their operations; the financial weakness of some operators and tenants (potentially including Brookdale and Emeritus), including potential bankruptcies and downturns in their businesses, which results in uncertainties regarding HCP’s ability to continue to realize the full benefit of such operators’ and/or tenants’ leases; changes in federal, state or local laws and regulations, including those affecting the healthcare industry that affect HCP’s costs of compliance or increase the costs, or otherwise affect the operations of operators, tenants and borrowers, including Brookdale and Emeritus; the potential impact of future litigation matters, including the possibility of larger than expected litigation costs, adverse results and related developments; competition for tenants and borrowers, including with respect to new leases and mortgages and the renewal or rollover of existing leases; HCP’s ability to negotiate the same or better terms with new tenants or operators if existing leases are not renewed or HCP exercises its right to replace an existing operator or tenant upon default; availability of suitable properties to acquire at favorable prices and the competition for the acquisition and financing of those properties; the financial, legal, regulatory and reputational difficulties of significant operators of HCP’s properties, potentially including Brookdale and Emeritus; the risk that HCP may not be able to achieve the benefits of the investments described above, including with respect to the CCRC JV and the Brookdale and Emeritus merger transaction, within expected time-frames or within expected cost projections; the ability to obtain financing necessary to consummate acquisitions on favorable terms; risks associated with HCP’s investments in joint ventures (including the proposed CCRC JV) and unconsolidated entities, including its lack of sole decision-making authority and its reliance on its joint venture partners’ financial condition and continued cooperation; changes in the credit ratings on U.S. government debt securities or default or delay in payment by the United States of its obligations; and other risks and uncertainties described from time to time in HCP’s Securities and Exchange Commission filings, including its 2013 Annual Report on Form 10-K. HCP assumes no, and hereby disclaims any, obligation to update any of the foregoing or any other forward-looking statements as a result of new information or new or future developments, except as otherwise required by law.

 

Page 5 of 8


BROOKDALE FORWARD-LOOKING STATEMENTS

Certain items in this press release and statements made by or on behalf of Brookdale Senior Living Inc. relating hereto (including statements with respect to the merger of Brookdale and Emeritus, the proposed CCRC JV and the expanded relationship and joint venture between Brookdale and HCP) may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Those forward-looking statements are subject to various risks and uncertainties. Forward-looking statements are generally identifiable by use of forward-looking terminology such as “may,” “will,” “should,” “potential,” “intend,” “expect,” “endeavor,” “seek,” “anticipate,” “estimate,” “overestimate,” “underestimate,” “believe,” “could,” “would,” “project,” “predict,” “continue,” “plan” or other similar words or expressions. Although Brookdale believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, Brookdale can give no assurance that its expectations will be attained and actual results could differ materially from those projected. Factors which could have a material adverse effect on Brookdale’s operations and future prospects or which could cause events or circumstances to differ from the forward-looking statements include, but are not limited to, the risk associated with the current global economic situation and its impact upon capital markets and liquidity; changes in governmental reimbursement programs; Brookdale’s inability to extend (or refinance) debt (including credit and letter of credit facilities) as it matures; the risk that Brookdale may not be able to satisfy the conditions precedent to exercising the extension options associated with certain of its debt agreements; events which adversely affect the ability of seniors to afford Brookdale’s monthly resident fees or entrance fees; the conditions of housing markets in certain geographic areas; Brookdale’s ability to generate sufficient cash flow to cover required interest and long-term operating lease payments; the effect of Brookdale’s indebtedness and long-term operating leases on its liquidity; the risk of loss of property pursuant to Brookdale’s mortgage debt and long-term lease obligations; the possibilities that changes in the capital markets, including changes in interest rates and/or credit spreads, or other factors could make financing more expensive or unavailable to Brookdale; Brookdale’s determination from time to time to purchase any shares under the repurchase program; Brookdale’s ability to fund any repurchases; Brookdale’s ability to effectively manage its growth; Brookdale’s ability to maintain consistent quality control; delays in obtaining regulatory approvals; the risk that Brookdale may not be able to expand, redevelop and reposition its communities in accordance with its plans; Brookdale’s ability to complete acquisitions and integrate them into its operations; competition for the acquisition of assets; Brookdale’s ability to obtain additional capital on terms acceptable to it; a decrease in the overall demand for senior housing; Brookdale’s vulnerability to economic downturns; acts of nature in certain geographic areas; terminations of resident agreements and vacancies in the living spaces Brookdale leases; early terminations or non-renewal of management agreements; increased competition for skilled personnel; increased union activity; departure of key officers; increases in market interest rates; environmental contamination at any of Brookdale’s facilities; failure to comply with existing environmental laws; an adverse determination or resolution of complaints filed against Brookdale; the cost and difficulty of complying with increasing and evolving regulation; risks relating to the merger of Brookdale and Emeritus, the proposed CCRC JV and the expanded relationship and joint venture between Brookdale and HCP, including in respect of the

 

Page 6 of 8


satisfaction of closing conditions to such transactions; unanticipated difficulties and/or expenditures relating to such transactions; the risk that regulatory approvals required for such transactions are not obtained or are obtained subject to conditions that are not anticipated; uncertainties as to the timing of such transactions; litigation relating to such transactions; the impact of such transactions on each company’s relationships with residents, employees and third parties; and the inability to obtain, or delays in obtaining cost savings and synergies from such transactions; as well as other risks detailed from time to time in Brookdale’s filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Brookdale expressly disclaims any obligation to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in its expectations with regard thereto or change in events, conditions or circumstances on which any statement is based.

ADDITIONAL INFORMATION AND WHERE TO FIND IT

In connection with the merger, Brookdale plans to file with the SEC a Registration Statement on Form S-4 that will include a joint proxy statement of Brookdale and Emeritus that also constitutes a prospectus of Brookdale, as well as other relevant documents concerning the proposed transaction. STOCKHOLDERS ARE URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS REGARDING THE MERGER WHEN IT BECOMES AVAILABLE AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. A free copy of the joint proxy statement/prospectus and other filings containing information about Brookdale and Emeritus Corporation may be obtained at the SEC’s Internet site (http://www.sec.gov). You will also be able to obtain these documents, free of charge, from Brookdale at www.brookdale.com under the heading “About Brookdale / Investor Relations” or from Emeritus Corporation at www.emeritus.com under the heading “Investors.”

Brookdale and Emeritus Corporation and their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from Brookdale’s and Emeritus Corporation’s stockholders in connection with the merger. Information about the directors and executive officers of Brookdale and their ownership of Brookdale common stock is set forth in the proxy statement for Brookdale’s 2013 annual meeting of stockholders, as filed with the SEC on Schedule 14A on April 30, 2013. Information about the directors and executive officers of Emeritus Corporation and their ownership of Emeritus Corporation common stock is set forth in the proxy statement for Emeritus Corporation’s 2013 annual meeting of stockholders, as filed with the SEC on Schedule 14A on April 9, 2013. Additional information regarding the interests of those participants and other persons who may be deemed participants in the merger may be obtained by reading the joint proxy statement regarding the merger when it becomes available. Free copies of this document may be obtained as described in the preceding paragraph. This press release shall not constitute an offer to sell or the solicitation of an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or

 

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qualification under the securities laws of any such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.

 

Page 8 of 8

EX-99.2
Enhanced Partnership with HCP
April 23, 2014
Creation of New Investment Platform and Concurrent Lease Restructuring
Exhibit 99.2


Forward-Looking Statements
1
Certain items in this presentation and statements made by or on behalf of Brookdale Senior Living Inc. relating hereto (including statements with respect to the merger of Brookdale and
Emeritus, the proposed CCRC JV and the expanded relationship and joint venture between Brookdale and HCP) may constitute forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Those forward-looking statements are subject to various risks and uncertainties. Forward-looking statements are generally identifiable by use of
forward-looking terminology such as "may," "will," "should," "potential," "intend," "expect," "endeavor," "seek," "anticipate," "estimate," "overestimate," "underestimate," "believe," "could,"
"would," "project," "predict," "continue," "plan" or other similar words or expressions. Although we believe the expectations reflected in any forward-looking statements are based on
reasonable assumptions, we can give no assurance that our expectations will be attained and actual results could differ materially from those projected. Factors which could have a material
adverse effect on our operations and future prospects or which could cause events or circumstances to differ from the forward-looking statements include, but are not limited to, the risk
associated with the current global economic situation and its impact upon capital markets and liquidity; changes in governmental reimbursement programs; our inability to extend (or refinance)
debt (including our credit and letter of credit facilities) as it matures; the risk that we may not be able to satisfy the conditions precedent to exercising the extension options associated with
certain of our debt agreements; events which adversely affect the ability of seniors to afford our monthly resident fees or entrance fees; the conditions of housing markets in certain geographic
areas; our ability to generate sufficient cash flow to cover required interest and long-term operating lease payments; the effect of our indebtedness and long-term operating leases on our
liquidity; the risk of loss of property pursuant to our mortgage debt and long-term lease obligations; the possibilities that changes in the capital markets, including changes in interest rates
and/or credit spreads, or other factors could make financing more expensive or unavailable to us; our determination from time to time to purchase any shares under the repurchase program; our
ability to fund any repurchases; our ability to effectively manage our growth; our ability to maintain consistent quality control; delays in obtaining regulatory approvals; the risk that we may
not be able to expand, redevelop and reposition our communities in accordance with our plans; our ability to complete acquisitions and integrate them into our operations; competition for the
acquisition of assets; our ability to obtain additional capital on terms acceptable to us; a decrease in the overall demand for senior housing; our vulnerability to economic downturns; acts of
nature in certain geographic areas; terminations of our resident agreements and vacancies in the living spaces we lease; early terminations or non-renewal of management agreements; increased
competition for skilled personnel; increased union activity; departure of our key officers; increases in market interest rates; environmental contamination at any of our facilities; failure to
comply with existing environmental laws; an adverse determination or resolution of complaints filed against us; the cost and difficulty of complying with increasing and evolving regulation;
risks relating to the merger of Brookdale and Emeritus, the proposed CCRC JV and the expanded relationship and joint venture between Brookdale and HCP, including in respect of the
satisfaction of closing conditions to such transactions; unanticipated difficulties and/or expenditures relating to such transactions; the risk that regulatory approvals required for such
transactions are not obtained or are obtained subject to conditions that are not anticipated; uncertainties as to the timing of such transactions; litigation relating to such transactions; the impact
of such transactions on each company’s relationships with residents, employees and third parties; and the inability to obtain, or delays in obtaining cost savings and synergies from such
transactions; as well as other risks detailed from time to time in our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K and Quarterly Reports 
on Form 10-Q. We expressly disclaim any obligation to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in our expectations
with regard thereto or change in events, conditions or circumstances on which any statement is based.


Additional Information
2
In connection with the merger, Brookdale plans to file with the SEC a Registration Statement on Form S-4 that will include a joint proxy statement of Brookdale and Emeritus that also
constitutes a prospectus of Brookdale, as well as other relevant
documents concerning the proposed transaction. STOCKHOLDERS ARE
URGED TO READ THE JOINT PROXY
STATEMENT/PROSPECTUS REGARDING THE MERGER WHEN IT BECOMES AVAILABLE AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, AS
WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. A free copy of the joint
proxy statement/prospectus and other filings containing information about Brookdale and Emeritus Corporation may be obtained at the SEC’s Internet site (http://www.sec.gov). You
will also be able to obtain these documents, free of charge, from Brookdale at www.brookdale.com under the heading " About Brookdale / Investor Relations " or from Emeritus
Corporation at www.emeritus.com under the heading " Investors. "
Brookdale and Emeritus Corporation and their respective directors and executive officers may be deemed to be participants in the
solicitation of proxies from Brookdale’s and Emeritus
Corporation’s stockholders in connection with the merger. Information about the directors and executive officers of Brookdale and their ownership of Brookdale common stock is set
forth in the proxy statement for Brookdale’s 2013 annual meeting of stockholders, as filed with the SEC on Schedule 14A on April 30, 2013. Information about the directors and
executive officers of Emeritus Corporation and their ownership of Emeritus Corporation common stock is set forth in the proxy statement for Emeritus Corporation’s 2013 annual
meeting of stockholders, as filed with the SEC on Schedule 14A on April 9, 2013. Additional information regarding the interests of those participants and other persons who may be
deemed participants in the merger may be obtained by reading the
joint proxy statement regarding the merger when it becomes available. Free copies of this document may be obtained
as described in the preceding paragraph. This presentation shall
not constitute an offer to sell or the solicitation of an offer
to sell or the solicitation of an offer to buy any securities, nor
shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any
such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.


Executive Summary
3
Brookdale
is
entering
into
an
enhanced
partnership
with
HCP
that
creates
a
new
platform
for
growth and favorably impacts the Emeritus merger
(1)
See reconciliations of Non-GAAP measures at the end of the presentation
1
2
As part of the transformational merger with Emeritus (“ESC”), Brookdale (“BKD”) is partnering
with HCP to:
Create a $1.2 billion joint venture to own and operate 14 CCRC campuses
Improve the structure of all 202 ESC leases
153 amended NNN leases with reduced rent
49 leases converted to RIDEA joint venture
Anticipated CFFO
(1)
accretion from the ESC merger increases by 25% to 
approximately
$0.50
per
share
by
Year
3
Immediate monetization and value creation from ESC purchase options with HCP
Deleverage and de-risk ESC NNN lease portfolios through rent reductions
The $0.10 of Additional
Accretion
is
driven by:
Future rent and escalator reduction in NNN lease restructuring
New management fees and elimination of losses after rent and capex from RIDEA conversion
CCRC JV including pending acquisition of 4 managed communities


Unique $1.2 billion CCRC Joint Venture
BKD will own 51% of a JV that owns and operates $1.2 billion of entry fee CCRCs
5% management fee, 2% of entry fee resale cash receipts, 2% incentive fee
Pro
rata
sharing
of
cash
flows;
all
ancillary
revenue
stays
with
BKD
Significant consolidation potential in entry fee CCRC industry
1,860
entry
fee
CCRC
communities
81%
are
typically
highly
levered
“non-profits”
Little new supply being developed
Benefit as housing market continues to recover
4
1
Portfolio Snapshot
Sources
(millions)
BKD Equity
(1)
$516
HCP Equity
$495
In-Place Mortgage Debt
$220
Total
$1,231
JV Capitalization at Inception
7,000
Units
81.0%
occupancy
22
year
Avg.
Age
(1)
Contribution of eight owned and two leasehold campuses (with related purchase options)
IL 67%
AL 11%
ALZ 4%
SNF 18%


Improved Structure of all 202 Leases
5
2
49
Properties
Converted
to
RIDEA
JV
153
Properties
Amended
NNN
Leases
5,400
Units
79.7%
occupancy
17
year
Avg.
Age
12,800
Units
90.6%
occupancy
16
year
Avg.
Age
HCP has agreed to restructure all 202 ESC leases
153 amended NNN leases with reduced rent
49 leases converted to RIDEA (20% BKD Ownership)
In consideration, BKD will cancel 49 purchase options and pay $34 million ($24 million net of
deposits)
for
lease
restructuring
over
2
years
(1)
Annual rent reductions drive cash flow; $8.0
million in 2016 and $9.0 million thereafter
HCP to provide $100 million of capital
expenditures through 2017
Eliminates all FMV rent resets
Amended initial term to 15 years on average with
new purchase options totaling $60 million on
under-performing properties
BKD acquires 20% JV interest for $68 million,
financed by HCP at 7%
Eliminates
negative
EBITDA
terminates
leases
with negative coverage and above market
escalators
Current rent coverage 0.84x before capex
BKD receives management fees, all ancillary
revenues and future participation in 20% of net
cash flows 2017 and beyond
(1)
49 purchase options reflect present value of $130-$160 mm based on 7.25% to 7.75% FMV cap rate range on seniors housing assets. Valuation assumes 10.0% discount rate


Partnership & Merger Drive Potential Upside
6
Management
Base
Case
Year
3
Accretion
Levers for Potential Upside
Value of remaining purchase options
Program Max 2.0 at ESC properties
Implement innovative products/services to
capture residents’
healthcare spend
Additional synergies and cost savings
New RIDEA joint venture
New EF CCRC joint venture
G&A
$0.14
Property Level OpEx
$0.12
New Ancillary Services
$0.14
Additional Accretion from
Enhanced
HCP Partnership
$0.10
Total CFFO/Share Accretion
$0.50


Substantial Real Estate Ownership
(1)
Reflects 7.00% to 7.50% FMV cap rate range on seniors housing assets. Valuation assumes 10.0% discount rate.
Leased
Other
36,114
32%
Owned
34,545
31%
3
rd
Party Managed
8,498
8%
Fair Market Purchase (“FMV”) Options
Bargain Purchase Option Update
Bargain purchase options on 32 communities with
approximately 4,000 units after transaction
Estimated
present
value
of
$140
-
$160
million
(1)
Opportunity
to
recapture
between
$800
million
-
$1.0
billion
of
aggregate
real
estate
Approximately 45% exercisable by end of 2017
FMV purchase options on 88 communities with 4,355
units
Opportunity to recapture approximately $1.0 billion of
aggregate real estate
Approximately 50% exercisable by end of 2017
JV Owned
20,717
18%
Leased
Amended
HCP 153
12,800
11%
Unit Ownership –
Post ESC merger/HCP transactions
7


Brookdale Non-GAAP Financial Measures
8
CFFO is a financial measures of operating performance that is not calculated in accordance with U.S. generally accepted accounting
principles (“GAAP”).The Company believes that this non-GAAP measure is useful in identifying trends in day-to-day performance because
it excludes items that are of little or no significance to operations and provide indicators to management of progress in achieving optimal
operating performance. In addition, this measure is used by many research analysts and investors to evaluate the performance and the value
of companies in the senior living industry. The Company strongly urges you to review the reconciliation of net cash provided by operating
activities to CFFO, provided below, along with the Company’s consolidated balance sheets, statements of operations, and statements of cash
flows. The Company defines CFFO and provides other information about this non-GAAP measure in the Company’s Annual Report on
Form 10-K for the year ended December 31,2013 that was filed with the SEC.
Cash From Facility Operations
Cash From Facility Operations (CFFO) is a measurement of liquidity that is not calculated in accordance with GAAP and should not be
considered in isolation as a substitute for cash flows provided by or used in operations, as determined in accordance with GAAP.  We define
CFFO as net cash provided by (used in) operating activities adjusted for changes in operating assets and liabilities, deferred interest and fees
added to principal, refundable entrance fees received, first generation entrance fee receipts at a recently opened entrance fee CCRC prior to
stabilization, entrance fee refunds disbursed adjusted for first generation entrance fee refunds not replaced by second generation entrance fee
receipts at the recently opened community prior to stabilization, lease financing debt amortization with fair market value or no purchase
options, gain (loss) on facility lease termination, recurring capital expenditures (net), distributions from unconsolidated ventures from
cumulative share of net earnings, CFFO from unconsolidated ventures, and other.  Recurring capital expenditures include routine
expenditures capitalized in accordance with GAAP that are funded from current operations.  Amounts excluded from recurring capital
expenditures consist primarily of major projects, renovations, community repositionings, expansions, systems projects or other non-
recurring or unusual capital items (including integration capital expenditures) or community purchases that are funded using lease or
financing proceeds, available cash and/or proceeds from the sale of communities that are held for sale.


Brookdale Cash From Facility Operations Reconciliation
The
table
below
reconciles
CFFO
from
net
cash
provided
by
operating
activities
for
the
three
months
and
years
ended
December
31,
2013
and
2012
(in thousands):
9
2013
2012
2013
2012
Net cash provided by operating activities
117,046
$                      
82,991
$             
366,121
$              
290,969
$          
Changes in operating assets and liabilities
(27,473)
(14,772)
(33,198)
(20,698)
Refundable entrance fees received
(2)
18,875
13,088
48,140
42,600
Entrance fee refunds disbursed
(10,821)
(7,801)
(35,325)
(27,356)
Recurring capital expenditures, net
(10,786)
(10,168)
(42,901)
(38,306)
(3,594)
(3,132)
(13,927)
(12,120)
(602)
(72)
(2,691)
(1,507)
CFFO from unconsolidated ventures
1,825
1,279
7,804
5,376
Cash From Facility Operations
84,470
$                        
61,413
$             
294,023
$              
238,958
$          
(1)
,
(1)
,
Years Ended December 31
Lease financing debt amortization with fair market value or no purchase options
Distributions from unconsolidated ventures from cumulative share of net earnings 
Three Months Ended December 31
(1) The calculation of Cash From Facility Operations includes integration, transaction-related and EMR roll-out costs of $4.1 million and $14.5
million for the three months and year ended December 31, 2013, respectively. The calculation of Cash From Facility Operations includes
integration, transaction-related and EMR roll-out costs of $7.2 million and $23.5 million for the three months and year ended December 31,
2012, respectively.
(2)  Total entrance fee receipts for the three months ended December 31, 2013 and 2012 were $32.5 million and $22.9 million, respectively,
including $13.6 million and $9.8 million, respectively, of non-refundable entrance fee receipts included in net cash provided by operating
activities.  Total entrance fee receipts for the years ended December 31, 2013 and 2012 were $92.3 million and $82.7 million, respectively,
including $44.2 million and $40.1 million, respectively, of non-refundable entrance fee receipts included in net cash provided by operating
activities. 
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