Brookdale Agrees to Continue Managing Over Half of Previous 120-Community Portfolio With Ventas

Brookdale Senior Living (NYSE: BKD) has agreed to a new “mutually beneficial” master lease with landlord Ventas (NYSE: VTR) to continue managing 65 communities previously covered by a 120-property lease the operator declined to renew earlier this month.

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In conjunction with the agreement, Ventas is in Sept. 2025 converting 44 communities in the portfolio to its seniors housing operating portfolio (SHOP) in what Ventas EVP of Senior Housing Justin Hutchens on Thursday called a “unique opportunity.” The Chicago-based real estate investment trust (REIT) also is selling the remaining 11 communities in the original 120-property portfolio.

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The communities that Brentwood, Tennessee-based Brookdale will continue operating average about 62 units each and comprise 40% of the previous master lease. Brookdale has agreed to manage the portfolio under a 10-year term beginning in 2026. The operator has agreed to pay an initial rent of $64 million, representing a 38% increase above the operator’s current rent, according to Ventas. The rent is slated to escalate 3% annually over the term of the lease.

In 2025, the Chicago-based REIT noted that Brookdale is obligated to pay rent of $48 million on the properties.

Under the agreement, Ventas has agreed to invest in the portfolio $35 million of CapEx over three years, starting in 2025. According to Ventas, the investment is meant “to improve performance, position the communities better in their respective markets and further enhance the environments for residents and their families.”

Brookdale had previously declined to renew its 120-property master lease with Ventas, and CEO Cindy Baier noted earlier this month that it had generated $23 million of negative cash flow for the operator between Sept. 2024 and the same month in 2023.

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The 44 to-be-converted SHOP communities offer a combination of independent living, assisted living and memory care services and carry a current average occupancy rate of 76%, with “significant affordability” for residents. The average size of the segment is 129 units. The communities are located in markets where Ventas has relationships with existing operating partners, though the company has not announced which ones would take over the newly converted SHOP communities.

Ventas believes that there is plenty of net operating income (NOI) upside ahead for the communities, especially with regard to growing occupancy and revenue. The company plans to implement its proprietary Ventas Operating Insights platform to help improve performance down the road.

And the 44-community portfolio represents an opportunity for Ventas to increase its SHOP segment – which today includes over 800 communities – without making a costly acquisition.

 “You wouldn’t be able to buy something of this size, of this quality, in today’s market,” Hutchens told Senior Housing News Thursday. “So, to be able to take it from triple-net to SHOP is a unique opportunity.”