HCP is transitioning the management of 24 senior housing communities that it owns from Brentwood, TN-based Brookdale Senior Living to Louisville, KY-based Atria Senior Living, the Irvine, CA-based real estate investment trust announced Monday.
The transitions will begin this month and are expected to be completed by September as regulatory approvals are obtained, according to HCP. The properties are located in California, Florida, New Jersey and Texas, where Atria already operates.
“Atria has a proven track record of providing outstanding care for residents and strong property operating performance for owners,” HCP President and CEO Tom Herzog said in a statement. “We have been discussing ways to grow together, and this agreement is a win-win for both organizations.”
HCP already had approximately six Atria properties in its portfolio, according to REIT executives. The transitioning properties are 30% independent living and 70% assisted living, they said.
HCP is in the process of selling or transitioning a total of 36 senior housing operating properties and 32 triple-net leased communities currently operated by Brookdale. “Upon completion, these transactions will significantly reduce our Brookdale concentration, improve lease coverage of our remaining triple-net assets leased to Brookdale, increase tenant diversification in our portfolio and enhance our balance sheet and credit profile,” the REIT said in a February news release.
The 24 properties transitioning to Atria are evenly split between HCP’s senior housing operating and triple-net lease portfolios. Atria choose them from a list of Brookdale properties, according to HCP executives.
HCP first announced that it was reducing the exposure to Brookdale in its portfolio in November in a series of transactions that the CEOs of both companies called a “win-win.” At the time, HCP said would sell six communities to Brookdale and terminate management agreements or leases on 68 other properties, among other actions. In February, HCP Executive Vice President and CFO Peter Scott said the REIT had closed on the sale of one community to Brookdale in January and expects to close on the sale of an additional five communities to the company near the end of the first quarter.
“We are excited to partner with HCP and grow our relationship with such a high-quality, long-term owner,” Atria Chairman and CEO John Moore said in a statement. “We look forward to expanding our management services platform to these quality properties and serving more residents and families.”
The 2017 ASHA 50 list from the American Seniors Housing Association ranked Atria as the eighth largest senior housing operator in the United States. The company had 166 U.S. communities and 19,541 units as of June 1, 2017, according to ASHA.
In addition to having locations in 27 states, Atria also operates in seven Canadian provinces, bringing its total of independent living, assisted living, supportive living and memory care communities to more than 200 locations. Altogether, those communities are home to 21,000 older adults and the workplace for almost 14,500 employees, according to the company.
Brookdale topped the lists of largest owners and largest operators in the 2017 ASHA 50 rankings. Feb. 22, the company announced that Lucinda “Cindy” Baier was replacing Andy Smith as CEO effective Feb. 28. Also leaving the company are Daniel Decker, executive chairman of the board; Bryan Richardson, executive vice president and chief administrative officer; and board member William G. Petty Jr., Brookdale said.
Brookdale said the moves marked the conclusion of a strategic review process that began in February 2017 as the company sought to increase shareholder value. As part of that process, Brookdale said it rejected a $9-per-share offer for the company.
Brookdale’s short-term turnaround plans include selling 30 communities, cutting $25 million in general and administrative expenses, increasing automation and the use technology where possible, and moving more decisions to the community level when deemed appropriate, executives said.