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HCP & Brookdale Buy Senior Housing Portfolio for $847M

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In a major development, HCP, Inc. (HCP - Free Report) , the Irvine, CA-based real estate investment trust (“REIT”) and Brookdale Senior Living Inc. (BKD - Free Report) , the leading operator of senior living communities, closed the acquisition of 35 private pay senior housing communities for $847 million. The acquisition of this portfolio from Chartwell Retirement Residences, the Ontario, Canada-based REIT, will further enhance HCP’s portfolio going forward.

In fact, Brentwood, TN-based Brookdale has been operating the portfolio since 2011. Further, per the REIT Investment Diversification and Empowerment Act (“RIDEA”) structure, Brookdale will continue to manage the portfolio as well as own 10% of it, whereas HCP will own 90%. Importantly, since the acquired portfolio is not burdened with third-party debt, it is anticipated to generate a cash yield of around 6.6% in the first year.

HCP is engaged in acquiring, developing, managing, selling and leasing a diverse portfolio of healthcare real estate and related properties. The company has established business relationships with a number of experienced healthcare management companies or operators. The latest acquisition, in partnership with Brookdale, will not only enhance its relationship with the latter, but also provide a robust platform for the company’s growth.

Both HCP and Brookdale currently has a Zacks Rank #3 (Hold).

Investors interested in the REIT industry may consider stocks like Arbor Realty Trust Inc. (ABR - Free Report) and Strategic Hotels & Resorts, Inc. . Both these stocks sport a Zacks Rank #1 (Strong Buy).

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