Brookdale Turns Leases to Ownership Amid Turnaround

Brookdale Senior Living announced second-quarter results on August 10, signaling that its turnaround strategy is gaining momentum, despite a slower-than-expected pace of occupancy growth. The senior living operator has reaffirmed its full-year guidance, projecting 8% to 9% RevPAR growth and adjusted EBITDA between $502 million and $516 million.

The company reported an 8.2% year-over-year increase in RevPAR for the second quarter, aligning with its annual target. Consolidated occupancy reached 82.4%, marking the 57th consecutive month of year-over-year gains. Labor costs as a percentage of revenue decreased to 45.2% from 46.1% a year prior.

Brookdale is actively strengthening its balance sheet through strategic acquisitions. It acquired the 244-unit Brookdale Galleria in Houston for $23.4 million and plans to purchase 17 leased communities for approximately $157 million. These moves are expected to enhance future EBITDA and cash flow. Liquidity increased to $566 million, and leverage improved following mortgage refinancing.

However, occupancy gains have not met initial projections, with full-year consolidated occupancy now expected around 83%. Management acknowledged that improvement in underperforming communities has been insufficient. Despite this, operational efficiencies are anticipated to offset the slightly lower occupancy, keeping adjusted EBITDA guidance intact. As of the quarter's end, 211 communities remained below 80% occupied.