Attached files
| file | filename |
|---|---|
| EX-99.1 - EXHIBIT 99.1 - Brookdale Senior Living Inc. | bkdq42017pressrelease.htm |
| 8-K - 8-K - Brookdale Senior Living Inc. | bkdq42017form-8k.htm |
Exhibit 99.2
Supplemental Information
4th Quarter 2017
2
Financial Overview 3
Segment Overview 7
Senior Housing 8
Ancillary Services 13
G&A Expense & Transaction Costs 14
Capital Expenditures 15
Cash Lease Payments 16
Unconsolidated Ventures 17
Debt & Liquidity 18
Net Asset Value Elements 20
Definitions 21
Appendix:
Consolidated Statements of Cash Flows 24
Non-GAAP Financial Measures 25
Table of Contents
3
(1) Brookdale’s weighted average unit ownership percentage is 23.5%.
Important Note Regarding Non-GAAP Financial Measures. Adjusted EBITDA, Adjusted Free Cash Flow, Brookdale's Proportionate Share of Adjusted EBITDA of Unconsolidated Ventures and
Brookdale’s Proportionate Share of Adjusted Free Cash Flow of Unconsolidated Ventures are financial measures that are not calculated in accordance with U.S. generally accepted accounting
principles (GAAP). See the definitions of such measures under “Definitions” below and important information regarding such measures, including reconciliations to the most comparable GAAP
financial measures, under “Non-GAAP Financial Measures” below.
($ in 000s, except Total RevPAR) 2016 2017 YoY
Q4 Q1 Q2 Q3 Q4 Q4
Resident fee and management fee revenue $ 1,030,338 $ 1,032,821 $ 956,512 $ 941,030 $ 925,622 (10.2)%
Net income (loss) $ (268,600) $ (126,361) $ (46,337) $ (413,929) $ 15,021 NM
Net cash provided by operating activities $ 88,451 $ 66,766 $ 133,108 $ 83,235 $ 83,555 (5.5)%
Adjusted EBITDA $ 184,198 $ 198,296 $ 160,325 $ 141,829 $ 138,116 (25.0)%
Adjusted Free Cash Flow $ 33,156 $ 63,445 $ 39,959 $ 5,804 $ (11,655) NM
Brookdale's Proportionate Share of Adjusted EBITDA of Unconsolidated Ventures $ 17,989 $ 17,126 $ 18,219 $ 16,788 $ 17,723 (1.5)%
Brookdale's Proportionate Share of Adjusted Free Cash Flow of Unconsolidated
Ventures $ 6,763 $ 8,750 $ 7,920 $ 6,709 $ 12,037 78.0 %
Total RevPAR $ 4,310 $ 4,405 $ 4,392 $ 4,386 $ 4,463 3.5 %
Q4 2017 weighted average unit occupancy
Community
% of Period End
Occupancy Band Count Communities
Greater than 95% 237 23%
90% < 95% 181 18%
85% < 90% 191 19%
80% < 85% 127 12%
Less than 80% 287 28%
Total 1,023
Consolidated Portfolio Average
Asset Age ~ 21.4 years
Managed - 3rd
Party: 8,222
Managed-
Venture :
25,719
Owned:
32,539
Leased:
34,102
100,582
units
Managed - 3rd
Party: 61
Managed-
Venture:
168
Owned:
360
Leased:
434 1,023
communities
Overview
(1)
As of December 31, 2017
4
Segment Overview (1) Senior Housing Segments
Re
venue
(2
)
Segme
nt
O
pe
ra
ting
In
come
(3
)
(1) Brookdale’s five segments are Retirement Centers, Assisted Living, CCRCs-Rental (which combined are referred to as Senior Housing), Brookdale Ancillary Services and Management
Services.
(2) Percentage of revenue is based on Q4 2017 resident fee and management fee revenue.
(3) Percentage of segment operating income is based on Q4 2017 results.
Brookdale
Ancillary
Services
12%
Management
Services 2%
Senior Housing
86%
Brookdale
Ancillary
Services 4%
Management
Services 7%
Senior Housing
89%
CCRCs - Rental
13%
Retirement
Centers 20%
Assisted Living
67%
CCRCs - Rental
9%
Retirement
Centers 25%
Assisted Living
66%
Consolidated Portfolio Overview
5
(1) Includes hurricane and natural disaster expense of $5.3 million and $1.9 million in Q3 2017 and Q4 2017, respectively.
(2) Primarily consists of proceeds from property insurance, cash paid for debt modification and extinguishment costs and cash paid for state income taxes.
(All amounts in 000s) 2016 2017 YoY
Q4 Q1 Q2 Q3 Q4 Q4
Resident fee and management fee revenue 1,030,338 1,032,821 956,512 941,030 925,622
Less: Facility operating expense (1) (686,176) (674,542) (642,405) (650,654) (634,554)
Combined Segment Operating Income 344,162 358,279 314,107 290,376 291,068 (15.4 )%
Less: G&A expenses (including non-cash stock-based compensation expense) (66,668) (65,560) (67,090) (63,779) (59,017)
Add: Non-cash stock-based compensation expense 5,067 7,774 7,246 7,527 5,285
Less: Transaction costs (2,040) (7,593) (3,339) (1,992) (9,649)
Less: Cash operating lease payments (see page 16) (96,323) (94,604) (90,599) (90,303) (89,571)
Adjusted EBITDA 184,198 198,296 160,325 141,829 138,116 (25.0)%
Less: Interest expense, net (85,594) (83,645) (69,076) (71,157) (67,054)
Less: Lease financing debt amortization (16,409) (17,248) (14,382) (14,626) (18,650)
Add: Proceeds from entrance fees, net of refunds and amortization 1,575 (173) 541 (547) 811
Add/Less: Other (2) (1,251) 937 1,383 (8,690) 7,030
Less: Non-Development Capital Expenditures, net (see page 15) (49,363) (34,722) (38,832) (41,005) (71,908)
Adjusted Free Cash Flow $ 33,156 $ 63,445 $ 39,959 $ 5,804 $ (11,655) NM
Brookdale's Proportionate Share of Unconsolidated Ventures
Adjusted EBITDA $ 17,989 $ 17,126 $ 18,219 $ 16,788 $ 17,723 (1.5)%
Adjusted Free Cash Flow $ 6,763 $ 8,750 $ 7,920 $ 6,709 $ 12,037 78.0 %
Weighted average shares used in computing basic net income (loss) per share 185,684 185,689 186,212 186,298 186,412
Adjusted EBITDA and Adjusted Free
Cash Flow
6
(1) Other is primarily comprised of corporate capital expenditures, unallocated G&A expense (primarily strategic project costs), non-cash stock-based compensation, transaction costs, and
debt modification costs.
($ in 000s) Q4 2017
Total
Senior
Housing
Owned
Portfolio
Senior
Housing
Leased
Portfolio
Ancillary
Services
Management
Services Other (1)
Resident fee and management fee revenue $ 925,622 $ 377,586 $ 415,169 $ 113,496 $ 19,371 $ —
Less: Facility operating expense (634,554) (260,799) (273,052) (100,703) — —
Combined Segment Operating Income 291,068 116,787 142,117 12,793 19,371 —
Less: G&A expenses (including non-cash stock-based compensation expense) (59,017) (15,176) (16,686) (7,630) (12,979) (6,546)
Add: Non-cash stock-based compensation expense 5,285 — — — — 5,285
Less: Transaction costs (9,649) — — — — (9,649)
Less: Cash operating lease payments (89,571) — (87,531) — — (2,040)
Adjusted EBITDA 138,116 101,611 37,900 5,163 6,392 (12,950)
Less: Interest expense, net (67,054) (46,031) (22,794) (132) — 1,903
Less: Lease financing debt amortization (18,650) — (17,322) — — (1,328)
Add: Proceeds from entrance fees, net of refunds and amortization 811 — 811 — — —
Add/Less: Other 7,030 — — — — 7,030
Less: Non-Development Capital Expenditures, net (71,908) (29,356) (29,119) (3) — (13,430)
Adjusted Free Cash Flow $ (11,655) $ 26,224 $ (30,524) $ 5,028 $ 6,392 $ (18,775)
Adjusted EBITDA and Adjusted Free
Cash Flow Distribution
7(1) Excludes reimbursed costs on behalf of managed communities of $178,530, $183,945, $229,960, $236,958, and $240,268 (in thousands), respectively.
($ in 000s, except RevPAR and RevPOR) 2016 2017 YoY
Q4 Q1 Q2 Q3 Q4 Q4
Total Senior Housing, Brookdale Ancillary and Management Services(1)
Revenue $ 1,030,338 $ 1,032,821 $ 956,512 $ 941,030 $ 925,622 (10.2)%
Combined Segment Operating Income $ 344,162 $ 358,279 $ 314,107 $ 290,376 $ 291,068 (15.4)%
Combined Segment Operating Margin 33.4% 34.7% 32.8% 30.9% 31.4% -200 bps
Senior Housing (see page 8)
Revenue $ 896,032 $ 904,955 $ 823,880 $ 812,288 $ 792,755 (11.5)%
Senior Housing Operating Income $ 307,609 $ 326,756 $ 278,562 $ 262,415 $ 258,904 (15.8)%
Senior Housing Operating Margin 34.3% 36.1% 33.8% 32.3% 32.7% -160 bps
Number of communities (period end) 902 838 829 820 794
Period end number of units 77,135 71,186 70,263 69,675 66,641
Total Average Units 78,029 76,862 70,833 70,112 67,652
RevPAR $ 3,823 $ 3,919 $ 3,873 $ 3,860 $ 3,904 2.1 %
Weighted average unit occupancy 86.0% 85.3% 84.6% 84.8% 85.2% -80 bps
RevPOR $ 4,446 $ 4,597 $ 4,580 $ 4,552 $ 4,584 3.1 %
Brookdale Ancillary Services Segment
Revenue $ 114,042 $ 111,972 $ 110,190 $ 110,604 $ 113,496 (0.5)%
Segment Operating Income $ 16,289 $ 15,629 $ 13,103 $ 9,823 $ 12,793 -21.5 %
Segment Operating Margin 14.3% 14.0% 11.9% 8.9% 11.3% -300 bps
Management Services Segment
Segment Operating Income (comprised solely of management fees) $ 20,264 $ 15,894 $ 22,442 $ 18,138 $ 19,371 (4.4)%
G&A Allocation (see page 14) (9,505) (11,238) (14,184) (13,134) (12,979) 36.5 %
Segment Operating Income (Adjusted to Include G&A Allocation) $ 10,759 $ 4,656 $ 8,258 $ 5,004 $ 6,392 (40.6)%
Segment Operating Margin (Adjusted to Include G&A Allocation) 53.1% 29.3% 36.8% 27.6% 33.0% -2010 bps
Resident fee revenue under management $ 297,713 $ 310,050 $ 371,381 $ 371,165 $ 386,253
Number of communities (period end) 153 214 210 211 229
Period end number of units 25,633 31,284 31,454 31,527 33,941
Total Average Units 25,623 25,702 31,361 31,417 33,176
RevPAR $ 3,873 $ 3,939 $ 3,876 $ 3,864 $ 3,804 (1.8)%
Weighted average occupancy 86.8% 86.3% 84.8% 84.5% 84.7% -210 bps
RevPOR $ 4,367 $ 4,549 $ 4,570 $ 4,566 $ 4,483 2.7 %
Segment Overview
8
Retirement Centers
Revenue $ 169,381 $ 172,620 $ 162,248 $ 161,986 $ 157,342 (7.1)%
Segment Operating Income $ 72,215 $ 74,002 $ 67,297 $ 65,907 $ 64,211 (11.1)%
Segment Operating Margin 42.6% 42.9% 41.5% 40.7% 40.8% -180 bps
Number of communities (period end) 93 86 86 85 84
Period end number of units 17,017 16,071 16,071 15,961 15,042
Total Average Units 17,115 17,108 16,071 16,061 15,256
RevPAR $ 3,299 $ 3,363 $ 3,365 $ 3,362 $ 3,438 4.2 %
Weighted average unit occupancy 88.9% 88.0% 87.3% 87.6% 88.1% -80 bps
RevPOR $ 3,711 $ 3,823 $ 3,857 $ 3,836 $ 3,905 5.2 %
Assisted Living
Revenue $ 581,827 $ 590,537 $ 547,430 $ 542,227 $ 530,494 (8.8)%
Segment Operating Income $ 204,044 $ 217,439 $ 186,921 $ 173,576 $ 171,122 (16.1)%
Segment Operating Margin 35.1% 36.8% 34.1% 32.0% 32.3% -280 bps
Number of communities (period end) 768 720 713 705 682
Period end number of units 50,682 47,296 46,999 46,520 44,773
Total Average Units 51,087 50,540 47,246 46,858 45,448
RevPAR $ 3,796 $ 3,895 $ 3,862 $ 3,857 $ 3,891 2.5 %
Weighted average unit occupancy 85.6% 84.7% 83.9% 84.2% 84.5% -110 bps
RevPOR $ 4,437 $ 4,600 $ 4,602 $ 4,582 $ 4,604 3.8 %
CCRCs - Rental
Revenue $ 144,824 $ 141,798 $ 114,202 $ 108,075 $ 104,919 (27.6)%
Segment Operating Income $ 31,350 $ 35,315 $ 24,344 $ 22,932 $ 23,571 (24.8)%
Segment Operating Margin 21.6% 24.9% 21.3% 21.2% 22.5% 90 bps
Number of communities (period end) 41 32 30 30 28
Period end number of units 9,436 7,819 7,193 7,194 6,826
Total Average Units 9,827 9,214 7,516 7,193 6,948
RevPAR $ 4,876 $ 5,086 $ 5,028 $ 4,989 $ 5,012 2.8 %
Weighted average unit occupancy 83.2% 83.5% 83.0% 82.6% 83.2% 0 bps
RevPOR $ 5,861 $ 6,091 $ 6,063 $ 6,046 $ 6,027 2.8 %
($ in 000s, except RevPAR and RevPOR) 2016 2017 YoY
Q4 Q1 Q2 Q3 Q4 Q4
Senior Housing Segments
9
Revenue $ 750,187 $ 770,151 $ 759,151 $ 754,903 $ 754,272 0.5 %
Community Labor Expense (309,553) (312,633) (319,566) (324,268) (328,079)
Other facility operating expense (170,093) (166,905) (172,963) (175,620) (173,520)
Facility operating expense (1) (479,646) (479,538) (492,529) (499,888) (501,599)
Same Community Operating Income $ 270,541 $ 290,613 $ 266,622 $ 255,015 $ 252,673 (6.6)%
Same Community Operating Margin 36.1% 37.7% 35.1% 33.8% 33.5% -260 bps
Number of communities (period end) 775 775 775 775 775
Total Average Units 63,779 63,770 63,761 63,755 63,736
RevPAR $ 3,919 $ 4,023 $ 3,966 $ 3,945 $ 3,942 0.6 %
Weighted average unit occupancy 86.7% 86.1% 85.3% 85.5% 85.6% -110 bps
RevPOR $ 4,519 $ 4,675 $ 4,652 $ 4,616 $ 4,604 1.9 %
($ in 000s, except RevPAR and RevPOR) 2016 2017 YoY
Q4 Q1 Q2 Q3 Q4 Q4
Same Community Operating Income/Weighted average unit
occupancy
Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017
86.7%
86.1%
85.3% 85.5% 85.6%
$270,541
$290,613
$266,622
$255,015 $252,673
Same Community RevPAR
Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017
$3,919
$4,023
$3,966 $3,945 $3,942
Senior Housing: Same Community
(1) Excludes hurricane and natural disaster expense.
10
Resident fee revenue $ 383,588 $ 388,310 $ 381,418 $ 376,896 $ 377,586
Less: Facility operating expense (259,430) (252,673) (257,991) (261,069) (260,799)
Owned Portfolio Operating Income 124,158 135,637 123,427 115,827 116,787 (5.9)%
Less: G&A Portfolio Allocation (see page 14) (16,163) (16,808) (17,580) (16,326) (15,176)
Owned Portfolio Operating Income (Adjusted to Include G&A Allocation) $ 107,995 $ 118,829 $ 105,847 $ 99,501 $ 101,611 (5.9)%
Additional Information
Interest expense: property level and corporate debt $ (42,302) $ (40,285) $ (41,352) $ (44,214) $ (46,031)
Community level capital expenditures, net (see page 15) $ (18,668) $ (13,909) $ (16,733) $ (17,695) $ (29,356)
Number of communities (period end) 363 362 360 360 360
Period end number of units 33,054 33,016 32,765 32,721 32,539
Total Average Units 33,489 33,041 32,921 32,734 32,579
RevPAR $ 3,818 $ 3,916 $ 3,862 $ 3,838 $ 3,863 1.2 %
Weighted average unit occupancy 85.2% 84.4% 83.9% 84.0% 84.9% -30 bps
RevPOR $ 4,481 $ 4,641 $ 4,603 $ 4,569 $ 4,550 1.5 %
Interest Coverage (as of December 31, 2017) 2.4x
Net Debt (as of December 31, 2017; see page 19) $ 3,354,474
($ in 000s, except RevPAR and RevPOR) 2016 2017 YoY
Q4 Q1 Q2 Q3 Q4 Q4
Senior Housing: Owned Portfolio
11
Resident fee revenue $ 512,444 $ 516,645 $ 442,462 $ 435,392 $ 415,169
Less: Facility operating expense (328,993) (325,526) (287,327) (288,804) (273,052)
Leased Portfolio Operating Income 183,451 191,119 155,135 146,588 142,117 (22.5 )%
Less: G&A Portfolio Allocation (see page 14) (21,592) (22,362) (20,394) (18,860) (16,686)
Leased Portfolio Operating Income (adjusted to Include G&A Allocation) $ 161,859 $ 168,757 $ 134,741 $ 127,728 $ 125,431 (22.5)%
Additional Information
Total cash lease payments on leased portfolio (see page 16) $ (152,849) $ (152,041) $ (129,853) $ (129,523) $ (127,647)
Proceeds from entrance fees, net of refunds and amortization $ 1,575 $ (173) $ 541 $ (547) $ 811
Community level capital expenditures, net (see page 15) $ (16,585) $ (14,801) $ (14,205) $ (15,397) $ (29,119)
Number of communities (period end) 539 476 469 460 434
Period end number of units 44,081 38,170 37,498 36,954 34,102
Total Average Units 44,540 43,821 37,912 37,378 35,073
RevPAR $ 3,827 $ 3,922 $ 3,883 $ 3,879 $ 3,942 3.0 %
Weighted average unit occupancy 86.6% 85.9% 85.2% 85.5% 85.5% -110 bps
RevPOR $ 4,420 $ 4,564 $ 4,557 $ 4,537 $ 4,610 4.3 %
Lease Coverage (as of December 31, 2017) 1.01x
($ in 000s, except RevPAR and RevPOR) 2016 2017 YoY
Q4 Q1 Q2 Q3 Q4 Q4
Lease Maturity Information as of December 31, 2017
Twelve months ended
December 31, 2017
Leased communities with
purchase options
Leased communities
without purchase options Total leased communities
Initial lease maturities
Community
count
Total
average
units
Community
count
Total
average
units
Community
count
Total
average
units
Total cash lease
payments
2018 42 2,169 43 4,158 85 6,327 $ 93,134
2019 3 327 48 2,724 51 3,051 48,254
2020 2 301 84 4,513 86 4,814 58,428
2021 — — 23 1,559 23 1,559 20,962
2022 1 114 11 961 12 1,075 12,597
Thereafter 47 2,541 130 14,735 177 17,276 267,015
Total 95 5,452 339 28,650 434 34,102 $ 500,390
Senior Housing: Leased Portfolio
12
(1) Data reflected is for the consolidated senior housing portfolio only.
(2) NIC MAP Supply Set, Q4 2017 "New Construction" properties with projected open dates through Q4 2018.
(3) Saturation is equal to units per population Age 75+ with income 50k+.
(4) Percentage changes are based on data from ESRI for 2016-2021.
Brookdale's Largest 20 Markets - Competitive Summary
Brookdale in NIC Markets Competition Within 20 Minute Drive
Market
Community
Count
Total
Average
Units
(IL/AL/MC)
Q4 2017
Weighted
Average
Unit
Occupancy
Q4 2017
RevPAR
New Const.
Properties(2)
IL/AL/MC
New
Const.
Units(2)
1 Yr Projected
Unit Opens %
of Supply(2)
Current
Saturation(3)
5 Yr
Projected
Total Pop
Growth(4)
5 Yr Projected
Age 75 + Pop
w/ Inc. $50k +
Growth(4)
Chicago, IL 16 2,602 90.0% $ 3,977 16 2,047 7.8% 20.5% 1.5% 24.1%
Seattle, WA 25 2,447 87.7% 3,741 2 164 0.8% 27.5% 6.8% 37.3%
Los Angeles, CA 20 2,146 84.0% 3,917 4 550 2.7% 8.5% 3.5% 24.0%
Phoenix, AZ 22 1,767 88.7% 3,808 13 1,841 9.4% 24.3% 8.8% 43.5%
Dallas, TX 25 1,709 85.4% 3,360 14 1,200 5.4% 22.6% 9.2% 39.7%
Portland, OR 17 1,467 93.2% 3,786 3 463 2.8% 37.7% 6.5% 46.0%
Charlotte, NC 18 1,403 90.2% 4,433 2 318 3.2% 33.6% 8.9% 41.5%
Denver, CO 11 1,207 81.9% 4,315 11 1,341 11.1% 23.3% 8.5% 42.8%
Austin, TX 10 1,043 87.8% 5,527 7 934 15.3% 20.9% 13.3% 47.0%
Miami, FL 7 1,041 79.1% 2,820 7 1,097 7.9% 15.8% 6.0% 36.5%
Houston, TX 12 991 86.3% 4,388 7 655 6.7% 14.9% 9.7% 41.2%
San Antonio, TX 12 970 74.2% 3,125 — — —% 22.4% 8.4% 35.9%
Detroit, MI 10 955 83.1% 3,206 10 956 6.9% 22.6% 1.5% 31.0%
Jacksonville, FL 9 934 90.0% 3,609 4 419 8.1% 25.8% 6.9% 45.4%
Riverside, CA 9 903 84.5% 3,338 4 599 7.1% 12.4% 5.0% 24.6%
Atlanta, GA 9 858 90.5% 3,402 6 609 6.2% 29.2% 8.0% 46.7%
Orlando, FL 11 848 85.7% 3,687 4 625 9.3% 20.0% 9.1% 46.3%
Tampa, FL 8 845 78.2% 2,916 7 877 8.2% 20.4% 6.1% 40.9%
Santa Rosa, CA 6 843 80.9% 3,931 — — —% 18.9% 3.6% 31.4%
New York, NY 8 841 89.2% 6,560 5 466 4.6% 8.0% 3.6% 22.7%
Top 20 Markets 265 25,820 86.1% $ 3,889 126 15,161 6.2% 21.5% 6.7% 37.4%
All Other NIC Markets 310 24,942 84.8% $ 3,918 82 8,184 2.3% 20.9% 4.3% 32.1%
New Supply (1)
13
Resident fee revenue
Home Health $ 91,199 $ 92,241 $ 88,561 $ 87,315 $ 89,272
Hospice 12,531 13,346 15,441 17,328 18,248
Outpatient Therapy 9,320 6,375 6,179 5,941 5,937
Other ancillary services 992 10 9 20 39
Segment resident fee revenue 114,042 111,972 110,190 110,604 113,496 (0.5)%
Segment Operating Income 16,289 15,629 13,103 9,823 12,793 (21.5)%
Segment Operating Margin 14.3% 14.0% 11.9% 8.9% 11.3% -300 bps
Less: G&A Allocation (see page 14) (6,331) (7,225) (7,128) (7,091) (7,630)
Segment Operating Income (Adjusted to Include G&A Allocation) $ 9,958 $ 8,404 $ 5,975 $ 2,732 $ 5,163 (48.2)%
Segment Operating Margin (Adjusted to Include G&A Allocation) 8.7% 7.5% 5.4% 2.5% 4.5% -420 bps
Additional Information
Interest expense $ (303) $ (288) $ (165) $ (168) $ (132)
Community level capital expenditures, net (see page 15) $ (51) $ (22) $ (35) $ (277) $ (3)
Home Health average daily census 14,587 15,370 14,821 14,844 15,335 5.1 %
Hospice average daily census 863 920 1,033 1,169 1,257 45.7 %
Outpatient Therapy treatment codes 307,933 193,853 190,618 178,851 179,132 (41.8)%
($ in 000s) 2016 2017 YoY
Q4 Q1 Q2 Q3 Q4 Q4
Ancillary Services
14
(1) G&A allocations are calculated using a methodology which the Company believes best matches the type of general and administrative cost with the community, segment, or portfolio.
Some of the allocations are based on direct utilization and some are based on formulas such as unit proportion. G&A allocations presented herein exclude non-cash stock-based compensation
expense and integration, transaction, transaction-related and strategic project costs.
G&A Expense Allocations(1)
Senior Housing Owned Portfolio allocation $ 16,163 $ 16,808 $ 17,580 $ 16,326 $ 15,176
Senior Housing Leased Portfolio allocation 21,592 22,362 20,394 18,860 16,686
Ancillary Services allocation 6,331 7,225 7,128 7,091 7,630
Management Services allocation 9,505 11,238 14,184 13,134 12,979
Total allocations(1) 53,591 57,633 59,286 55,411 52,471
Non-cash stock-based compensation expense 5,067 7,774 7,246 7,527 5,285
Integration, Transaction-Related and Strategic Project Costs 8,010 153 558 841 1,261
General and administrative expense 66,668 65,560 67,090 63,779 59,017 -11.5%
Transaction Costs 2,040 7,593 3,339 1,992 9,649
General and administrative expense and transaction costs $ 68,708 $ 73,153 $ 70,429 $ 65,771 $ 68,666 -0.1%
Allocated G&A Expense as a Percentage of Resident Fee Revenue
Resident fee revenue $ 1,010,074 $ 1,016,927 $ 934,070 $ 922,892 $ 906,251
Senior Housing Owned Portfolio allocation 16,163 16,808 17,580 16,326 15,176
Senior Housing Leased Portfolio allocation 24,592 22,362 20,394 18,860 16,686
Ancillary Services allocation 6,331 7,225 7,128 7,091 7,630
Non-cash stock-based compensation expense 5,067 7,774 7,246 7,527 5,285
Total $ 49,153 $ 54,169 $ 52,348 $ 49,804 $ 44,777
As a % of resident fee revenue 4.9% 5.3% 5.6% 5.4% 4.9%
($ in 000s) 2016 2017 YoY
Q4 Q1 Q2 Q3 Q4 Q4
G&A Expense & Transaction Costs
15
Community level capital expenditures, including allocations
Senior Housing Owned Portfolio $ 18,668 $ 13,909 $ 16,733 $ 17,695 $ 29,356
Senior Housing Leased Portfolio 16,585 14,801 14,205 15,397 29,119
Ancillary Services 51 22 35 277 3
Community level capital expenditures, net 35,304 28,732 30,973 33,369 58,478 65.6 %
Corporate capital expenditures 14,059 5,990 7,859 7,636 13,430 (4.5 )%
Non-Development Capital Expenditures, net 49,363 34,722 38,832 41,005 71,908 45.7 %
Development Capital Expenditures, net 7,186 1,064 2,807 3,336 1,616 (77.5)%
Total capital expenditures, net $ 56,549 $ 35,786 $ 41,639 $ 44,341 $ 73,524 30.0 %
Community level capital expenditures, net, per unit $ 452 $ 374 $ 437 $ 476 $ 864 91.2 %
Reconciliation to Additions to PP&E
Total capital expenditures, net $ 56,549 $ 35,786 $ 41,639 $ 44,341 $ 73,524
Add: Total lessor reimbursements 12,727 8,044 5,545 4,379 8,218
Add: Change in related payables 421 5,098 (6,542) 1,754 (7,899)
Additions to property, plant and equipment and leasehold intangibles, net $ 69,697 $ 48,928 $ 40,642 $ 50,474 $ 73,843
($ in 000s, except for Community level capital expenditures per unit) 2016 2017 YoY
Q4 Q1 Q2 Q3 Q4 Q4
Capital Expenditures
16(1) Includes cash lease payments of $3,566, $3,514, $3,491, $3,466 and $3,368 (in thousands), respectively, for leases of corporate offices and information technology systems and equipment.
Operating Leases
Facility lease expense $ 91,745 $ 88,807 $ 84,690 $ 84,437 $ 81,787
Less: Straight-line (income) expense, net 1,786 3,007 3,119 3,078 5,109
Less: Amortization of (above) below market lease, net 1,699 1,697 1,697 1,697 1,586
Add: Amortization of deferred gain 1,093 1,093 1,093 1,091 1,089
Cash operating lease payments(1) $ 96,323 $ 94,604 $ 90,599 $ 90,303 $ 89,571 (7.0 )%
Capital and Financing Leases
Interest expense: capital and financing lease obligations $ 50,451 $ 49,859 $ 32,228 $ 31,999 $ 26,578
Less: Non-cash interest expense on financing lease obligations (6,768) (6,156) (3,865) (3,939) (3,784)
Add: Lease financing debt amortization 16,409 17,248 14,382 14,626 18,650
Cash capital and financing lease payments $ 60,092 $ 60,951 $ 42,745 $ 42,686 $ 41,444 (31.0 )%
Total cash lease payments(1) $ 156,415 $ 155,555 $ 133,344 $ 132,989 $ 131,015 (16.2)%
Interest Expense Reconciliation to Income Statement
Interest expense: capital and financing lease obligations $ 50,451 $ 49,859 $ 32,228 $ 31,999 $ 26,578
Less: Non-cash interest expense on financing lease obligations (6,768) (6,156) (3,865) (3,939) (3,784)
Interest expense: capital and financing lease obligations - cash payments 43,683 43,703 28,363 28,060 22,794
Less: Interest income (694) (631) (804) (1,285) (1,903)
Interest expense: debt 42,605 40,573 41,517 44,382 46,163
Interest expense, net 85,594 83,645 69,076 71,157 67,054
Add: Amortization of deferred financing costs and debt premium (discount) 2,422 2,591 2,692 3,544 3,854
Add: Change in fair value of derivatives 150 46 39 74 15
Add: Non-cash interest expense on financing lease obligations 6,768 6,156 3,865 3,939 3,784
Add: Interest income 694 631 804 1,285 1,903
Interest expense per income statement $ 95,628 $ 93,069 $ 76,476 $ 79,999 $ 76,610
($ in 000s) 2016 2017 YoY
Q4 Q1 Q2 Q3 Q4 Q4
Cash Lease Payments
17
($ in 000s) Q4 2017
Year Ended
December 31,
2017
Total CCRC Venture Other Ventures Total
Resident fee revenue $ 343,383 $ 103,784 $ 239,599 $ 1,354,444
Less: Facility operating expenses (241,729) (79,473) (162,256) (946,477)
Less: G&A expenses including management fees (17,340) (5,453) (11,887) (71,898)
Less: Facility lease expense 14 — 14 (727)
Adjusted EBITDA of Unconsolidated Ventures $ 84,328 $ 18,858 $ 65,470 $ 335,342
Less: Interest expense, net (32,766) (5,998) (26,768) (130,468)
Add: Proceeds from entrance fees, net of refunds and amortization 15,883 15,883 — 35,535
Less: Other 289 534 (245) 1,221
Less: Community level capital expenditures, net (31,196) (9,820) (21,376) (100,621)
Adjusted Free Cash Flow of Unconsolidated Ventures $ 36,538 $ 19,457 $ 17,081 $ 141,009
Statistics
Brookdale's weighted average unit ownership percentage 23.5% 51.0% 12.7% 23.5%
Non-recourse debt principal of unconsolidated ventures as of December 31, 2017 $ 2,783,650 $ 630,825 $ 2,152,825 $ 2,783,650
Number of communities (period end) 168 16 152 168
Total average units 28,619 7,253 21,367 28,323
Weighted average unit occupancy 84.6% 85.7% 84.3% 85.0%
RevPOR $ 4,620 $ 5,157 $ 4,435 $ 4,586
Brookdale's Proportionate Share of:
Adjusted EBITDA of Unconsolidated Ventures $ 17,723 $ 9,618 $ 8,105 $ 69,856
Adjusted Free Cash Flow of Unconsolidated Ventures $ 12,037 $ 9,923 $ 2,114 $ 35,416
Debt principal of unconsolidated ventures as of December 31, 2017 $ 594,250 $ 321,720 $ 272,530 $ 594,250
Unconsolidated Ventures
18
$2,536,474 $1,334,263
(1) Includes the carrying value of mortgage debt, convertible notes, line of credit and other notes payable, but excludes capital and financing lease obligations.
(2) Pertaining to variable rate debt, reflects a) market rates as of December 31, 2017 and b) applicable cap rates for hedged debt.
Line of credit available to draw Cash and cash equivalents and marketable securities Total liquidity (available to draw + cash)
$1,000,000
$800,000
$600,000
$400,000
$200,000
$0
12/31/2016 03/31/2017 06/30/2017 09/30/2017 12/31/2017
$367,642 $367,473 $364,699 $361,505 $358,191
$216,397
$59,237
$181,307
$537,930 $514,443
$899,435
$546,006
$426,710
$584,039
As of December 31, 2017
Weighted Rate
Fixed rate debt 4.89%
Variable rate debt (2) 3.65%
Total debt and line of credit 4.46%
Balance(1)
Total debt $ 3,870,737
Total Liquidity
($ in 000s)
Debt & Liquidity
$872,634
Debt Structure(1)
($ in 000s)
Fixed rate debt
Variable rate debt with interest rate caps
Variable rate debt- unhedged
Total variable rate debt
$534,338
$799,925
19
Debt Maturity Schedule(1)
($ in 000s)
Debt
$1,400,000
$700,000
$0
2018 2019 2020 2021 2022 Thereafter
$495,413
$326,038
$485,977
$336,096 $341,095
$1,886,118
(1) Includes carrying value of $309.9 million of
convertible notes.
(2) Includes mortgage debt, convertible notes and
other notes payable, but excludes capital and
financing leases and line of credit and recurring
principal amortization.
(3) Leverage ratios include results of operations of
communities disposed of through sale or lease
termination through the disposition date.
(4) Amounts exclude transaction and strategic project
costs of $25.4 million.
Important Note Regarding Non-GAAP Financial
Measures. Adjusted EBITDAR, Adjusted EBITDA and
Adjusted EBITDA after cash capital and financing lease
payments (in each case excluding transaction and
strategic project costs), Net debt, and Adjusted net debt
are financial measures that are not calculated in
accordance with GAAP. See the definitions of such
measures under “Definitions” below and important
information regarding such measures, including
reconciliations to the most comparable GAAP financial
measures, under “Non-GAAP Financial Measures” below.
(2)
Leverage Ratios(3)
($ in 000s)
Year ended December 31, 2017
Annualized
Leverage
Adjusted EBITDAR(4) (A) $ 1,029,029
Less: Cash operating lease payments (see page 16) (365,077)
Adjusted EBITDA(4) 663,952
Less: Cash capital and financing lease payments (see page 16) (187,826)
Adjusted EBITDA(4) after cash capital and financing lease payments (B) 476,126
As of December 31, 2017
Debt (2) 3,870,737
Line of credit —
Less: Cash and cash equivalents (222,647)
Less: Marketable securities (291,796)
Less: Cash and escrow deposits - restricted held as collateral against existing debt (1,820)
Net Debt (C) 3,354,474 7.0x (C/B)
Plus: Cash operating and capital and financing lease payments (see page 16) multiplied by 8 4,423,224
Adjusted Net Debt (D) $ 7,777,698 7.6x (D/A)
Weighted Rate
Debt(2)
2018 3.44%
2019 6.31%
2020 5.23%
2021 5.82%
2022 4.02%
Thereafter 4.05%
Total 4.46%
Total Balance
Debt(2) $ 3,870,737
Debt Maturity & Leverage
(1)
20
(1) Includes results of operations of communities disposed through sale or lease termination through the disposal date.
(2) See page 14. G&A allocations presented on this page exclude non-cash stock-based compensation expense of $27,832 and transaction and strategic project costs of $25,386 for the twelve
months ended December 31, 2017.
Senior Housing: Owned Portfolio(1)
Owned Portfolio Operating Income $ 491,678
Less: G&A Portfolio Allocation(2) (65,890)
Owned Portfolio Operating Income (Adjusted to Include G&A Allocation) $ 425,788
Net Debt as of December 31, 2017 (see page 19) $ 3,354,474
Total Average Units 32,819
Senior Housing: Leased Portfolio(1)
Leased Portfolio Operating Income (Adjusted to Include G&A Allocation)(2) $ 556,657
Total cash lease payments on leased portfolio (see page 16) $ (539,064)
Proceeds from entrance fees, net of refunds and amortization $ 632
Total Average Units 38,546
Ancillary Services
Segment Operating Income (Adjusted to Include G&A Allocation)(2) $ 22,274
Management Services
Segment Operating Income (Adjusted to Include G&A Allocation)(2) $ 24,310
Unconsolidated Ventures
Brookdale's Proportionate Share of Adjusted EBITDA $ 69,856
Brookdale's Proportionate Share of non-recourse debt principal as of December 31, 2017 $ 594,250
Total Average Units 28,323
Brookdale's weighted average unit ownership percentage 23.5%
Shares outstanding (excluding 4,770,097 unvested restricted shares) as of December 31, 2017 186,505,831
($ in 000s and are for the trailing twelve months ending December 31, 2017 unless otherwise noted)
Net Asset Value Elements
21
Adjusted EBITDA is a non-GAAP financial measure that the Company defines as net
income (loss) before provision (benefit) for income taxes; non-operating (income)
expense items; depreciation and amortization (including non-cash impairment
charges); (gain) loss on sale or acquisition of communities (including gain (loss) on
facility lease termination); straight-line lease expense (income), net of amortization
of (above) below market rents; amortization of deferred gain; non-cash stock-based
compensation expense; and change in future service obligation. For purposes of the
Company’s leverage ratios presented under “Debt Maturity & Leverage”, Adjusted
EBITDA and Adjusted EBITDA after cash capital and financing lease payments exclude
transaction and strategic project costs.
Adjusted EBITDAR is a non-GAAP financial measure that the Company defines as
Adjusted EBITDA less cash operating lease payments. For purposes of the Company’s
leverage ratios presented under “Debt Maturity & Leverage”, Adjusted EBITDAR
excludes transaction and strategic project costs.
Adjusted Free Cash Flow is a non-GAAP financial measure that the Company defines
as net cash provided by (used in) operating activities before: changes in operating
assets and liabilities; gain (loss) on facility lease termination; and distributions from
unconsolidated ventures from cumulative share of net earnings; plus: proceeds from
refundable entrance fees, net of refunds; and property insurance proceeds; less: lease
financing debt amortization and Non-Development Capital Expenditures (next
page).
Adjusted Net Debt is a non-GAAP financial measure that the Company defines as
Net Debt, plus cash operating and capital and financing lease payments for the
relevant period multiplied by 8.
Brookdale's Proportionate Share of Adjusted EBITDA of Unconsolidated
Ventures is a non-GAAP financial measure calculated based on the Company’s equity
ownership percentage and in a manner consistent with the Company’s definition of
Adjusted EBITDA for its consolidated entities. The Company’s investments in its
unconsolidated ventures are accounted for under the equity method of accounting.
Brookdale’s Proportionate Share of Adjusted Free Cash Flow of Unconsolidated
Ventures is a non-GAAP financial measure calculated based on the Company’s equity
ownership percentage and in a manner consistent with the Company’s definition of
Adjusted Free Cash Flow for its consolidated entities. The Company’s investments in
its unconsolidated ventures are accounted for under the equity method of
accounting and, therefore, the Company’s proportionate share of Adjusted Free Cash
Flow of unconsolidated ventures does not represent cash available to the Company’s
consolidated business except to the extent it is distributed to the Company.
Combined Segment Operating Income is defined by the Company as resident fee
and management fee revenue of the Company, less facility operating expenses.
Combined Segment Operating Income does not include general and administrative
expenses, transaction costs or depreciation and amortization.
Community Labor Expenses is a component of facility operating expense that
includes regular and overtime salaries and wages, bonuses, paid-time-off and holiday
wages, payroll taxes, contract labor, employee benefits, and workers compensation.
Development Capital Expenditures means capital expenditures for community
expansions and major community redevelopment and repositioning projects,
including the Company’s Program Max initiative, and the development of new
communities. Amounts of Development Capital Expenditures are presented net of
lessor reimbursements received or anticipated to be received.
Integration, Transaction, Transaction-Related and Strategic Project Costs are
general and administrative expenses. Integration costs include transition costs
associated with organizational restructuring (such as severance and retention
payments and recruiting expenses), third party consulting expenses directly related
to the integration of acquired communities (in areas such as cost savings and synergy
realization, branding and technology and systems work), and internal costs such as
training, travel and labor, reflecting time spent by Company personnel on integration
activities and projects. Transaction and transaction-related costs include third party
costs directly related to the acquisition and disposition activity, community financing
and leasing activity, our assessment of options and alternatives to enhance
stockholder value, and corporate capital structure assessment activities (including
stockholder relations advisory matters), and are primarily comprised of legal, finance,
consulting, professional fees and other third party costs. Strategic project costs
include costs associated with certain strategic projects related to refining the
Company's strategy, building out enterprise-wide capabilities (including the
electronic medical records (“EMR”) roll-out project) and reducing costs and achieving
synergies by capitalizing on scale.
Interest Coverage is calculated based on the trailing-twelve months Owned
Portfolio Operating Income adjusted for 5% management fee and capital
expenditures at $350/unit, divided by the trailing-twelve months property level and
corporate debt interest expense.
Lease Coverage is calculated based on the trailing-twelve months Leased Portfolio
Operating Income, excluding resident fee revenue and facility operating expense of
communities disposed during such period adjusted for 5% management fee and
capital expenditures at $350/unit, divided by the trailing-twelve months cash lease
payments for both operating leases and capital and financing leases, excluding cash
lease payments for leases of corporate offices and information technology systems
and equipment.
Definitions
22
Leased Portfolio Operating Income is defined by the Company as resident fee
revenues (excluding Brookdale Ancillary Services segment revenue), less facility
operating expenses for the Company’s Senior Housing Leased Portfolio. Leased
Portfolio Operating Income does not include general and administrative expenses
(unless otherwise noted), transaction costs or depreciation and amortization.
Net Debt is a non-GAAP financial measure that the Company defines as the total of
its debt (mortgage debt, convertible notes and other notes payable) and the
outstanding balance on the line of credit, less unrestricted cash, marketable
securities, and cash held as collateral against existing debt.
NM means not meaningful and is used in the year-over-year variance column if either
or both periods being compared are negative values.
Non-Development Capital Expenditures is comprised of corporate and
community-level capital expenditures, including those related to maintenance,
renovations, upgrades and other major building infrastructure projects for the
Company’s communities. Non-Development Capital Expenditures does not include
capital expenditures for community expansions and major community
redevelopment and repositioning projects, including the Company’s Program Max
initiative, and the development of new communities (i.e., Development Capital
Expenditures). Amounts of Non-Development Capital Expenditures are presented
net of lessor reimbursements received or anticipated to be received.
Owned Portfolio Operating Income is defined by the Company as resident fee
revenues (excluding Brookdale Ancillary Services segment revenue), less facility
operating expenses for the Company’s Senior Housing Owned Portfolio. Owned
Portfolio Operating Income does not include general and administrative expenses
(unless otherwise noted), transaction costs or depreciation and amortization.
RevPAR, or average monthly senior housing resident fee revenues per available unit,
is defined by the Company as resident fee revenues, excluding Brookdale Ancillary
Services segment revenue and entrance fee amortization, for the corresponding
portfolio for the period, divided by the weighted average number of available units
in the corresponding portfolio for the period, divided by the number of months in
the period.
RevPOR, or average monthly senior housing resident fee revenues per occupied unit,
is defined by the Company as resident fee revenues, excluding Brookdale Ancillary
Services segment revenue and entrance fee amortization, for the corresponding
portfolio for the period, divided by the weighted average number of occupied units
in the corresponding portfolio for the period, divided by the number of months in
the period.
Same Community information reflects historical results from senior housing
operations for same store communities (utilizing the Company's methodology for
determining same store communities).
Segment Operating Income is defined by the Company as segment revenues less
segment facility operating expenses. Segment Operating Income does not include
general and administrative expenses (unless otherwise noted), transaction costs or
depreciation and amortization. Management Services segment operating income
excludes revenue for reimbursements for which the Company is the primary obligor
of costs incurred on behalf of managed communities, and there are no facility
operating expenses associated with the Management Services segment. See the
Segment Information note to the Company’s consolidated financial statements for
more information regarding the Company’s segments.
Senior Housing Leased Portfolio represents Brookdale leased communities and
does not include owned, managed – 3rd party, or managed – venture communities.
Senior Housing Operating Income is defined by the Company as segment revenues
less segment facility operating expenses for the Company’s Retirement Centers,
Assisted Living and CCRCs–Rental segments on an aggregate basis. Senior Housing
Operating Income does not include general and administrative expenses,
transaction costs or depreciation and amortization.
Senior Housing Owned Portfolio represents Brookdale owned communities and
does not include leased, managed – 3rd party, or managed – venture communities.
Total Average Units represents the average number of units operated during the
period.
Total RevPAR, or average monthly resident fee revenues per available unit, is defined
by the Company as resident fee revenues, excluding entrance fee amortization, for
the Company for the period, divided by the weighted average number of available
units in the Company’s consolidated portfolio for the period, divided by the number
of months in the period.
Definitions
23
Brookdale West Hartford
West Hartford, CT
Consolidated Statements of Cash Flows 24
Non-GAAP Financial Measures 25
Appendix
24
Cash Flows from Operating Activities
Net income (loss) $ (268,600) $ (126,361) $ (46,337) $ (413,929) $ 15,021
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Loss on extinguishment of debt, net 876 54 42 573 45
Depreciation and amortization, net 131,510 130,078 123,579 121,193 119,908
Goodwill and asset impairment 221,877 20,706 1,559 368,551 18,966
Equity in (earnings) loss of unconsolidated ventures (1,182) (981) 4,570 6,722 4,516
Distributions from unconsolidated ventures from cumulative share of net earnings 17,144 439 453 473 6,893
Amortization of deferred gain (1,093) (1,093) (1,093) (1,091) (1,089)
Amortization of entrance fee revenue (1,084) (1,198) (832) (427) (444)
Proceeds from deferred entrance fee revenue 2,653 1,927 2,025 567 1,193
Deferred income tax (benefit) provision (556) 83,310 (2,937) (31,704) (63,978)
Straight-line lease income (1,786) (3,007) (3,119) (3,078) (5,109)
Change in fair value of derivatives 150 46 39 74 15
Loss (gain) on sale of assets, net (5,092) 603 547 233 (20,656)
Loss on facility lease termination — — 6,368 4,938 2,970
Non-cash stock-based compensation 5,067 7,774 7,246 7,527 5,285
Non-cash interest expense on financing lease obligations 6,768 6,156 3,865 3,939 3,784
Amortization of (above) below market rents, net (1,699) (1,697) (1,697) (1,697) (1,586)
Other (2,777) (1,398) (1,571) (1,730) (4,120)
Changes in operating assets and liabilities:
Accounts receivable, net (6,602) 3,556 8,401 (1,192) 1,982
Prepaid expenses and other assets, net 10,292 (8,630) 27,609 4,344 (1,353)
Accounts payable and accrued expenses (9,356) (51,627) 3,645 26,523 16,932
Tenant refundable fees and security deposits (146) (297) 82 (17) (190)
Deferred revenue (7,913) 8,406 664 (7,557) (15,430)
Net cash provided by operating activities 88,451 66,766 133,108 83,235 83,555
Cash Flows from Investing Activities
Change in lease security deposits and lease acquisition deposits, net (449) (420) 425 (416) (1,702)
Change in cash and escrow deposits - restricted 6,837 (629) (1,092) (4,619) 7,366
Purchase of marketable securities, net — — (29,779) (216,597) (44,811)
Additions to property, plant and equipment and leasehold intangibles, net (69,697) (48,928) (40,642) (50,474) (73,843)
Acquisition of assets, net of related payables — — (400) — (4,796)
Investment in unconsolidated ventures (7,306) (185,971) (195) (1,434) (11,417)
Distributions received from unconsolidated ventures 214,137 1,807 6,238 3,446 17,544
Proceeds from sale of assets, net 78,461 31,675 2,780 115 35,937
Property insurance proceeds 2,777 1,398 1,571 1,461 4,120
Other 6,439 696 251 15 13
Net cash (used in) provided by investing activities 231,199 (200,372) (60,843) (268,503) (71,589)
Cash Flows from Financing Activities
Proceeds from debt 185,216 34,455 58,116 1,200,476 14,158
Repayment of debt and capital and financing lease obligations (251,613) (52,273) (36,931) (869,499) (95,458)
Proceeds from line of credit — — — 100,000 —
Repayment of line of credit (100,000) — — (100,000) —
Purchase of treasury stock (9,640) — — — —
Payment of financing costs, net of related payables (1,524) (321) (202) (5,182) 131
Proceeds from refundable entrance fees, net of refunds 6 (902) (652) (687) 62
Payment on lease termination — — (552) — —
Payments of employee taxes for withheld shares (205) (5,112) (208) (346) (223)
Other 323 599 455 532 457
Net cash (used in) provided by financing activities (177,437) (23,554) 20,026 325,294 (80,873)
Net increase (decrease) in cash and cash equivalents 142,213 (157,160) 92,291 140,026 (68,907)
Cash and cash equivalents at beginning of period 74,184 216,397 59,237 151,528 291,554
Cash and cash equivalents at end of period $ 216,397 $ 59,237 $ 151,528 $ 291,554 $ 222,647
($ in 000s) 2016 2017
Q4 Q1 Q2 Q3 Q4
Consolidated Statements of Cash Flows
25
This Supplemental Information contains financial measures utilized by management to evaluate the Company’s operating performance and liquidity that are not calculated
in accordance with GAAP, including Adjusted EBITDA; the Company's Proportionate Share of Adjusted EBITDA of Unconsolidated Ventures; Adjusted EBITDAR, Adjusted
EBITDA and Adjusted EBITDAR after cash lease payments (in each case excluding transaction and strategic project costs); Net Debt; Adjusted Net Debt; Adjusted Free Cash
Flow; and the Company’s Proportionate Share of Adjusted Free Cash Flow of Unconsolidated Ventures, the Company’s definitions for which are included in the “Definitions”
section above. In addition, this section contains reconciliations of the Company’s non-GAAP financial measures Cash From Facility Operations (CFFO), Adjusted CFFO and
the Company's proportionate share of CFFO of unconsolidated ventures, which the Company historically reported. These non-GAAP financial measures should not be
considered in isolation from or as superior to or as a substitute for net income (loss), income (loss) from operations, net cash provided by (used in) operating activities, short-
term debt, long-term debt, less current portion, current portion of long-term debt, or other financial measures determined in accordance with GAAP. Management uses
these non-GAAP financial measures to supplement the Company’s GAAP results to provide a more complete understanding of the factors and trends affecting the business.
Investors are urged to review the reconciliations set forth in this section of such non-GAAP financial measures to their most comparable GAAP financial measures and to
review the information under “Reconciliation of Non-GAAP Financial Measures” in the Company’s earnings release dated February 22, 2018 for additional information regarding
the Company’s use, and the limitations of, the Company’s non-GAAP financial measures. Investors are cautioned that amounts presented in accordance with the Company’s
definitions of these non-GAAP measures may not be comparable to similar measures disclosed by other companies, because not all companies calculate such measures in
the same manner.
As noted in the Company’s earnings release dated February 22, 2018, the Company changed its definition and calculation of Adjusted EBITDA when it reported results for
the second quarter of 2016. Prior period amounts of Adjusted EBITDA presented herein have been recast to conform to the new definition. See "Reconciliation of Non-GAAP
Financial Measures" in the Company’s earnings release dated February 22, 2018 for more information regarding the changes made to the definition and calculation of Adjusted
EBITDA.
Accounting Standards Update 2016-15, Statement of Cash Flows - Classification of Certain Cash Receipts and Cash Payments ("ASU 2016-15") is effective for the Company on
January 1, 2018 and will be applied retrospectively for all periods presented. Among other things, ASU 2016-15 provides that debt prepayment and extinguishment costs
will be classified within financing activities within the statement of cash flows. We have identified $5.1 million, $0.7 million, $10.6 million, and $0.5 million of cash paid for
debt modification and extinguishment costs for the fourth quarter of 2016, the second quarter of 2017, the third quarter of 2017, and the fourth quarter of 2017, respectively,
which we have determined will be retrospectively classified as cash flows from financing activities and will result in an increase to the amount of net cash provided by
operating activities for such quarters. There was no material amount of cash paid for debt modification and extinguishment costs during the first quarter of 2017. We do not
anticipate changing our definition of Adjusted Free Cash Flow as a result of our adoption of ASU 2016-15. As a result, we anticipate that in future presentations of Adjusted
Free Cash Flow that accompany 2018 financial results, the amount of Adjusted Free Cash Flow for the fourth quarter of 2016, the second quarter of 2017, third quarter of
2017, and the fourth quarter of 2017 will be increased by $5.1 million, $0.7 million, $10.6 million, and $0.5 million, respectively.
Non-GAAP Financial Measures
26
Net income (loss) $ (268,600) $ (126,361) $ (46,337) $ (413,929) $ 15,021
(Benefit) provision for income taxes (569) 84,028 (2,735) (31,218) (66,590)
Equity in (earnings) loss of unconsolidated ventures (1,182) (981) 4,570 6,722 4,516
Debt modification and extinguishment costs 5,930 61 693 11,129 526
(Gain) loss on sale of assets, net (5,092) 603 547 233 (20,656)
Other non-operating income (3,790) (1,662) (2,236) (2,621) (4,899)
Interest expense 95,628 93,069 76,476 79,999 76,610
Interest income (694) (631) (804) (1,285) (1,903)
Income (loss) from operations (178,369) 48,126 30,174 (350,970) 2,625
Depreciation and amortization 129,088 127,487 120,887 117,649 116,054
Goodwill and asset impairment 221,877 20,706 1,559 368,551 18,966
Loss on facility lease termination 11,113 — 6,368 4,938 2,970
Straight-line lease expense (income) (1,786) (3,007) (3,119) (3,078) (5,109)
Amortization of above market lease, net (1,699) (1,697) (1,697) (1,697) (1,586)
Amortization of deferred gain (1,093) (1,093) (1,093) (1,091) (1,089)
Non-cash stock-based compensation expense 5,067 7,774 7,246 7,527 5,285
Adjusted EBITDA $ 184,198 $ 198,296 $ 160,325 $ 141,829 $ 138,116
($ in 000s) 2016 2017
Q4 Q1 Q2 Q3 Q4
Adjusted EBITDA Reconciliation
Non-GAAP Financial Measures (Continued)
27
Adjusted EBITDAR; Adjusted EBITDA; and Adjusted EBITDA after cash capital and financing lease payments Reconciliations (excluding transaction and strategic
project costs)
($ in 000s)
2017
Net income (loss) $ (571,606)
Benefit for income taxes (16,515)
Equity in loss of unconsolidated ventures 14,827
Debt modification and extinguishment costs 12,409
Gain on sale of assets, net (19,273)
Other non-operating income (11,418)
Interest expense 326,154
Interest income (4,623)
Income (loss) from operations (270,045)
Depreciation and amortization 482,077
Goodwill and asset impairment 409,782
Loss on facility lease termination 14,276
Facility lease expense 339,721
Non-cash stock-based compensation expense 27,832
Transaction and strategic project costs 25,386
Adjusted EBITDAR (excluding Transaction and Strategic Project Costs) $ 1,029,029
$ —Facility lease expense $ (339,721)
Straight-line lease income (14,313)
Amortization of above market lease, net (6,677)
Amortization of deferred gain (4,366)
Adjusted EBITDA (excluding Transaction and Strategic Project Costs) $ 663,952
Interest expense: capital and financing lease obligations $ (140,664)
Non-cash interest expense on financing lease obligations 17,744
Lease financing debt amortization (64,906)
Adjusted EBITDA after cash capital and financing lease payments (excluding
Transaction and Strategic Project Costs) $ 476,126
Non-GAAP Financial Measures (Continued)
28
Net Debt and Adjusted Net Debt Reconciliations
($ in 000s)
2017
Long-term debt (including current portion) $ 3,870,737
Line of credit —
Less: cash and cash equivalents (222,647)
Less: marketable securities (291,796)
Less: cash held as collateral against existing debt (1,820)
Net Debt 3,354,474
Plus: trailing twelve months cash lease payments multiplied by 8 4,423,224
Adjusted Net Debt $ 7,777,698
Adjusted Net Debt to Adjusted EBITDAR (excluding Transaction and Strategic Project
Costs) 7.6x
Net Debt to Adjusted EBITDA after cash capital and financing lease payments
(excluding Transaction and Strategic Project Costs) 7.0x
Non-GAAP Financial Measures (Continued)
29
Net cash provided by operating activities $ 88,451 $ 66,766 $ 133,108 $ 83,235 $ 83,555
Net cash provided by (used in) investing activities 231,199 (200,372) (60,843) (268,503) (71,589)
Net cash (used in) provided by financing activities (177,437) (23,554) 20,026 325,294 (80,873)
Net increase (decrease) in cash and cash equivalents $ 142,213 $ (157,160) $ 92,291 $ 140,026 $ (68,907)
Net cash provided by operating activities $ 88,451 $ 66,766 $ 133,108 $ 83,235 $ 83,555
Changes in operating assets and liabilities 13,725 48,592 (40,401) (22,101) (1,941)
Proceeds from refundable entrance fees, net of refunds 6 (902) (652) (687) 62
Lease financing debt amortization (16,409) (17,248) (14,382) (14,626) (18,650)
Loss on facility lease termination 11,113 — — — —
Distributions from unconsolidated ventures from cumulative share of net earnings (17,144) (439) (453) (473) (6,893)
Non-development capital expenditures, net (49,363) (34,722) (38,832) (41,005) (71,908)
Property insurance proceeds 2,777 1,398 1,571 1,461 4,120
Adjusted Free Cash Flow $ 33,156 $ 63,445 $ 39,959 $ 5,804 $ (11,655)
($ in 000s) 2016 2017
Q4 Q1 Q2 Q3 Q4
Adjusted Free Cash Flow Reconciliation
Non-GAAP Financial Measures (Continued)
30
Non-GAAP Financial Measures (Continued)
($ in 000s)
2017
Net cash provided by operating activities $ 366,664
Net cash used in investing activities (601,307)
Net cash provided by financing activities 240,893
Net increase in cash and cash equivalents $ 6,250
Net cash provided by operating activities $ 366,664
Changes in operating assets and liabilities (15,851)
Proceeds from refundable entrance fees, net of refunds (2,179)
Recurring capital expenditures, net (57,203)
Lease financing debt amortization with fair market value or no purchase options (61,472)
Distributions from unconsolidated ventures from cumulative share of net earnings (8,258)
CFFO $ 221,701
Transaction, transaction-related and strategic project costs 37,081
Adjusted CFFO $ 258,782
CFFO and Adjusted CFFO Reconciliations
31
Brookdale's Proportionate Share of Adjusted EBITDA of Unconsolidated Ventures
For purposes of this presentation, amounts for each line item represent the aggregate amounts of such line items for all the Company's unconsolidated ventures.
Net income (loss) $ 1,917 $ 8,118 $ (22,935) $ (40,233) $ (26,373) $ (81,423)
Provision for income taxes 227 263 327 323 292 1,205
Debt modification and extinguishment costs 131 13 16 80 21 130
(Gain) loss on sale of assets, net (724) (372) 189 20 11 (152)
Other non-operating income (loss) (781) (434) (837) (617) (590) (2,478)
Interest expense 27,183 26,391 35,304 36,119 34,035 131,849
Interest income (723) (703) (750) (783) (804) (3,040)
Income (loss) from operations 27,230 33,276 11,314 (5,091) 6,592 46,091
Depreciation and amortization 48,042 47,528 79,695 79,884 77,189 284,296
Asset impairment 413 2 483 3,911 546 4,942
Straight-line lease expense (income) — — 8 4 1 13
Adjusted EBITDA of unconsolidated ventures $ 75,685 $ 80,806 $ 91,500 $ 78,708 $ 84,328 $ 335,342
Brookdale's weighted average ownership percentage 23.8% 21.2% 19.9% 21.3% 21.0% 20.8%
Brookdale's proportionate share of Adjusted EBITDA of unconsolidated ventures $ 17,989 $ 17,126 $ 18,219 $ 16,788 $ 17,723 $ 69,856
($ in 000s) 2016 2017 TTM
Q4 Q1 Q2 Q3 Q4 Q4 2017
Non-GAAP Financial Measures (Continued)
32
Net cash provided by operating activities $ 40,994 $ 59,924 $ 85,867 $ 62,054 $ 61,910 $ 269,755
Net cash provided by (used in) investing activities 5,556 (1,150,080) (68,585) (20,267) (28,593) (1,267,525)
Net cash (used in) provided by financing activities (55,554) 1,145,059 (29,166) (32,514) (52,315) 1,031,064
Net (decrease) increase in cash and cash equivalents $ (9,004) $ 54,903 $ (11,884) $ 9,273 $ (18,998) $ 33,294
Net cash provided by operating activities $ 40,994 $ 59,924 $ 85,867 $ 62,054 $ 61,910 $ 269,755
Changes in operating assets and liabilities 8,617 2,086 (16,559) (5,615) 6,904 (13,184)
Proceeds from refundable entrance fees, net of refunds (4,931) (4,365) (5,028) (6,309) (1,664) (17,366)
Non-development capital expenditures, net (26,232) (17,027) (23,739) (28,659) (31,196) (100,621)
Property insurance proceeds — 393 834 614 584 2,425
Adjusted Free Cash Flow of Unconsolidated Ventures $ 18,448 $ 41,011 $ 41,375 $ 22,085 $ 36,538 $ 141,009
Brookdale's weighted average ownership percentage 36.7% 21.3% 19.1% 30.4% 32.9% 25.1%
Brookdale’s Proportionate Share of Adjusted Free Cash Flow of Unconsolidated
Ventures $ 6,763 $ 8,750 $ 7,920 $ 6,709 $ 12,037 $ 35,416
($ in 000s) 2016 2017 TTM
Q4 Q1 Q2 Q3 Q4 Q4 2017
Brookdale's Proportionate Share of Adjusted Free Cash Flow of Unconsolidated Ventures
For purposes of this presentation, amounts for each line item represent the aggregate amounts of such line items for all the Company's unconsolidated ventures.
Non-GAAP Financial Measures (Continued)
33
Non-GAAP Financial Measures (Continued)
Brookdale's Proportionate Share of CFFO of Unconsolidated Ventures
For purposes of this presentation, amounts for each line item represent the aggregate amounts of such line items for all the Company's unconsolidated ventures.
($ in 000s)
2017
Net cash provided by operating activities $ 269,755
Net cash used in investing activities (1,267,525)
Net cash provided by financing activities 1,031,064
Net increase in cash and cash equivalents $ 33,294
Net cash provided by operating activities $ 269,755
Changes in operating assets and liabilities (13,184)
Proceeds from refundable entrance fees, net of refunds (17,366)
Recurring capital expenditures, net (23,767)
CFFO of Unconsolidated Ventures $ 215,438
Brookdale's weighted average ownership percentage 26.3%
Brookdale's Proportionate Share of CFFO of Unconsolidated Ventures $ 56,631
Brookdale Senior Living Inc.
111 Westwood Place, Suite 400
Brentwood, TN 37027
(615) 221-2250
www.brookdale.com