Brookdale Sale Stalls Amid Buyer’s Funding Problems, According to Financial Times

BRENTWOOD, Tenn. — The proposed $3 billion acquisition of Brookdale Senior Living (NYSE: BKD) by a Chinese investor has stalled amid funding problems for the buyer, according to a report by Financial Times.

Reuters reported in June that Zhonghong Zhuoye had made the offer to by the huge-but-beleaguered seniors housing owner-operator. Financial Times now reports that, while the investor was close to reaching a deal, Chinese regulators had downgraded the company to “high risk,” which caused the Chinese bank funding the acquisition to put its financing on hold.

“The banking regulator has asked that banks assess their level of exposure to those companies and the foreign exchange watchdog has said that it is looking into the use of fake collateral for guaranteeing offshore loans,” according to Financial Times. “Global banks have responded by reducing their exposure to some of these high profile groups. Chinese banks, fearing a backlash from Beijing, have also been more conservative in their credit assessments.”

Chinese investors started making significant investments in North American seniors housing last year. For example, in November, a joint venture between Chinese firms Cindat Capital Management and Union Life Insurance paid $930 million for a 75 percent stake in a 39-property portfolio owned by Welltower.

Chinese investment firms have made major waves in other U.S. real estate sectors, as well. Most notably, China’s Anbang Insurance Group severely complicated Marriott International’s 2016 attempt to acquire Starwood Hotels & Resorts Worldwide, starting a bidding war that increased the final offer by nearly $2 billion before Anbang backed out. The Financial Times report notes that “Anbang’s chairman Wu Xiaohui was detained by authorities in June and has not been seen since.”

Headquartered in Brentwood, Brookdale is by far the largest owner and operator of seniors housing in the United States. Its operational portfolio includes 1,052 properties and 103,00 units, according to the company’s first-quarter report, which is nearly triple the size of the next largest competitor.

However, the company has struggled since its $2.8 billion acquisition of fellow seniors housing giant Emeritus in 2014. After initially experiencing a lift in the months following the merger, Brookdale’s stock price fell from $38.16 on March 2, 2015, to $11.80 on Feb. 8, 2016. Rumors of a sale of the company have swirled for months.

Brookdale’s dipped following the news, dropping from $13.12 per share on Friday, Aug. 4, to $12 on Monday, Aug. 7, its lowest point since December.

— Jeff Shaw

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