netrashetty
Netra Shetty
Brookdale Senior Living (NYSE: BKD) is a company that operates senior's residences, established in 1978. It is a New York Stock Exchange listed company. Brookdale is the largest owner and operator of senior living communities throughout the United States", operating over 570 senior or retirement communities in the US. They have 35,000 staff and 55,000 residents.[1]
The company also offers Independent living, Personalized Assisted living, Alzheimer’s and dementia care, rehabilitation and skilled nursing. One whole-owned subsidiary company, Innovative Senior Care (ISC), offers rehabilitation, fitness and educational programming, and health services.
The Origins of Brookdale started in the late 1970s with the focus of Large Upscale Urban Retirement communities located in large cities Like Chicago, New York, and Miami. These early models replicated large full service Five Star hotels like the Hyatt, Marriott's and Hilton of the modern era. As the industry evolved into the late nineties and early 2000s, Brookdales major shareholder became Fortress Investments with approximately 51% holdings. Throughout the late nineties and early to mid 2000s Brookdale developed several more communities that resembled earlier models but also reflected the ever changing climate including Large Continuous Care Retirement Communities (CCRC) which house all brands of the aging process including Skilled Nursing, Assisted Living, Independent Living, and Memory Care facilities.
By early 2005 the company had grown to approximately 90 stand alone properties. During this times Fortress Investments had acquired the recently bankrupt Alterra Corporation (formerly Alternative Living Services) A Milwaukee WI based company who had developed and opened more than 500 stand alone Assisted Living and Memory Care properties throughout the USA between 1993 and 2003. At one Point Alterra was the largest provider of Assisted Living and Memory Care services within the United States catapulting ahead of the Industry Benchmark for Senior Living "Sunrise Senior Living of Virginia". Rapid growth proved costly and detrimental to the Alterra Corporation and that organization filed for chapter 11 bankruptcy protection in 2004. They managed to sell off a third of their assets and bring their facility total down to approximately 300. During the bankruptcy Fortress purchased Alterra and pondered whether to sell the company to Emeritus Senior Living, which was hired on to manage Alterra through the bankruptcy phase. By the time the management agreement with Emeritus was about to expire the remaining Alterra portfolio was thriving due to an aggressive push by corporate and divisional leaders to prove the company was not "dead" and was a valuable asset. Fortress at the 11th hour put together a merger that would bring their Successful Brookdale Portfolio together with their now rising Alterra Portfolio. This was approved and completed in early 2005 bringing the Brookdale property total to 390. From late 2005 to early 2007 Fortress and Brookdale took advantage of a strong market and an abundance in company cash reserves to acquire several smaller senior living organizations within the United States. These Included the April 2006 acquisition of Southern Assisted Living a Chapel Hill, North Carolina Based privately held company who managed approximately 45 properties in the Carolinas, predominantly North Carolina. Simultaneously the acquisitions of several smaller companies including Liberty Senior Services, Wellington Senior Living, and Southland properties brought Brookdale into the second spot on the leading providers list for Senior Care in the US right behind Sunrise.
Brookdale Senior Living (NYSE: BKD) is the largest and most regionally diversified operator of senior living communities in America. As of December 31, 2009, it had 565 communities in 35 states and the ability to serve approximately 53,600 residents.[1]
The company stands to benefit from the aging of the baby boomers, which will see more seniors entering retirement communities. The subprime crisis and the ensuing credit crisis has both limited the ability of seniors and aging baby boomers to afford retirement communities, and has caused Brookdale senior management to worry about whether it can make debt payments, and used borrowed money to grow its business. This is because 83% of BKD's revenues are from private pay customers.[1]
Company Overview
Brookdale Senior Living offers assisted and residential communities to senior citizens across the United States. Brookdale operates 565 communities in 35 states that serve over 53,000 residents. Brookdale also offers management services to other communities throughout the nation. Brookdale also provides ancillary services such as therapy and home health to it's residents.
Business Financials
In 2009, BKD had total revenues of $2.01 billion, an increase from its previous year's total revenues of $1.93 billion.[1] This increase was largely due to an increase in average monthly revenue per unit/bed, including increases in BKD's ancillary services revenue. As a result of this and tight cost control measures, BKD was able to reduce its net loss from $373 million in 2008 to $66 million in 2009.
Contents
1 Company Overview
1.1 Business Financials
1.2 Business Segments
1.2.1 Retirement Centers
1.2.2 Assisted Living
1.2.3 Continuing Care Retirement Communities (CCRCs)
1.2.4 Management Services
2 Trends and Forces
2.1 Aging Baby Boomers Entering Managed Care Facilities
2.2 Falling House Prices Delay When Seniors Can Move Into Retirement Communities
2.3 Credit Crisis Affects Brookdale's Ability to Grow and Pay its Debt
3 Competition
4 References
Business Segments
BKD breaks its operations into four business segments: i) retirement centers, ii) assisted living, iii) continuing care retirement communities (“CCRCs”), and iv) management services.
Retirement Centers
Retirement centers are communities consisting of middle to upper income seniors who desire upscale residential living.
Assisted Living
Assisted living communities are communities for seniors who require 24-hour medical assistance.
Continuing Care Retirement Communities (CCRCs)
These are large scale communities offering a variety of living arrangements and accommodate all levels of physical ability and health.
Management Services
This segment earns revenues by providing management services for senior homes that need a company to manage their operations.
Trends and Forces
Aging Baby Boomers Entering Managed Care Facilities
The primary market for senior assisted living services are people over the age of 70. The census bureau estimates that this group will grow by 3.5 million by 2015[2]. With the decreasing size of the American family, baby boomers will not be able to count on their adult children for senior care. Since Brookdale Senior Living is the largest provider of these services and has facilities across America, they are uniquely positioned to take full advantage of the graying of America.
Falling House Prices Delay When Seniors Can Move Into Retirement Communities
Retirement communities such as the ones that Brookdale operates are not cheap. The fees that residents pay are generally not covered by Medicare or Medicade; therefore residents must pay out of their own pocket. A common way for residents to afford the entrance fees is to sell their home. Home prices have been falling, and very few homes are being sold on the market, which makes it very hard for residents to afford moving to one of Brookdales's retirement communities. In the future, retaining and attracting new residents will become more difficult, which in turn will affect Brookdale's ability to expand and to keep current occupancy rates.
Credit Crisis Affects Brookdale's Ability to Grow and Pay its Debt
Brookdale has a significant amount of mortgage debt and lease obligations tied to it's properties. With the current liquidity crisis caused by subprime lending, Brookdale is left exposed to rising interest rates and borrowing costs, which will raise it's debt payments and cut into net profitability. Management also worries that Brookdale will not have the cash to pay it's debts and will be forced to foreclose on some properties. By the same token, Brookdale relies heavily upon mortgages and leases to acquire new properties and grow its business. With lenders more reluctant to lend in this economic environment, Brookdale's Senior Management worries that it will not be able to receive the funds it needs to grow the business.
Competition
Brookdale Senior Living competes in the competitive Senior Living Industry. The industry features many players of which Brookdale is the largest and most regionally diversified in America. Brookdale continues to face competition in acquiring and operating senior living facilities.
Brookdale Senior Living's main competitors are Sunrise Senior Living (SRZ), Emeritus (ESC), and Capital Senior Living (CSU)
The company also offers Independent living, Personalized Assisted living, Alzheimer’s and dementia care, rehabilitation and skilled nursing. One whole-owned subsidiary company, Innovative Senior Care (ISC), offers rehabilitation, fitness and educational programming, and health services.
The Origins of Brookdale started in the late 1970s with the focus of Large Upscale Urban Retirement communities located in large cities Like Chicago, New York, and Miami. These early models replicated large full service Five Star hotels like the Hyatt, Marriott's and Hilton of the modern era. As the industry evolved into the late nineties and early 2000s, Brookdales major shareholder became Fortress Investments with approximately 51% holdings. Throughout the late nineties and early to mid 2000s Brookdale developed several more communities that resembled earlier models but also reflected the ever changing climate including Large Continuous Care Retirement Communities (CCRC) which house all brands of the aging process including Skilled Nursing, Assisted Living, Independent Living, and Memory Care facilities.
By early 2005 the company had grown to approximately 90 stand alone properties. During this times Fortress Investments had acquired the recently bankrupt Alterra Corporation (formerly Alternative Living Services) A Milwaukee WI based company who had developed and opened more than 500 stand alone Assisted Living and Memory Care properties throughout the USA between 1993 and 2003. At one Point Alterra was the largest provider of Assisted Living and Memory Care services within the United States catapulting ahead of the Industry Benchmark for Senior Living "Sunrise Senior Living of Virginia". Rapid growth proved costly and detrimental to the Alterra Corporation and that organization filed for chapter 11 bankruptcy protection in 2004. They managed to sell off a third of their assets and bring their facility total down to approximately 300. During the bankruptcy Fortress purchased Alterra and pondered whether to sell the company to Emeritus Senior Living, which was hired on to manage Alterra through the bankruptcy phase. By the time the management agreement with Emeritus was about to expire the remaining Alterra portfolio was thriving due to an aggressive push by corporate and divisional leaders to prove the company was not "dead" and was a valuable asset. Fortress at the 11th hour put together a merger that would bring their Successful Brookdale Portfolio together with their now rising Alterra Portfolio. This was approved and completed in early 2005 bringing the Brookdale property total to 390. From late 2005 to early 2007 Fortress and Brookdale took advantage of a strong market and an abundance in company cash reserves to acquire several smaller senior living organizations within the United States. These Included the April 2006 acquisition of Southern Assisted Living a Chapel Hill, North Carolina Based privately held company who managed approximately 45 properties in the Carolinas, predominantly North Carolina. Simultaneously the acquisitions of several smaller companies including Liberty Senior Services, Wellington Senior Living, and Southland properties brought Brookdale into the second spot on the leading providers list for Senior Care in the US right behind Sunrise.
Brookdale Senior Living (NYSE: BKD) is the largest and most regionally diversified operator of senior living communities in America. As of December 31, 2009, it had 565 communities in 35 states and the ability to serve approximately 53,600 residents.[1]
The company stands to benefit from the aging of the baby boomers, which will see more seniors entering retirement communities. The subprime crisis and the ensuing credit crisis has both limited the ability of seniors and aging baby boomers to afford retirement communities, and has caused Brookdale senior management to worry about whether it can make debt payments, and used borrowed money to grow its business. This is because 83% of BKD's revenues are from private pay customers.[1]
Company Overview
Brookdale Senior Living offers assisted and residential communities to senior citizens across the United States. Brookdale operates 565 communities in 35 states that serve over 53,000 residents. Brookdale also offers management services to other communities throughout the nation. Brookdale also provides ancillary services such as therapy and home health to it's residents.
Business Financials
In 2009, BKD had total revenues of $2.01 billion, an increase from its previous year's total revenues of $1.93 billion.[1] This increase was largely due to an increase in average monthly revenue per unit/bed, including increases in BKD's ancillary services revenue. As a result of this and tight cost control measures, BKD was able to reduce its net loss from $373 million in 2008 to $66 million in 2009.
Contents
1 Company Overview
1.1 Business Financials
1.2 Business Segments
1.2.1 Retirement Centers
1.2.2 Assisted Living
1.2.3 Continuing Care Retirement Communities (CCRCs)
1.2.4 Management Services
2 Trends and Forces
2.1 Aging Baby Boomers Entering Managed Care Facilities
2.2 Falling House Prices Delay When Seniors Can Move Into Retirement Communities
2.3 Credit Crisis Affects Brookdale's Ability to Grow and Pay its Debt
3 Competition
4 References
Business Segments
BKD breaks its operations into four business segments: i) retirement centers, ii) assisted living, iii) continuing care retirement communities (“CCRCs”), and iv) management services.
Retirement Centers
Retirement centers are communities consisting of middle to upper income seniors who desire upscale residential living.
Assisted Living
Assisted living communities are communities for seniors who require 24-hour medical assistance.
Continuing Care Retirement Communities (CCRCs)
These are large scale communities offering a variety of living arrangements and accommodate all levels of physical ability and health.
Management Services
This segment earns revenues by providing management services for senior homes that need a company to manage their operations.
Trends and Forces
Aging Baby Boomers Entering Managed Care Facilities
The primary market for senior assisted living services are people over the age of 70. The census bureau estimates that this group will grow by 3.5 million by 2015[2]. With the decreasing size of the American family, baby boomers will not be able to count on their adult children for senior care. Since Brookdale Senior Living is the largest provider of these services and has facilities across America, they are uniquely positioned to take full advantage of the graying of America.
Falling House Prices Delay When Seniors Can Move Into Retirement Communities
Retirement communities such as the ones that Brookdale operates are not cheap. The fees that residents pay are generally not covered by Medicare or Medicade; therefore residents must pay out of their own pocket. A common way for residents to afford the entrance fees is to sell their home. Home prices have been falling, and very few homes are being sold on the market, which makes it very hard for residents to afford moving to one of Brookdales's retirement communities. In the future, retaining and attracting new residents will become more difficult, which in turn will affect Brookdale's ability to expand and to keep current occupancy rates.
Credit Crisis Affects Brookdale's Ability to Grow and Pay its Debt
Brookdale has a significant amount of mortgage debt and lease obligations tied to it's properties. With the current liquidity crisis caused by subprime lending, Brookdale is left exposed to rising interest rates and borrowing costs, which will raise it's debt payments and cut into net profitability. Management also worries that Brookdale will not have the cash to pay it's debts and will be forced to foreclose on some properties. By the same token, Brookdale relies heavily upon mortgages and leases to acquire new properties and grow its business. With lenders more reluctant to lend in this economic environment, Brookdale's Senior Management worries that it will not be able to receive the funds it needs to grow the business.
Competition
Brookdale Senior Living competes in the competitive Senior Living Industry. The industry features many players of which Brookdale is the largest and most regionally diversified in America. Brookdale continues to face competition in acquiring and operating senior living facilities.
Brookdale Senior Living's main competitors are Sunrise Senior Living (SRZ), Emeritus (ESC), and Capital Senior Living (CSU)
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