Brookdale Senior Living Completes Acquisition of Horizon Bay; Obtains Option and Right of First Offer on Chartwell Communities

Brookdale Senior Living

today announced that it has completed its previously announced acquisition of Horizon Bay Realty, the ninth largest operator of senior living communities in the United States with 91 communities containing over 16,400 units in 19 states. In conjunction with the acquisition, the Company entered into an agreement to restructure the management agreements with Chartwell Seniors Housing Real Estate Investment Trust relating to 45 communities (with a total of 6,420 units) managed by Horizon Bay. As part of the restructuring of the management agreements, Chartwell granted Brookdale an option through 2013 to acquire a 20% interest in Chartwell's U.S. real estate assets managed by Brookdale. Brookdale will also have a right of first offer to acquire any of Chartwell's assets managed by Brookdale. Additionally, the Company restructured Horizon Bay's existing relationship with HCP

relating to 33 communities that Horizon Bay leased from HCP. First, the Company formed a joint venture with HCP to own and operate 21 of the communities (with a total of 5,070 units) utilizing a RIDEA structure. Brookdale acquired a 10% interest in the joint venture and will manage the communities under a ten-year management agreement with 4 five-year renewal options. The annualized second quarter revenues for the portfolio were $143.2 million. Second, Brookdale entered into long term, triple net leases with HCP relating to 12 communities with a total of 1,547 units. The annualized second quarter revenues for this portfolio were $68.1 million. Brookdale will also provide management services to the remaining 58 Horizon Bay communities, which contain approximately 9,817 units. Annualized second quarter revenues for managed communities were approximately $318.9 million. Eleven of the 58 communities are in lease up, under development or represent new management relationships. The management contracts are generally long-term agreements with base management fees and potential incentive fees. With respect to virtually all of the Horizon Bay communities, the Company retains the economic benefit of ancillary services opportunities. Approximately 70% of the 16,400 units are within the geographic boundaries of the Company's current outpatient therapy and/or home health agency service area. The Company expects to roll out its ancillary services programs to these communities over the next two years and ultimately achieve an operating profit per occupied unit target of approximately $75 per month. In total, the Company expects to invest approximately $47 million in the first year of operation, including acquisition consideration, capital contributions to the HCP joint venture, integration costs, transaction expenses and capital expenditures related to the rollout of our ancillary services programs. This amount does not include any estimate of costs associated with the future exercise of the Chartwell purchase option or right of first offer. "The acquisition of Horizon Bay demonstrates the scalability of our platform. The integration efforts are underway and due to the hard work and professionalism of all those involved – Brookdale, Horizon Bay, HCP, Chartwell, AEW and others – is progressing well. The addition of the Horizon Bay communities not only fits with our strategy of continuum networks, but also brings a talented group of people who we are pleased to welcome into Brookdale," said Bill Sheriff, Brookdale's Chief Executive Officer. "We are also pleased that we have been able to secure the opportunity to acquire an interest in the real estate associated with the Chartwell managed communities. These are very good assets, and, with our ability to bring enhanced economics to the bottom line, we are excited about the prospects of sharing in that value creation," Mr. Sheriff continued. "Brookdale's cash flow will benefit from increased management fees, ancillary services contribution and the leasehold cash flow. We expect return on invested capital to average approximately 35% to 40% per year over the first three years. These transactions will be slightly accretive to our 2011 Cash From Facility Operations, excluding integration and transactions costs, and are expected to add approximately $0.09 to $0.11 per share to 2012 CFFO and approximately $0.15 to $0.17 per share to 2013 CFFO," commented Mark Ohlendorf, Co-President and Chief Financial Officer of Brookdale.