BKD - Earnings call transcript Q3 2018 | Brookdale Senior Living Inc.

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Kathy MacDonald

Thank you, and good morning, everyone. I would like to welcome you to the Third Quarter 2018 Earnings Call for Brookdale Senior Living.

Joining us today are Cindy Baier, our President and Chief Executive Officer, and Steve Swain, our Executive Vice President and Chief Financial Officer. I would like to point out that all statements today, which are not historical facts including our earnings guidance may be deemed to be forward-looking statements within the meaning of the Federal Securities laws. These statements are made as of today's date and we expressly disclaim any obligation to update these statements in the future. may from performance statements. and results differ forward-looking materially Actual as results could are Form we Certain the we risk well annual time-to-time that on in on SEC actual with issued the to the filed as factors release other factors reports including earnings Form cause XX-K differ XX-Q. from quarterly reports the detailed yesterday, our contained in report in and Living's I statement. earnings to direct Senior release Harbor Brookdale full the for Safe you we call, will both Also please this note during non-GAAP and measures. present financial that GAAP

reconciliations from Cindy. like on For furnished to the comparable turn to GAAP found supplemental of release information, be over would was earnings and our you the call direct X-K most at each non-GAAP brookdale.com/investor may which yesterday. measure measure, With to our and I I that,

Cindy Baier

turnaround you, will morning guidance. Good other This welcome our to shareholders, all earnings Steve and will an third our provide third morning, about update and participants, provide quarter XXXX of call. Kathy. Thank results XXXX our early quarter thought strategy our XXXX I and analysts, and to on

consumer speak Swain, I Vice about XXX. new the mission Before Dish from and strategy, passionate our of number joins is on focus. Network strong He President great and Steve Financial us our Chief Officer. Executive Brookdale a he's welcome because to ranked three I'd like Fortune has for our XXX about Steve pillars the a fit

complex, our business a businesses his community intensive of him associates’ to up. great within our from first Steve walk already team. each wanted the within makes addition finance our and expertise level fact, In He within days, the learn to large, Steve's shoes in division. leadership asset has served XX three communities in

Jeff footprint. time improvement. years the personally of the to welcoming board. as thank share I XXX and IPO, at his service business our the Chairman operational to turn Brookdale's for He on Directors Leeds to our Board Warren from to locally. advice. addition our several XXX-plus of will to for Denise after the our I making Steve, Board. retired company current is XX joined his Jeff our In winning to years welcome want and I miss we're saw priority to around grow will now by turnaround strategy progress the drive communities to top served

strategic family me by three and priorities. term creates which and advocates delivering services, and Drive associates, future by and generates Brookdale long resident to and Let our returns you of retaining trust the high care remind attractive resident attracting shareholders, referrals. best our earning quality

start me Let with our associates priority.

are associates take day our residents of critical every of Our to year. day, XX because the we hours a success care

are Florence are clear also hurricanes and a protected good teams in our a to reminder the we matter of most of support and where These what hurricanes as service We dedication were and patients. Brookdale’s Michael. us provide and residents our to best business scale quality allows during seniors our two the people how are

way. harm's had hurricanes, could to in most our moving During communities of XXX the residents agencies communities communities. XX have evacuated We recent that we and been X two with sister

host neighboring from from both and to Associates family, team evacuating the a communities. spirit stayed traveled together came teams with associates as work, our staff evacuated our support residents. our We communities from of formed and the states and relief

that would and medications, the to residents had we Our our supplies food, field all teams make corporate that sure and need. mobilized

any as repair teams to storm-related that be Our ensure possible. to as would asset able quickly damage management deployed we

loved what what throughout the is work our We storms, ones. team our the about kept with friends residents’ services goes ancillary support they also worked to to had and the families their ensure beyond informed hard that needed support residents. that Our our patients and was needed happening

during the associates Our best incredibly I'm had ones for place working successful ensure that keeping plan grateful our proactive in regional our families to informed. extremely we residents and loved our our to and keeping associates hurricanes, were flowing residents’ protecting community communication corporate updated. website the in and with and residents'

lot been Over report on sales of reporting organizational period community We was the critical last time. changes and the our changing success. district in expanding improving in a several field center second short to is months, very of strategy. realignments control major at This XXXX, our sales to leadership, the level of change including the Making above stage we've the level, directly initiated our associates to focused these contact turnaround the hours. of turnaround quarter the within early of a span

and take We meeting services we held ancillary together these leadership from that sales, will time time from first benefits win culture is to brought To and and national everyone reestablish across the efforts what to are community that understanding the these traction seeing reap from clinical we’ve it of This locally, the a leadership. some the initiatives. our together. solidify leaders operations, it and had corporate nation the takes but our our early above

Our energized we across our goal they removed meeting, share learned strategy and these decision-making partnerships many success to with we on was leaders. their After to the that to functions greater barriers returned what are guardrails ensure are can. as with clear our where regions have leaders ready as to that community that we and everyone understands the

Turning to metrics. associate our key

XX XX% for directors' quarters rate Internal have over this forward to EDs basis. remained Our communities We five milestone. team. us look their over two the two-year in and achieved momentum our continuing been this positive wellness that shows of retention for Executive research better and a has has Director Directors years. trailing on Over Executive health an month year-over-year current XX% our when perform role

third sales under quarter organization, For sales transformation the the plan. was full the first our quarter

we as our individual to is directors, program sales set clear, there community sales refine and For continue expectations, turnover.

time the are improving of RevPAR span coaching me to district community and our priority brings We positions, the leading the strategic This second leaders sales sales with associate. referrals. care more are to to to quickly our XXXX, more and open on Leads of residents indicators and spend fill working control, third In the driving to quality in community future obtaining of occupancy the by three a were improve indicators up X% quarter leading quarter third to compared same providing four we continued XXXX. basis. and our of able the of

XXXX. First we the one in When XXXX and put visits similar XXXX is line improvement. of visit learnings This between into that drew leads year-over-year look first showed you conjunction, and at we a action.

plan similar our improvement XXXX visit. into were XXXX in lower visits conversion While to they plan implement first higher After move-ins, can the improvement. plan, the to from were a for We leads converted you weren't refining quarter. see positive, which third our

help X% within for associates quality a on to third third lower our Controllable our rate. we significant development. sources focus negative year, residence third XXXX. enhancing our on over deeper that enhance the we year-over-year quarter and were and in quality a consecutive quarter quarter quarter saw residents, occupancy the third X% lead for X% dashboards improving prioritize improvement. strides since lead discounts are We've made coaching outs move highest significant The process mark-to-market was drove year-over-year the the of highest XXXX. to the the the the We communities to plan to referenced discipline potential was due comparison past also price sales I’ve and improved that through XXXX, move-ins our help tough and a mark-to-market of basis. in existing occurred This previously

positive in Here's making are their community. an a example of difference how our associates

made internal impressions program fresh this implemented residents. program feedback We've our improvements consistently the and team associate, environments to assurance in Our for comfortable our operations easier to year scores. right do in clean resulting the work and quality for our great provide

lower occupancy. put isolation that are in like, the than movements out in would Together, me move move the drive in we While context. and let

improve prior We're During XX same than pleased points performance the quarter. that results quarter, third NIC basis the Brookdale for from sequentially third the better the quarter. occupancy was our sequential community

final the shareholders. our strategic priority, to Turning

for announced an to a rate. X% August, has Brookdale Our real well. Battery strategy Ventas represented that progress price agreement to In approximate estate Park sell continued we to the cap

benefit of and By wanted the to As agreements portfolio agreement we reached are had more was Ventas an operate for us in assets additional that end quarter, XX these community. to signed, assets optimization third the pleased sell we the sale. the to were after continue held

being that X are remaining marketed. communities have We

and expect still a we of be sales portion soon significant to expect excess debt costs. Collectively, of asset We in transaction finalized the net will associated proceeds realized. of proceeds and $XXX million generate the

XXXX. an respect sharing on the good update agreements have community aligned by cash portfolio addition since REIT have our investment. quarter year, our progress the with of we of I'll third we our on lease you And reduced we estate, our making as to early in capital partners to real provide uses after interest beginning XXXX. thoughts this own on XX% negotiated of In

For XXXX, to we for landscape early improvement. competitive will indications be difficult, but expect there the continue are

taking this we been fill reported stabilize. abate. on previously starts to downward open new underwriting on our of The is longer opens trend a as numbers This yet near put year. percentage by or to analysis, construction As continues housing up inventory to it future may starting determined pressure senior a be Through additional and construction. NIC, historical that new data are highs, and remains has custom

seen widespread we discounting. some put may rate, fillip slower the While not pressure on have

the for majority due Our XXXX vast before the will of persist headwinds is improvement. current supply

soon it's expectations While some to thought year. for XXXX, want on early guidance for our get next to too I provide

the our be expect turnaround peers. to For Brookdale, occupancy the compared we industry year. to Despite gain to factors, macroeconomic improvements, expect continue occupancy down but we grow as year-over-year we accelerate slightly to to within challenging

larger made in inflation, the we the we in cost Given we've in XXXX. that than expect normal well place large did as rent pass labor, as through investments increases

to product associates labor the the community previously XXXX goal our costs, a mentioned was investment to our plan second bring up Regarding three I threshold. year of line

labor X.X% XXXX compared growth was our continue of CapEx. which outlook our lately XXXX. previous our to tight to be than low cost and labor continues we XXXX significant XXXX final expect of The is commence end labor part the The lower related range. is expected to to into will market investments Our

that I recently our up of strategy. turnaround As focus inappropriate CEO. condition our on review with review our bottoms The a completed discipline, previously after needs ensuring physical initiated I this for plus our a to XXX support are team communities portfolio CapEx consolidated mentioned, community became community immediately

investments protect the of portfolio. also determined part to we the needed our of what As review, additional value are

and we building based infrastructure result to review XXXX projects. level CapEx a near our for including additional attributable term major primarily community increased in preliminary communities that our XXXX due, spend As on on of our anticipate investment now

increase XXXX to by find We reimbursed fourth we to the partners. spend. increased in non-development factors and CapEx key currently be this of expect capital proceeds than quarter asset We up net order And reviewed the We've and our anticipated for our with option. plan. net financing our $XX be the will from these a board this allocation reimbursement that portion assess intend XXXX such REIT our of our to refinancing CapEx anticipate with outlook higher to and sale million the of portion

We the are to call I'll certainly over turn repurchases. Steve. committed reassessing to share

Steven Swain

of it. months, Thanks because mission seniors I serve. in to impressed expertise while Brookdale been of for my industry right the associates. the strategy first introduction of and Cindy. our we our we I with the I'm the see and lives be enrich passion I leveraging have believe couple In to was the first excited to attracted scale locally its part to have leading win I

XX of the with XX reported improved points in on improved a Independent revenue a same details provide year-over-year. In start the few quarter, leased owned estate was real let To industry highlights outlook. assets. third These owned context before at progress flow held the we to our as I Starting sell and a occupancy transactions. communities. every and which community opportunistically for improved good financial basis better than to and nearly month the reported by additional In least select, third the on quarter sequentially, agreement discuss quarter, long I term with sell is Brookdale improve cash assets streamlining signed sale. our are Battery both basis, average saw will XXXX the quarter Occupancy to at We Moving an financial with properties Park start strategy, which occupancy weighted real results, agreement properties. monetizing slightly living estate for another made of to the as XXXX, we by XX%. me NIC. owned resulting and portfolio

estate our We market for continue as seven real assets program. to part sale more of XXXX

quick a Battery Brookdale of sale This and collaboration close between closed. the already and that Park pleased are has Ventas shows We was great the Brookdale.

not year. of Park. of realized asset in proceeds the since still Battery has beginning the the associated of net excess to sale debt with the million strategy, million For which of generate of We $XXX in expect we costs owned outlook changed transaction the $XXX

Turning now to portfolio. our least

the have to this by XX% reduced In since line as HCP make progress XXth November third portfolio with continue XXXX. our quarter We beginning planned, of we announcement. in the with

and September. agreements communities terminated already have XXXX on management we master in Specific the in leases two Welltower, the HCP. the XX quarter, which completes terminated have leases fourth for several from and XX We communities terminated to an a November for additional communities, terminations agreement with we leases

interests. agreement beneficial of the in In master end, addition, years. following the to lease greater renew quarter a Sallie the and X alignment next mutually Welltower for This results agreed Brookdale

investments the the flow. quarter you XXXX quarter term the disposed third since the will provide sales a XXX communities view example Welltower fund terminations. larger will dollar of our improve of through end beginning first and To XXXX, and of near For lease of capital which have pool we cash through third

to residential fee million. but in financials million cash flow less activities compared and revenue prior $XX.X these estate $XX.X resulted million X.X by For quarter year, the EBITDA, free the third less adjusted adjusted XXXX increased real

well in communities lease With $X.XX lower ancillary first X.X% which then wide. disposal address revenue third billion was XXXX, of This as senior and the portfolio terminations, will compared was reflects the quarter XXXX. the reported third occupancy significant $X.XX decrease experienced for as in sales mind and in housing changes industry of our the through I billion services. to quarter

consolidated mitigated comparability. occupancy. quarter. the to way year revenue the taken compared increases because X.X% rate earlier of For analyze and community Existing housing lower prior use community year communities, our senior the decline reported to Same real impacted to in results best adjustment same execution operations estate the our this is the improved resident strategy mark-to-market

The third our the industry is good the improvement quarter flat after decline discipline, mix, averages. XXXX. looking XXXX industry weighted This to which XX the was the sequentially. quarter a news the also rate provided NIC result with difference occupancy even community that year-over-year in occupancy is average XXXX We a In of the that we decline three for occupancy a were better the pleased especially were as XX we bands. same sequential year. QX this the year-over-year NIC pleased in reported compared top context XX.X%, basis points of community second basic product as third we with than And results with quarter delivered occupancy prior were The in adjusting essentially bands same performance. supplement, industry in pleased point at our are with of

Our the rent third place reflects quarter over RevPOR growth same resident XXX basis positively in community of growth. points prior year

in minus XXXX. improved was Last that year, pleased the quarter was very that within As mark-to-market pricing high especially approximately of discipline a which occupancy for mark-to-market is X%. long quarter environment in viable we have as we price the to incentives not third I'm XXXX, was to our reminder, our a an our occupancy. X% the view third existing of manage residence use incentives and a competitive do the term indication strategy of increase rate

third retain because compensation recruit intentional key expenses labor in to investments to operating and to salaries our the compensation associates revenue XXXX With and industry. increased increased pressure compared X.X% ability X.X% community industry investments a community plus to than consolidated expense occupancy, does wage prior year the market the faster same resident best increased third our community associate the X.X% lower operating Our year facing improve income to to same our X.X% community along a third and the increased leading of periods. to facility scale with quarter. benefits above in XXXX. with robust a expense and more Same reflects not year-to-date quarter perfectly decline operating growth, quarter operating our tight quarter This total due prior compared compared for

operating earned $X.X services. to third million of We for Moving the ancillary quarter. segment income

consolidating X.X% third which recognition driven remainder two our quarter this the gradually an revenue normalized a rates address and the towards XXXX model industry The by perspective, of are therapy impact we a new approximately grouping case basis. of shifting next G&A. to the potential mind, to the industry. home decrease health thirds we reducing lower several in years. With of CMS performance. From was trends change adoption Our mitigated by year-over-year revenue decreased on patient changes to proposed from over expense revenue several standard the revenue resulted the and primarily mix Lower reimbursement impact Medicare contributed driven continue agencies changes

hospice continues strongly. Our grow to business

quarter a due on and third the the quarter the G&A for administration made basis year. $XX.X a to XXXX, and quarter. the year-over-year third by revenue year For prior This General XXXX, XX% X% below sequential this on we rationalization increased mainly XX% expenses is million basis. earlier were

with along year-over-year more of the Partially increased related a to agreement on $X.X these intentional and are $XXX.X our restructuring adjusted of management were compares project and and leadership in transaction to in targeted same $XX were transaction third adjusted million of and of mainly million a cost community million EBITDA sales of third expenses driven key savings robust of strategic industry our increases asset G&A above through excluding current previously Florence had million $X.X on already by drivers discussed. operating salaries offsetting $XX had million. and adjusted the $XX net of G&A million excluding the on communities impact adjusted We as year costs and XXXX million. community the described. leases EBITDA quarter as approximately investments on EBITDA Hurricane quarter I EBITDA million track The disposal lower decline the and We a This determination deliver $XXX.X Irma organizational lower EBITDA. million to of $X adjusted a $X.X XXXX, we had $X.X Harvey In of million impact benefits. hurricanes generated

of Our prior in XXXX the adjusted compared year million free quarter. quarter to million the cash $X.X for third $XX.X flow

financing, the adjusted disposition impacted Beyond free impacted adjusted lease expense cash EBITDA, that and factors described flow. interest related debt amortization positively I

XXXX million. in million was by Our of of year flow fee driven unconsolidated quarter was improvement The adjusted proportionate $X.X prior net quarter share entry of cash free to $X.X third the the ventures compared growth.

XXth, was September availability including of that As of total credit liquidity line million. $XXX.X

We have X years. the next reasonable debt maturities over

Our total non-recourse debt outstanding asset is XX% mortgage backed debt.

While due that for a renewal proactively to anticipate are we fixed facility amended or XXXX, facility the facility line. this of current revising secured have revolving credit reduced will credit coverage the is limitations. our new until not We beginning due charge

anticipate We my are transactions financing in facility complete also the and that on remarks prepared actively working liquidate. will up I financing refinancing our the credit have fourth with We XXXX a minimal net to company quarter. and transactions will impact guidance. wrap mortgage total

guidance transaction to to excluding to million targeting range. were in our and are and organizational XXX expectations cash of XXXX within the current free range be adjusted tighten EBITDA, The we previously of guidance be disclosed As both metrics million. for year the flow for range million the our full million previous restructuring XX XX in XXX adjusted cost

the ahead we that quarter. industry pleased growth are sequential occupancy of We delivered this

be line expected in expectations costs we on approximately our in the labor Transaction mentioned million. are was are it good continues investment and Rate XX to with progress I earlier. end of and be making expectations. low to restructuring our organizational However as our

taking in plan we within headwinds. significant guidance XXXX, with shape. be a year turnaround Our is In will macroeconomic

with market, operational the and will initiatives labor in rate context pressures and tactics. competitive continuing execute XXXX we on improvements tight a of disciplined For CapEx

term the to As back demographic right have long call Cindy. while our industry we scale shareholder develop, locally now win I'll the over tailwinds industry's strategy turn leading leveraging to value. the to drive

Cindy Baier

event. value a were residents Celebrate in you, second reminders submit And order our our change aging. of make and hear short. our plays excitement about warmed Robb was to XX,XXX to and President many was John to and long and in perception patients. turnaround the associates There and to shareholders. the joy the the October silver Film nominations term tears trend who all and invited ancillary important The speech, to much Brookdale serve. Festival, of the We among capitalize hearts committed it the annual movie strategy all the positive deliver future demographic us event our he and our Steve. acceptance on believe creating our we his In Brookdale resident established provided countless for role it thanks rest we That Thank Aging lives about, that at the to of to in is help lives that our of our in are residents critical and wave the participate lives. those organization put Brookdale is enriching of allows what as mission attended for

are seniors care We possibly health so our life dad possible best that can them. and is for or mom that your country live providing company the services,

company a questions. are And I answer your an of line believes up are you you open and both. margin. balance for We if are investor Operator, the also imagine mission Steve questions please I in believe and that to now. happy in the that

Operator

have first so our of And we Raskin Thank [Operator Joshua line question Research. the from from much. Instructions] you Nephron

Your open. line now is

Mary Shang

is This morning. Shang Mary for this morning. Good Josh

lease it's do the assets to inning you with of you terminations, could asset identified an just process, on guys the So so think what majority just an are give starting of ongoing dispositions we idea sales, have you us and sell? the

Cindy Baier

me just Mary, for pretty question quickly. probably have [indiscernible] I baseball that you testing me. I the strategy. that let recap in our of about restructured. you feel great that we would the are And say leases A we're

we credit. in those to with those extended about an Ventas sold we get well a we're very of have Ventas, for assets rent We lease connection assets sell our a during lease, of had million X for lease Brookdale partnership to expect Ventas, and those lease years, and excited with additional and significant properties would restructuring. XXXX. ability the $XX a Sallie and announced the identified So We've With prune Welltower to that. performing to on continued with that's Welltower, be I many

a As our almost that regard announced many sale quarter, Ventas, well. announced as the the will Welltower is almost Welltower behind the we at feel be our ago, a very property. the we and is we're transaction portfolio we've end we had HCP, HCP asset sales, transaction, a With With the for real and great pleased of us. I estate in with completed to of our It transactions pleased the with same that leases we to of received. shape at we terminated we and and the Battery Park. previously We're that will in XX operate fantastic like price continue great that announced time year

assets we portfolio quarter, our announced contract. This are under optimization XX additional

re-evaluate talked in to calls. need are get monetized, that for You still dependent last there all assets credit in two sale. to moved you're the as assets to assets we've our will the assets that you'll model be is those notice but debt to line see see current or once I the that continue review additional is get better on what restructuring you'll sold We're also and held of whether held they going our looking presentation and investor in before forma, pro which done, say will do, it forma, that step end seven. forward. the like some into we say, moved of on at that inning back there's restructuring up more also We the whether for to assets course gave will done year; all some additional pro additional pace our sale, business all we'll if us work of to I'd and looks so have that but the a to now

Mary Shang

All right, great.

turning through you're the for And in 'XX, growth of is XXXX, majority know you've but now previously then occupancy like just large outlook sales. I down. occupancy expected slightly over to the Sounds

just or outlook the simply just the today are? is change So, appear function where of I of a curious incrementally just today, am occupancy primary it the worse landscape in drivers curious does is what

Cindy Baier

So well as have pretty Mary, market the been competitive as the intensely. industry we studying

in being everyone virtually and think new growth that will delivery add supply of XXXX. I delivered XXXX, sees that lot in supply a

in say to we at that, basically So when we're very be a headwind. look we going difficult

Now occupancy but improvements the XXXX where to make are we for throughout do reflects expect in XXXX. we outlook year, our

about many occupancy on times year, year a grow. decline have a regain build to year, like you’ve in you’ve given of talked we to unit when we’ve occupancy this you call, lost this had As every occupancy have can before you of

I on turnaround So are We we fact that to to want improve. we will the walk away with because anyone don't we confident our continue that not plan, are. believe

make our those are, and and accordingly. We conversion execution but improve sales to marketing we what strategy refinements some will and to the have actions that we to visits of need know our adjust our and in we move in, we think

Mary Shang

great. Thank you. Alright,

Operator

your of from you comes And from Thank Stifel. Chad question line so much. Vanacore the next

Your line is now open.

Chad Vanacore

you. Thank

was XXX how ran hoping EBITDA you’d so adjusted you the help you me that just guidance, out or XXX look I at and million So million. with quarter this

would closer to be Can implied XQ? million a XQ XX million. quarter fourth know I you've there is of restructuring bridge you costs, me, that you’re from big gap that the there guidance delta year to jump expecting full for that XXX something got else or Your is

Cindy Baier

we investor that is of guidance quarter, really of all part are those kind and beginning after be of of of look the If the look the of deck, transactions the course, sort on you not look you quarter the that's at are the our I view for $XXX completed, the the transaction But for all we where EBITDA will are transactions think having it. at at operations, done investor quarter. adjusted year. expected and difference I of to the that the if between our presentation, they'll some million about give So where we at for of be dispositions where so year-to-date a it's

I happy original go guidance did been that think provided, We the of and we initial are pleased we've about that that have and we outside tightened our within that strategy, the our that turnaround I'm really guidance. we gave. realistic not that very I'm Now demonstrates we’ve guidance

Chad Vanacore

that jump is quarter in correct? XQ, a fourth but No Alright. over pretty implies that big

Cindy Baier

I think mark-to-market in that in biggest the to addition Those seen continued optimization. also the it factors reflects that portfolio continued the we've the the it are labor investments reflects year. throughout costs,

Chad Vanacore

kind Can side? give you us an cost on expecting the what of Alright. you are synergies idea of

Cindy Baier

we said been our And we of portfolio of, the public plan. shrink to of fact our critical that that the communities reduce that, We've to to we Sure. the it's would portfolio, very dispose X% as about G&A size still we revenues right operate. that's of match our scale we what about by X% our the

for to that We of haven't comes we on but finalized as for it our and investing we disciplined we XXXX every our revenue make our dollar we're will where that budget sure residents, recognize expenses sure say we're get very to want suffice that that make yet, we it appropriate.

Chad Vanacore

Is X% that close XX Alright, dispositions and million bridge of bridge there cost - another XXX X to somewhere? it's are or say synergies or that X right you almost on there X% so so that that million so. is expecting to G&A to million

Cindy Baier

were net XXX a is disposing proceeds to the So you're Chad, opposed think revenue that I properties the of that the as off. referencing

G&A higher than it's Our X million.

Chad Vanacore

else leave Alright, I'll Thanks. questions. somebody Okay. ask some

Cindy Baier

your Chad. you questions for Thank

Operator

so you much. Thank

Brian Jefferies. Your comes from from next of the Tanquilut question line

Your line now open. is

Brian Tanquilut

morning, Yeah, guys. good

is I by here Chad's essentially mean guidance down to transaction about think to QX million, way right that? the we if just I question add clarification, of So about the implies thinking flat your that costs, on back follow-up XX

Cindy Baier

down is fourth optimization, So normally the as And a the occupancy so down. in of it will portfolio quarter the include slightly be flat that. to certainly will it result

our think don't you're that's with I anything So that inconsistent views. saying

Brian Tanquilut

cool. Okay,

cool. to So lease press then And alright, we're the it, the your announcement right? terminations that not of expecting Welltower part previous just second, in confirm was release

Cindy Baier

nothing just last That's earlier that transaction It's new, this we've completed quarter. correct. announced actually quarter, the we

Brian Tanquilut

actually losses this portfolio increased that and see you've good lease it the so the expect some you've quarter, improving in kind Okay. start terminations. success basis, a flows done and And the know modifications, one when portfolio lease when with from quarter-over-quarter some cash exits then because obviously interesting exits of other had you from was you lease to to do lease the

color you some you mind that? giving are just thinking about If don't how on

Cindy Baier

Yeah, it's really question. good a

required think that lease yet. I two that our hadn't things the are have to portfolio, around as portfolio So happened think are I about turn there

I landlord we're has think restructuring with have going basically the and comfortable we happened the forward with. assets that

are We to have think drive in labor we necessary made which significant investments topline.

really so the growth And to occupancy what's improved and rate. going topline is improve

sort certainly that occupancy the about we next we year the performance and are however are to our do rate which lean to we improve that for capital on going We As talked to year, portfolio. recognize are of of reflected. in have grow expenditures required

lease And expect So we thing investments capital we portfolio improve. note would our to our making are important that lightly. I behind one think us, it's to

a We comprehensive ground against very balancing capital have done are up allocation we that single review portfolio we other a every from have. options of and level

opportunistically variety based it we capital and plan a have And As share could market other use an we conditions. a allocation on options. the reminder, of also have existing we repurchase

being also that portfolio sure we're how how to allocating but thoughtful improve we're that make about So to lease capital very appropriately.

Brian Tanquilut

over And question or more or then me, point? do behind see lease mostly modified is month XX next at Is underperforming there, at exit us any that from last Cindy. this opportunities the you

Cindy Baier

assets have payment. represents million $XX sell we we the the that Ventas the can Well, our $XX lease, million rent of

overall that have where payment There We to are but we're we assets pretty represent happy going our be believe assets what them, million rent I leases. things our have right some to $X all win. have of on the to assets I of we that are think Welltower on operate. with

the appropriate to I performance think we've effectively in size stability And distractions of that have to a as some Brookdale. improving of the from we to asset getting by benefit our restructurings assets and big are think portfolio some got that that on lease always there's manage focused all the caused so the I portfolio, opposed we sale. the

Brian Tanquilut

you. thank Awesome,

Cindy Baier

Thank you much. very

Operator

comes question of from America. next Your Gajuk line from Instructions] the [Operator Joanna of Bank much. so you Thank

Your now is open. line

Joanna Gajuk

morning. so Good for the Thanks question. much taking

XXXX right the the you maybe reflected guess tracking characterize the guess it's that mostly for and also is the guidance, better the in on it the is the mostly were because and labor actually the guidance? first of so cost so at occupancy year, the slightly driven characterization So quarter guidance that's quarter would midpoint I I occupancy or tightening

Cindy Baier

at if existing our look of end you But we're at if within with the look the certainly occupancy, for tightening guidance our we guidance our our is at range. that year So our pleased expectation. guidance we're well growth. lower sequential It

end improved the We're but rate increases range the we nicely year, fact our And beginning the with did we're place those very so of happy our in very have lower the At the rate. the mark-to-market. that really range. guidance within and held of we our reflecting is

do performance Now to with pretty say to our as I relates that NIC. pleased it want we're

expectation, end While occupancy the we industry we're the for better our and quarters. than have been are two we the low at last of

community our So gave And that X.X% hold. range. really really is like labor, finally below that starting guidance it outlook X% feel turnaround our to of plan is then operational and we take on to slightly

with on EBITDA we is a increases guidance again instance, this year our X.X% net our X.X% million hurricanes other two about driver are our impact reflected in occupancy. a Now the the year-to-date, in we've $X we labor got things cost and in expect increase are There certainly guidance. quarter. really didn't of primary few But out for at

Joanna Gajuk

it's which guess And on the then shrinking. you mark-to-markets I comment on slagging your that thereby and you tracking pricing saying it's know

to and resident place that in actually number next increases play you been think has able we being what So out should about year?

Cindy Baier

X% a about our this place of of have portfolio. out year all resident we in rate across so Yeah, increase averaged sort

resident strategy our for rate that for And be about think that make the people for income we got to our facility in rate have higher occupancy best return we've better and translate in into but and that for drive to strategy in will than positioned, and our our you to operating for are shareholders. sure really strategy, communities the place XXXX appropriately XXXX. we higher have to Now is industry that place, increases we if think drive or

Joanna Gajuk

that rate the way guess we even right incentives doing I incentives you you that X% place in you're reading thinking than not really your then So and can of not rents, assume to you are it addressed am are much go, comments you around currently? than about the push so so are I think should saying that more

Cindy Baier

they And way has be tool incentives competitive equipped used a I the local that when our very think but decide are think That's the So lot with term go. to over new have selectively is or program, to helpful to market, particular term a happens the in out RevPAR But with unit. aggressive that you and we the go found when that you available forward win a and that a a they of that competition in to rate, industry in reduce but per long long they pull not moving well move. leadership Brookdale not you new aren't what get the I'll should has we of to appropriately. say revenue tell that market game increasing is don't an actually

on have it's continue while successful a protecting very in we occupancy to industry and delivering been tool gains what needs to rate, do. that it's and tool a we'll the But So selectively. be that's above performance

Joanna Gajuk

slightly cash the outlook from piece obviously the lower so talk lower one adjusted flow was what's then cash actually guidance and one about increased, you because Last That guidance that? EBITDA driving but flow you. that free then on a JV, quick

Cindy Baier

flows. on a So, couple have we been our JV able cash things of to do

year-to-date, First, we've have you had that recognize performance to strong there.

interest will sell we to in flow portfolio. reflects losing good this fact and able cash the were we expect was that JV performance that Second, it

Joanna Gajuk

Great, thank you.

Cindy Baier

Joanna. Thanks

Operator

Thanks And the comes your from next much. so Hambly Stephens. question line Dana from of

now is line Your open.

Cindy Baier

Hi Dana.

Dana Hambly

morning. Good

Just couple of G&A. questions on

to reduction timing of dispose the three that on X% what's is ago? the or two mentioned You revenue, on general X% Cindy, that

Cindy Baier

as my to after can. place possibly as always do we objective months that. think I need said the but dispositions, We've to is get we six drive soon in it

something next So call or two. you'll about hear the that in

Dana Hambly

then the to And any is is you the you're nothing that - there's for pro G&A forma the Okay. that benefit gave, there forma yourself correct? pro in in reduction, in not break nothing giving

Cindy Baier

that that we just are to the these are we recognize the the we're So communities to is we are where pro this portfolio, communities our away, as G&A, not. the going keep have forma P&L going adjust We like facts, try adjust it's but away. to that for

Dana Hambly

Okay. understand inflation a clarifications next expenses, of level will pricing, X.X% at is labor X% to you outlook, couple year is the this the the similar the continue in occupancy, so the experience correct? the And expect XXXX year, labor the that on you

Cindy Baier

for slightly working be that. want it'll to at our I some we core be still below business, may We're slightly to the that. including our whether But will think it below on team. capabilities budget incremental looking think add I

Dana Hambly

then should XXX mentioned on next incremental is year, you related year expect And that the you Okay. and just an hurricane million the on CapEx, XX subtract expect non-development top expenses? you'd million generator the the XX million we or of in this

Cindy Baier

have priority end. year of a sure thought people markets the appropriately at our to to for number top go thought on do cash we number, present that's the so it, the about our It's we Certainly the actual XXX would for are of communities we that it. most when presented CapEx probably we way or lot next that's flow how infrastructure And the million. to make and major building their work to positioned

Dana Hambly

much. very thanks Okay,

Cindy Baier

Thank you.

Operator

you. Thank

the from question. comes your line Chad Vanacore question Please next Stifel. Your ask from of

Chad Vanacore

Alright, hey there.

Just follow-up. have a

then that's thinking rate, and the Just year in year-to-date about occupancy X% a lower. got little next you expectations be and place bit

So translate for expectations how year? all your that does RevPAR into next

Cindy Baier

do the of that back about But our us assume rate to call, ahead detail in we little X% guidance place it's let a You're it. given increases held. is we plans come was increases XXXX what certainly those rent we'll that certainly we and for back that our the year. November, And if more finish yearend we the when for you. provide come will our But know

Chad Vanacore

that. Thanks. Alright, do I'll

Cindy Baier

much. so you Thank

Operator

the questions over much. so may continue. phone, And don't have further you you Thank any presenters, we

Cindy Baier

So soon. We look I very to to thank much. you us morning. talking to again forward want Thank just joining everyone you this for

Operator

This Thank you, ladies conference concludes you, and gentlemen. thank presenters today's and call.

You day. may now Have disconnect. good a

Brookdale Senior Living (BKD) 6 Nov 182018 Q3 Earnings call transcript