Nov. 2, 2009 (PR Newswire) --

NASHVILLE, Tenn., Nov. 2 /PRNewswire-FirstCall/ -- Brookdale Senior Living Inc. (NYSE: BKD) (the "Company") today reported financial and operating results for the third quarter of 2009.

Bill Sheriff, Brookdale's CEO, said, "We are happy with our strong results this quarter which build on the success of the first two quarters this year. We believe our platform is operating effectively in today's difficult environment as evidenced by our results, and is well positioned to take advantage of growth opportunities. Without being unduly aggressive, we are evaluating and deploying capital in long-term growth opportunities, including both acquisitions and expansions, especially those that fit well within our ancillary services footprint. Last month, we announced our first acquisition since 2007 and one which fits firmly within this strategy."

Mark Ohlendorf, Co-President and CFO of Brookdale, commented, "Our business continues to perform well with recurring CFFO per share increasing dramatically to $0.43 from $0.30 in the third quarter last year. This growth includes over $1.5 million of start-up losses related to the opening of new expansions this quarter. Same-community Facility Operating Income ("FOI") results also showed substantial improvement of 11.7% aided by both revenue growth and strong expense management. We have continued the roll-out of ancillary services, materially increasing our ancillary profitability per unit, from $128 of monthly FOI per occupied unit last year to $206 this quarter. Our operating stability combined with our strong liquidity profile positions us well for long-term value creation."

Financial Results

Total revenue for the third quarter was a record $505.8 million, an increase of $23.6 million, or 4.9%, from the third quarter of 2008. The increase in revenue was primarily driven by an increase in average monthly revenue per unit, including growing revenues from ancillary services, partially offset by a small decline in occupancy. Average monthly revenue per unit was $3,987 in the third quarter, an increase of $201, or 5.3%, over the third quarter of 2008. Average occupancy for the third quarter was 89.0%, compared to 88.5% for the second quarter of 2009 and 89.7% for the third quarter of 2008.

Facility operating expenses for the third quarter were $328.9 million, an increase of $2.7 million, or 0.8%, from the third quarter of 2008. The increase over the prior year's quarter was primarily driven by the growth of ancillary services and expenses associated with expansions. With the positive impact of the Company's cost control initiatives, facility operating expenses, excluding the impact of ancillary services, decreased by 0.2% from the third quarter of 2008. Operating contribution margin for the total company during the third quarter of 2009 was 34.7%, a 260 basis point improvement over the third quarter of 2008.

General and administrative expenses for the third quarter were $34.7 million, up from $32.9 million in the third quarter of 2008. Excluding non-cash compensation, integration and acquisition-related costs from both periods, general and administrative expenses were $24.7 million in the third quarter of 2009 versus $22.3 million for the prior year same period. Demonstrating the Company's efficient platform, this was 4.5% as a percentage of revenue (including revenues under management) in the third quarter of 2009.

Brookdale's management utilizes Adjusted EBITDA and Cash From Facility Operations to evaluate the Company's performance and liquidity because these metrics exclude non-cash expenses such as depreciation and amortization, non-cash stock-based compensation expense and straight-line lease expense, net of deferred gain amortization. Brookdale also uses Facility Operating Income to assess the performance of its facilities.

In the third quarter of 2009, Adjusted EBITDA and Cash From Facility Operations included $2.2 million of acquisition-related costs. Third quarter 2008 Adjusted EBITDA and Cash From Facility Operations included $3.6 million of hurricane and named tropical storms expense and integration costs of $3.9 million.

For the quarter ended September 30, 2009, Facility Operating Income was $169.2 million, an increase of $19.3 million from the third quarter of 2008, and Adjusted EBITDA was $85.6 million, an $18.2 million increase over the third quarter of 2008.

Cash From Facility Operations was $48.2 million for the third quarter of 2009, or $0.41 per share. Excluding the $2.2 million of acquisition-related costs, CFFO for the third quarter was $50.4 million, or $0.43 per share. This was an increase of $20.4 million over the third quarter of 2008, excluding the non-recurring and integration expenses in 2008. Excluding the 2008 hurricane and named tropical storms and integration expenses, the Company reported CFFO of $0.30 per share in the third quarter of 2008. For the nine months ended September 30, 2009, reported CFFO was $150.9 million, or $1.40 per share.

Net loss for the third quarter of 2009 was $(21.3) million, or $(0.18) per diluted common share. The loss for the quarter includes non-cash items for depreciation and amortization, non-cash stock-based compensation expense and straight-line lease expense, net of deferred gain amortization, which totaled $79.7 million.

Operating Activities

For the quarter ended September 30, 2009, same community revenues grew 4.4% over the same period in 2008 as revenue per unit increased by 5.0% and occupancy fell by 0.5%. Same community Facility Operating Income for the quarter increased by 11.7% when compared to the third quarter of 2008 as expenses grew by 0.9%.

For the twelve months ended September 30, 2009, same community revenues grew 4.4% over the corresponding period ending in 2008, and same community Facility Operating Income increased by 6.0% over the corresponding period ending in 2008. The twelve month same community data excludes $7.0 million of charges in the fourth quarter of 2007 relating to integration-related accounting items and hurricane and named tropical storms expenses of $4.8 million in the last three quarters of 2008.

By the end of the third quarter, the Company's ancillary services programs provided therapy services to approximately 35,000 Brookdale units. At the end of the quarter, the Company's home health agencies were serving almost 18,800 units across the total consolidated Brookdale portfolio, up from approximately 11,400 units served a year ago. The therapy and home health services produced $206 of monthly Facility Operating Income per occupied unit in the third quarter across all units served, up from $128 per month a year ago, driven primarily by maturation of existing clinics and the acquisition of home health agencies.

During the quarter, the Company opened two expansions with a total of 156 units. There are currently two expansion projects under construction with an additional 205 units which will open in the fourth quarter of 2009. The two projects currently under construction are leased and require no additional equity from the Company. Additionally, near the end of the quarter the Company opened the 240-unit independent living component of its new entry fee CCRC in the Villages, Florida. The 72-bed skilled nursing unit at the Villages will open in the fourth quarter. The start-up losses for expansions were $1.5 million in the third quarter and were comprised of operating expenses, additional interest and lease expense.

Balance Sheet

Brookdale had $159.3 million of unrestricted cash and cash equivalents and $171.4 million of restricted cash on its balance sheet at the end of the third quarter. The Company had no cash borrowings outstanding against its Line of Credit.

During the first half of 2009, Brookdale extended the maturity of all of its mortgage debt initially due in 2009. Therefore, the Company currently has no mortgage debt maturities before 2011 that do not contain contractual extension options other than periodic, scheduled principal payments.

Subsequent Events

The Company recently announced that it entered into a definitive asset purchase agreement with affiliates of Sunrise Senior Living, Inc. (NYSE: SRZ) to acquire 21 senior living communities that are currently owned by those affiliates for an aggregate purchase price of $204 million plus customary transaction expenses. The portfolio has a total of 1,389 units, comprised of 92 independent living units, 876 assisted living units and 421 Alzheimer's units. The Company expects to finance the transaction with approximately $134.0 million of mortgage debt (substantially through the assumption of existing debt), with the balance of the purchase price to be paid from cash on hand. The consummation of the transaction is subject to the satisfaction of certain closing conditions and contingencies and the receipt of certain lender approvals. The transaction is expected to close in November 2009.

Additional Filings

The Company will file on or about November 2, 2009 a Form 8-K with the SEC which includes supplemental information relating to the Company's third quarter 2009 results. This filing will also be available through the Investor Relations section of the Company's website upon filing - www.brookdaleliving.com.

Earnings Conference Call

Brookdale's management will conduct a conference call on Tuesday, November 3, 2009 to review the financial results of its third quarter ended September 30, 2009. The conference call is scheduled for 9:00 AM ET. All interested parties are welcome to participate in the live conference call. The conference call can be accessed by dialing (866) 845-7252 (from within the U.S.) or (706) 634-9069 (from outside of the U.S.) ten minutes prior to the scheduled start and referencing the "Brookdale Senior Living Third Quarter Earnings Call."

A webcast of the conference call will be available to the public on a listen-only basis at www.brookdaleliving.com. Please allow extra time prior to the call to visit the site and download the necessary software required to listen to the internet broadcast. A replay of the webcast will be available for three months following the call.

For those who cannot listen to the live call, a replay will be available until Midnight ET on November 10, 2009 by dialing (800) 642-1687 (from within the U.S.) or (706) 645-9291 (from outside of the U.S.) and referencing access code "35964524." A copy of this earnings release is posted on the Investor Relations page of the Brookdale website (www.brookdaleliving.com).

About Brookdale Senior Living

Brookdale Senior Living Inc. is a leading owner and operator of senior living communities throughout the United States. The Company is committed to providing an exceptional living experience through properties that are designed, purpose-built and operated to provide the highest-quality service, care and living accommodations for residents. Currently the Company owns and operates independent living, assisted living, and dementia-care communities and continuing care retirement centers, with 547 communities in 35 states and the ability to serve approximately 52,000 residents.

Safe Harbor

Certain items in this press release and the associated earnings conference call may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Those forward-looking statements are subject to various risks and uncertainties and include all statements that are not historical statements of fact and those regarding our intent, belief or expectations, including, but not limited to, statements regarding the consummation of the Sunrise portfolio acquisition and the related financing and our expectations regarding the future performance of the acquired communities and their effect on our financial results; statements relating to our operational initiatives and our expectations regarding their effect on our results; our expectations regarding occupancy, revenue, expense levels, the demand for senior housing, expansion activity, acquisition opportunities and asset dispositions; our belief regarding our growth prospects; our ability to secure financing or repay, replace or extend existing debt at or prior to maturity; our ability to remain in compliance with all of our debt and lease agreements (including the financial covenants contained therein); our expectations regarding liquidity; our plans to deleverage; our expectations regarding financings and refinancings of assets; our plans to generate growth organically through occupancy improvements, increases in annual rental rates and the achievement of operating efficiencies and cost savings; our plans to expand our offering of ancillary services (therapy and home health); our plans to expand existing communities; the expected project costs for our expansion program; our expected levels of expenditures and reimbursements (and the timing thereof); our expectations for the performance of our entrance fee communities; our ability to anticipate, manage and address industry trends and their effect on our business; and our ability to increase revenues, earnings, Adjusted EBITDA, Cash From Facility Operations, and/or Facility Operating Income.