he had a positive feeling about the potential partnership. Yes, Health Care REIT
had the financial capacity to close and
drive growth for years to come, but more
than that, both operator and investor
already had enough of a relationship for
Grape to know that they shared the same
team-oriented business philosophy and
corporate culture, Grape says. In other
words, they could be a great fit together,
something essential for any joint venture
to weather not just the ups but any downs
that could happen down the road.
“It wasn’t like we were starting as
strangers,” Grape says. “We had several
meaningful lengthy conversations about
what we each were trying to accom-
plish—our respective goals and objec-
tives, what had worked and not worked in
prior relationships.”
In the case of Silverado, its most
recent RIDEA joint venture with Health
Care REIT was not the pair’s first part-
nership and the relationship goes back
to 1996. Having worked together before,
they already had built up trust and con-
fidence, bolstered by the fact that many
people on the leadership team for Health
Care REIT had been with the company
for a long time and worked with Sil-
verado before, says Loren Shook, CEO,
president, and chairman. While lots of
REITs are interested in senior housing,
he also prefers to do business with one
that already has experience and a proven
track record in the sector.
“There are many fine REITs out there,
but we wouldn’t have done a RIDEA
structure with just any organization,”
he adds. “They need to understand not
just the long-term care business but our
unique niche—serving the memory-impaired at the assisted living level, and
hospice and home care services.”
Tips for Closing the Deal
n Pick partners with a proven track record of successful growth.
n Be clear about your objectives.
n find a potential partner who shares your goals/vision for growth.
n Look for corporate cultures that fit, rather than trigger potential conflicts.
n Do your homework/due diligence upfront.
n Balance risks with opportunities.
n Be realistic about price and terms.
n Ask your employees, residents, families, and other equity partners for their opinions on the pros and cons of the deal.
Ensuring a Successful Show
Every potential deal is different, but
while prior relationship and trust can
start up a deal, both come into play most
strongly in the often complex negotiation
period that follows, says Mark Ohlendorf,
co-president and CFO of Brookdale
Senior Living. The Brentwood, Tennessee-based company operates 646 communities nationwide and is now the sector’s
largest provider of independent and
assisted living when rated by operational
resident capacity (63,472).
That being said, Ohlendorf feels
that the very nature of the senior living
sector, with its caregiver and hospitality-oriented culture and mission, is more
conducive to effective acquisitions than
other industries, whether real estate or
beyond. People tend to be in this business
because they like people, and seniors in
particular, he says. “Senior housing tends
to attract people who want to be committed to the company they work for and
insist that company should be about more
than just making money or getting big,”
he suggests.
At the same time, that caring predisposition can make executives more
sensitive to how a deal will impact their
employees and residents, which may
raise additional concerns, Ohlendorf
adds. Last year, Brookdale’s biggest deal
was the acquisition of the operations of
Horizon Bay Retirement Communities,
which grew the company by 30 percent
and leveraged its long-term relationships
with HCP Inc., which owns 33 Horizon
Bay assets, and Chartwell Seniors Housing REIT, which owns 45 communities.
The scope of that growth obviously would
significantly impact both Brookdale and
Horizon Bay employees, so working out
the feasibility of a transitional strategy
was not something that could wait until
after the deal was closed, Ohlendorf says..
“When you try to shortcut that part
of the process and not pay attention to
it, you often will pay the price,” he adds.
“You can’t just pretend to pay attention
to culture or to people and what their
concerns are; you really have to do it all
the way down.”
Brookdale has a lot of experience
with merging cultures, having previously
merged with Alterra and acquired Amer-
ican Retirement Corp. The company
paired up executive directors and business
directors, many of whom had been fierce
competitors in their markets.
www.ALfA.ORG | MAY/JUNE 2012 | SENIOR LIVING EXECUTIVE 29
