Brookdale Completes Equity Offering

June 3, 2009

June 3, 2009
On June 2, Brookdale Senior Living sold 13,953,489 shares of common stock at a price of $10.75 per share. Underwriters have the option to sell an additional 2,093,023 shares for 30 days, an option which we assume they will exercise because the price is a bit higher now despite a nearly 4% drop in value since this morning. When Brookdale announced this potential offering on May 12, the shares were trading above $12.00 per share and hit a recent high of $14.87 the week before that. This compares with $7.05 per share on April 22. As they say, you've come a long way, Brookdale.

Gross proceeds before the underwriters' over-allotment option will be $150 million, and the funds will be used to repay the $125 million of debt that is currently outstanding under Brookdale's credit agreement, with the remainder to be used for working capital. Goldman, Sachs & Co., Barclays Capital Inc. and Merrill Lynch & Co. were the joint book-running managers. This was a well-timed equity offering even though one of the results is that the amount that can now be drawn down under the credit line has been reduced, which may hamper future financial flexibility a bit. The good news is that when (and if) they draw it down again, the cost will be 100 basis points cheaper. In the current market environment, this is an important milestone for the company and the seniors housing industry.

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