Brookdale Senior Living Inc.BKD
Brookdale Senior Living Inc. Leases Disclosure
8. Leases
As of December 31, 2025, the Company operated 178 communities under long-term leases (169 operating leases and 9 financing leases). The substantial majority of the Company's lease arrangements are structured as master leases. Under a master lease, numerous communities are leased through an indivisible lease. In certain cases, the Company guarantees the performance and lease payment obligations of its subsidiary lessees under the master leases. An event of default related to an individual property or limited number of properties within a master lease portfolio may result in a default on the entire master lease portfolio.
The leases relating to substantially all of the Company's leased communities are fixed-rate leases with annual escalators that are fixed. The Company is responsible for all operating costs, including repairs and maintenance, property taxes, and insurance. As of December 31, 2025, the weighted average remaining lease term of the Company's operating and financing leases was 9.9 and 6.3 years, respectively. The leases generally provide for renewal or extension options, or in certain cases, purchase options. As of December 31, 2025, none of the Company's renewal or extension option periods for community leases are included in the lease term for accounting purposes.
The community leases contain other customary terms, which may include assignment and change of control restrictions, maintenance and capital expenditure obligations, termination provisions, and financial covenants, such as those requiring the Company to maintain prescribed minimum liquidity and net worth levels and lease coverage ratios, in each case on a consolidated, portfolio-wide, multi-community, single-community and/or entity basis. In addition, the Company's lease documents generally contain non-financial covenants, such as those requiring the Company to comply with Medicare or Medicaid provider requirements and maintain insurance coverage.
The Company's failure to comply with applicable covenants could constitute an event of default under the applicable lease documents. Many of the Company's lease documents contain cross-default provisions so that a default under one of these instruments could cause a default under other lease and debt documents (including documents with other lessors and lenders). Certain leases contain cure provisions, which generally allow the Company to post an additional lease security deposit if the required covenant is not met. Furthermore, the Company's leases are secured by its communities and, in certain cases, a guaranty by the Company and/or one or more of its subsidiaries.
As of December 31, 2025, the Company is in compliance with the financial covenants of its long-term lease agreements.
A summary of operating and financing lease expense (including the respective presentation on the consolidated statements of operations) and net cash outflows from leases is as follows.
| Years Ended December 31, | |||||||||||||||||
Operating Leases (in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| Facility operating expense | $ | 7,968 | $ | 8,122 | $ | 7,105 | |||||||||||
| Facility lease expense | 200,263 | 200,587 | 202,410 | ||||||||||||||
| Operating lease expense | 208,231 | 208,709 | 209,515 | ||||||||||||||
Operating lease expense adjustment (1) | 14,349 | 48,793 | 45,739 | ||||||||||||||
| Changes in operating lease assets and liabilities for lessor capital expenditure reimbursements | (32,187) | (16,362) | (9,844) | ||||||||||||||
| Operating net cash outflows from operating leases | $ | 190,393 | $ | 241,140 | $ | 245,410 | |||||||||||
(1) Represents the difference between the amount of cash operating lease payments and the amount of operating lease expense.
| Years Ended December 31, | |||||||||||||||||
Financing Leases (in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| Depreciation and amortization | $ | 4,652 | $ | 15,275 | $ | 16,444 | |||||||||||
| Interest expense: financing lease obligations | 10,797 | 27,761 | 21,950 | ||||||||||||||
| Financing lease expense | $ | 15,449 | $ | 43,036 | $ | 38,394 | |||||||||||
| Operating cash outflows from financing leases | $ | 10,797 | $ | 27,761 | $ | 21,950 | |||||||||||
| Financing cash outflows from financing leases | 1,195 | 1,084 | 8,473 | ||||||||||||||
| Changes in financing lease assets and liabilities for lessor capital expenditure reimbursement | (388) | (598) | (475) | ||||||||||||||
| Total net cash outflows from financing leases | $ | 11,604 | $ | 28,247 | $ | 29,948 | |||||||||||
As of December 31, 2025, the weighted average discount rate of the Company's operating leases was 8.7%.
The aggregate amounts of future minimum lease payments, including community, office, and equipment leases, recognized on the consolidated balance sheet as of December 31, 2025 are as follows (in millions).
| Year Ending December 31, | Operating Leases | Financing Leases | |||||||||
| 2026 | $ | 184.5 | $ | 7.1 | |||||||
| 2027 | 187.3 | 6.5 | |||||||||
| 2028 | 184.5 | 6.3 | |||||||||
| 2029 | 187.0 | 6.3 | |||||||||
| 2030 | 179.6 | 6.3 | |||||||||
| Thereafter | 919.9 | 9.3 | |||||||||
| Total lease payments | 1,842.8 | 41.8 | |||||||||
| Imputed interest and variable lease payments | (644.7) | (36.9) | |||||||||
| Non-cash gain on future sale of property | — | 20.7 | |||||||||
| Total lease obligations | $ | 1,198.1 | $ | 25.6 | |||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 19, 2026 | Showing above |
| 2024 | Feb 19, 2025 | |
| 2023 | Feb 21, 2024 | |
| 2022 | Feb 22, 2023 | |
| 2021 | Feb 15, 2022 | |
| 2020 | Feb 25, 2021 | |
| 2019 | Feb 19, 2020 | |
| 2018 | Feb 14, 2019 | |
| 2017 | Feb 22, 2018 | |
| 2016 | Feb 15, 2017 | |
| 2015 | Feb 12, 2016 | |
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.