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What changed in Brookdale Senior Living Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Brookdale Senior Living Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+418 added−522 removedSource: 10-K (2024-02-21) vs 10-K (2023-02-22)

Top changes in Brookdale Senior Living Inc.'s 2023 10-K

418 paragraphs added · 522 removed · 356 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

120 edited+19 added−36 removed101 unchanged
Biggest changeAs we look to return to pre-pandemic results, we intend to (i) exit non-strategic or underperforming owned assets or leases when possible, (ii) expand our footprint and services in core markets where we have, or can achieve, a clear leadership position, and (iii) explore further growth opportunities.
Biggest changeAs we continue to focus on returning to, and then exceeding, our pre-pandemic results, in the near and longer term, we also intend to (i) exit certain non-strategic or underperforming owned assets when possible, (ii) exit or restructure underperforming leases as we approach lease maturity, where possible, (iii) expand our footprint and services in core markets where we have, or can achieve, a clear leadership position, and (iv) explore further growth opportunities, such as opportunistic acquisitions (including potential acquisitions of currently leased assets) and other expansions of our senior living business, subject to capital availability.
Partially as a result of tax law changes enacted through REIT Investment Diversification and Empowerment Act ("RIDEA"), we now compete more directly with the various publicly-traded healthcare REITs for the acquisition of senior housing properties, the largest of which are Ventas, Inc. ("Ventas") and Welltower Inc.
Partially as a result of tax law changes enacted through REIT Investment Diversification and Empowerment Act ("RIDEA"), we now compete more directly with the various publicly-traded healthcare REITs for the acquisition of senior housing properties, the largest of which are Ventas, Inc. and Welltower Inc.
Operations Operations Overview We have implemented intensive standards, policies and procedures, and systems, including detailed associate resources and training, which we believe have contributed to high levels of customer service. Further, we believe our centralized support infrastructure allows our community-based leaders and personnel to focus on resident care and family connections.
Operations Operations Overview We have implemented intensive standards, policies and procedures, and systems, including detailed associate resources and training, which we believe have contributed to high levels of customer service. Further, we believe our centralized community support infrastructure allows our community-based leaders and personnel to focus on resident care and family connections.
Most inspection deficiencies are resolved through a plan of corrective action relating to the community's operations, but the reviewing agency may have the authority to take further action against a licensed or certified community, which could result in the imposition of fines, imposition of a provisional or conditional license, suspension or revocation of a license, suspension or denial of admissions or denial of payment for admissions, loss of certification as a provider under federal and/or state reimbursement programs, or imposition of other sanctions, including criminal penalties.
Most inspection deficiencies are resolved through a plan of corrective action relating to the community's operations, but the reviewing agency may have the authority to take further action against a licensed or certified community, which could result in the imposition of fines, imposition of a provisional or conditional license, suspension or revocation of a license, suspension or denial of admissions or denial of payment for admissions, loss of certification as a provider under federal and/or state reimbursement programs, or imposition of 15 other sanctions, including criminal penalties.
We have also established company-wide policies and 14 procedures relating to, among other things: resident care; community design and community operations; billing and collections; accounts payable; finance and accounting; risk management; development of associate training materials and programs; advertising and marketing activities; the hiring and training of management and other community-based personnel; compliance with applicable local and state regulatory requirements; and implementation of our acquisition, development, and leasing plans.
We have also established company-wide policies and procedures relating to, among other things: resident care; community design and community operations; billing and collections; accounts payable; finance and accounting; risk management; development of associate training materials and programs; advertising and marketing activities; the hiring and training of management and other community-based personnel; compliance with applicable local and state regulatory requirements; and implementation of our acquisition, development, and leasing plans.
Residents with cognitive or physical frailties and higher level service needs can often be accommodated with supplemental services in their own units or, in certain communities, are cared for in a more structured and supervised environment on a separate wing or floor. These communities also generally have dedicated assisted living associates and separate assisted living dining rooms and activity areas.
Residents with physical frailties and higher level service needs can often be accommodated with supplemental services in their own units or, in certain communities, are cared for in a more structured and supervised environment on a separate wing or floor. These communities also generally have dedicated assisted living associates and separate assisted living dining rooms and activity areas.
We are unable to predict the future course of federal, state, and local legislation or regulation. Changes in the regulatory framework could have a material adverse effect on our business. Many senior living communities are also subject to regulation and licensing by state and local health and social service agencies and other regulatory authorities.
We are unable to predict the future course of federal, state, and local legislation or regulation. Changes in the regulatory framework could have a material adverse effect on our business. State and Local Regulation and Licensing Many senior living communities are subject to regulation and licensing by state and local health and social service agencies and other regulatory authorities.
All online forms and many calls are handled by trained senior living advisors in our Brookdale Connection Center, 15 who schedule visits directly to our communities. Certain resident referral programs have been established and promoted at many communities within the limitations of federal and state laws.
All online forms and many calls are handled by trained senior living advisors in our Brookdale Connection Center, who schedule visits directly to our communities. Certain resident referral programs have been established and promoted at many communities within the limitations of federal and state laws.
If we were to violate the federal Anti-Kickback Statute, we may face criminal penalties and civil sanctions, including fines and possible exclusion from government reimbursement programs, which may also cause us to default under our debt and lease documents and/or trigger cross-defaults.
If we were to violate the federal Anti-Kickback Statute, we may face criminal penalties and civil sanctions, including fines and possible exclusion from government reimbursement programs, which 16 may also cause us to default under our debt and lease documents and/or trigger cross-defaults.
Brookdale also recognizes the importance of financial wellbeing, which is why we offer access to a financial wellness program for all associates. 17 Industry Regulation The regulatory environment surrounding the senior living industry continues to intensify in the number and type of laws and regulations affecting it.
Brookdale also recognizes the importance of financial wellbeing, which is why we offer access to a financial wellness program for all associates. Industry Regulation The regulatory environment surrounding the senior living industry continues to intensify in the number and type of laws and regulations affecting it.
If regulatory requirements increase, whether through enactment of new laws or regulations or changes in the enforcement of existing rules, including increased 18 enforcement brought about by advocacy groups, in addition to federal and state regulators, our operations could be adversely affected.
If regulatory requirements increase, whether through enactment of new laws or regulations or changes in the enforcement of existing rules, including increased enforcement brought about by advocacy groups, in addition to federal and state regulators, our operations could be adversely affected.
Interest earned on our cash, cash equivalents, and marketable securities partially offset such increased interest expense. 9 Resident Fee Increases The rates we charge our residents are highly dependent on local market conditions and the competitive environment in which the communities operate.
Increased interest earned on our cash, cash equivalents, and marketable securities partially offset such increased interest expense. Resident Fee Increases The rates we charge our residents are highly dependent on local market conditions and the competitive environment in which our communities operate.
Under our management arrangements, we receive management fees, which 13 are generally determined by an agreed upon percentage of gross revenues (as defined in the management arrangement), as well as reimbursed expenses, which represent the reimbursement of certain expenses we incur on behalf of the owners.
Under our management arrangements, we receive management fees, which are generally determined by an agreed upon percentage of gross revenues (as defined in the management arrangement), as well as reimbursed expenses, which represent the reimbursement of certain expenses we incur on behalf of the owners.
These inspections cover the appearance of the exterior and grounds; the appearance and cleanliness of the interior; the professionalism and friendliness of associates; quality of resident care (including assisted living services and nursing care); the quality of activities and the dining program; observance of residents in their daily living activities; and compliance with government regulations.
These inspections cover the appearance of the exterior and grounds; the appearance and cleanliness of the interior; the professionalism and friendliness of associates; quality of resident care (including assisted living and memory care services and nursing care); the quality of activities and the dining program; observance of residents in their daily living activities; and compliance with government regulations.
Federal, state, and local laws and regulations also govern the removal, encapsulation, disturbance, handling, and/or disposal of asbestos-containing materials and potential asbestos-containing materials when such materials are in poor condition or in the event of construction, remodeling, renovation, or demolition of a building.
Federal, state, and local laws and regulations also govern the removal, 18 encapsulation, disturbance, handling, and/or disposal of asbestos-containing materials and potential asbestos-containing materials when such materials are in poor condition or in the event of construction, remodeling, renovation, or demolition of a building.
We operate and manage independent living, assisted living, memory care, and continuing care retirement communities ("CCRCs"). Our senior living communities and our comprehensive network help to provide seniors with care and services in an environment that feels like home.
We operate and manage independent living, assisted living, memory care, and continuing care retirement communities ("CCRCs"). Our senior living communities and our comprehensive network help to provide seniors with care, connection, and services in an environment that feels like home.
New community openings have subjected the senior housing industry to oversupply and increased competitive pressures. Data from NIC shows that industry occupancy began to decrease starting in 2016 as a result of new openings and oversupply.
New community openings subjected the senior housing industry to oversupply and increased competitive pressures. Data from NIC shows that industry occupancy began to decrease starting in 2016 as a result of new openings and oversupply.
Because labor represents such a large portion of our operating expenses, changes in federal, state, and local employment-related laws and regulations could increase our cost of 19 doing business.
Because labor represents such a large portion of our operating expenses, changes in federal, state, and local employment-related laws and regulations could increase our cost of doing business.
We are subject to certain federal and state laws that regulate financial arrangements by healthcare providers, such as the federal Anti-Kickback Statute, the Stark laws, and certain state referral laws.
Anti-Kickback Regulation We are subject to certain federal and state laws that regulate financial arrangements by healthcare providers, such as the federal Anti-Kickback Statute, the Stark laws, and certain state referral laws.
Through our comprehensive network of services, we help to provide seniors with care and services to support their lifestyle in an environment that feels like home. We believe that we are one of the few companies in the senior living industry with this capability and the ability to do so at scale on a national basis.
Through our comprehensive network of 11 services, we help to provide seniors with care, connection, and services to support their lifestyle in an environment that feels like home. We believe that we are one of the few companies in the senior living industry with this capability and the ability to do so at scale on a national basis.
Management's Discussion and Analysis of Financial Condition and Results of Operations" and Note 21 to our consolidated financial statements contained in "Item 8. Financial Statements and Supplementary Data." Our Community Offerings We offer a variety of senior living communities in locations across the United States. We operate and manage independent living, assisted living, memory care, and continuing care retirement communities.
Management's Discussion and Analysis of Financial Condition and Results of Operations" and Note 20 to our consolidated financial statements contained in "Item 8. Financial Statements and Supplementary Data." Our Community Offerings We offer a variety of senior living communities in locations across the United States. We operate and manage independent living, assisted living, memory care, and continuing care retirement communities.
Our assisted living and memory care communities include both freestanding, multi-story communities with more than 50 units, as well as smaller, freestanding, single story communities.
Our assisted living and memory care communities include both freestanding, multi-story 10 communities with more than 50 units, as well as smaller, freestanding, single story communities.
Due to the industry's lower than pre-pandemic occupancy levels, certain competitors may price aggressively in order to capture market share.
Due to the industry's current lower than pre-pandemic occupancy levels, certain competitors may price aggressively in order to capture market share.
We believe that our multiple product offerings create marketing synergies and cross-selling opportunities. • The size of our business allows us to realize cost and operating efficiencies. We are the largest operator of senior living communities in the United States based on total capacity.
We believe that our multiple service offerings create marketing synergies and cross-selling opportunities. • The size of our business allows us to realize cost and operating efficiencies. We are the largest operator of senior living communities in the United States based on total capacity.
According to data from the National Investment Center for the Seniors Housing & Care Industry ("NIC"), there were approximately 2,500 local and regional senior housing operators as of December 31, 2022, of which approximately 90% operated five or fewer communities.
According to data from the National Investment Center for the Seniors Housing & Care Industry ("NIC"), there were approximately 2,500 local and regional senior housing operators as of December 31, 2023, of which approximately 90% operated five or fewer communities.
Our major senior housing competitors include Atria Senior Living Inc., Life Care Services, LLC, Sunrise Senior Living, LLC, Erickson Senior Living, AlerisLife Inc., and multiple regional providers with large localized market presence, as well as a large number of not-for-profit entities. Over the long term we plan to evaluate and, where opportunities arise, pursue development, investment, and acquisition opportunities.
Our major senior housing competitors include Atria Senior Living Inc., Life Care Services, LLC, Sunrise Senior Living, LLC, Discovery Senior Living, LLC, and Erickson Senior Living, LLC, and multiple regional providers with large localized market presence, as well as a large number of not-for-profit entities. 8 Over the long term we plan to evaluate and, where opportunities arise, pursue development, investment, and acquisition opportunities.
Over the longer term, we will also continue to invest in our development capital expenditures program through which we expand, reposition, and redevelop selected existing senior living communities where economically advantageous.
Over the longer term, we expect that we will also continue to invest in our development capital expenditures program through which we expand, reposition, and redevelop selected existing senior living communities where economically advantageous.
While the number varies depending upon the particular community, as of December 31, 2022 approximately 80% of all of the units at our independent living communities were independent living units, with the balance of the units operating as licensed assisted living and memory care units.
While the number varies depending upon the particular community, as of December 31, 2023 approximately 80% of all of the units at our independent living communities were independent living units, with the balance of the units operating as licensed assisted living and memory care units.
Due to demographic trends, and continuing advances in science, nutrition, and healthcare, the senior population will continue to grow. U.S. Census projections suggest that there will be over one million new potential residents per year for the rest of the decade, and we believe that demand for senior care will increase as a result.
Due to demographic trends, and continuing advances in science, nutrition, and healthcare, the senior population will continue to grow. U.S. Census projections suggest that there will be over one million new potential residents per year for the next decade, and we believe that demand for senior care will increase as a result.
The size of our business also allows us to achieve increased efficiencies with respect to various corporate functions such as procurement, human resources, finance, accounting, legal, information technology, and marketing. We are also able to realize cost efficiencies in the purchasing of food, supplies, insurance, benefits, and other goods and services.
The size of our business also allows us to achieve increased efficiencies with respect to various community support functions such as procurement, human resources, finance, accounting, legal, information technology, and marketing. We are also able to realize cost efficiencies in the purchasing of food, supplies, insurance, benefits, and other goods and services.
There is a growing consumer awareness among seniors and their families concerning the types of services provided by senior living operators, which has further contributed to the demand for senior living services.
There is a growing consumer awareness among seniors and their families regarding the types of services provided by senior living operators, which has further contributed to the demand for senior living services.
In order to foster a sense of belonging and engagement, as well as to respond to residents' needs and desires, at many of our communities, we have established a resident council or other resident advisory committees that meet at least monthly with the Executive Director of the community.
In order to foster a sense of belonging and engagement, as well as to respond to residents' needs and desires, at many of our communities, we have established a resident council or other resident advisory committees that meet periodically with the Executive Director of the community.
We are also subject to a wide variety of federal, state, and local employment-related laws and regulations which govern matters including, but not limited to, wage and hour requirements, equal employment opportunity obligations, leaves of absence and reasonable accommodations, employee benefits, the right of employees to engage in protected concerted activity (including union organizing), and occupational health and safety requirements.
Employment-Related Regulation We are also subject to an increasing and wide variety of federal, state, and local employment-related laws and regulations which govern matters including, but not limited to, wage and hour requirements, equal employment opportunity obligations, leaves of absence and reasonable accommodations, employee benefits, the right of employees to engage in protected concerted activity (including union organizing), and occupational health and safety requirements.
We believe the successful execution of these initiatives will improve resident health and wellbeing and drive incremental revenue and value creation (including through increasing move-ins and extending residents' average length of stay resulting in increased occupancy). • Drive innovation and leverage technology.
We believe the successful execution of these initiatives will improve resident health and well-being and drive incremental revenue and value creation (including through increasing move-ins and extending residents' average length of stay resulting in increased occupancy). • Drive innovation and leverage technology.
Our expertise in healthcare, hospitality, and real estate provides residents with opportunities to improve wellness, pursue passions, and stay connected with friends and loved ones.
Our expertise in healthcare, hospitality, and real estate provides residents with opportunities to improve wellness, pursue passions, make new friends, and stay connected with loved ones.
Our owned communities generated 58.4% of our resident fee revenue and our leased communities generated 41.6% of our resident fee revenue. The table below shows the percentage of our resident fee and management fee revenue attributable to each of our segments or All Other category for the year ended December 31, 2022.
Our owned communities generated 58.6% of our resident fee revenue and our leased communities generated 41.4% of our resident fee 9 revenue. The table below shows the percentage of our resident fee and management fee revenue attributable to each of our segments or All Other category for the year ended December 31, 2023.
We believe that earning the trust of our residents and their families will allow us to build relationships that create passionate advocates and generate referrals. We intend to create a consistent high quality experience for residents, including through the implementation and execution of our high quality clinical, operational, and resident engagement programs.
We believe that fostering the continued trust of our residents and their families will allow us to build relationships that create passionate advocates and generate referrals. We intend to create a consistent high-quality experience for residents, including through the implementation and execution of our high-quality clinical, operational, dining, and resident engagement programs.
Most of our CCRCs have independent living, assisted living, memory care, and skilled nursing available on one campus or within the immediate area. Our CCRC residents are generally seniors seeking a community offering a broad continuum of care enabling them to age-in-place.
Most of our CCRCs have independent living, assisted living, memory care, and skilled nursing available on one campus or within the immediate area. Our residents of our CCRCs are generally seniors seeking a community that offers a broad continuum of care enabling them to age-in-place.
Residents can also enter the CCRC communities directly into assisted living, memory care, or skilled nursing and, in some cases, may enter via the skilled nursing product line following an acute event and subsequently transfer from the skilled nursing unit to one of the other on-campus service lines.
Residents can also enter the CCRCs directly into assisted living, memory care, or skilled nursing and, in some cases, may enter via the skilled nursing service line following an acute event and subsequently transfer from the skilled nursing unit to one of the other on-campus service lines.
The information within, or that can be accessed through, our website addresses is not part of this report. 21
The information within, or that can be accessed through, our website addresses is not part of this report. 19
We believe successful execution on this strategy provides the best opportunity to create attractive long-term stockholder value. We are focused on priorities that will position us for growth and capitalize on positive trends in demographics, customer preferences, and lower new supply in the industry, while using scale to our advantage.
We believe successful execution of this strategy provides the best opportunity to create attractive long-term stockholder value. We are focused on priorities that will position us for growth and capitalize on positive trends in demand demographics, customer preferences, and lower new supply in the industry, while using our unique Brookdale differentiators and scale to our advantage.
The size of our business allows us to realize cost savings and economies of scale in the procurement of goods and services. Our scale also allows us to achieve increased efficiencies with respect to various corporate functions.
The size of our business allows us to realize cost savings and economies of scale in the procurement of goods and services. Our scale also allows us to achieve increased efficiencies with respect to various community support functions.
Additionally, we continue to post to and source from job sites created for under-represented groups to expand our pipeline of candidates. Development We offer learning opportunities for our associates when they join Brookdale and throughout their careers to better serve our residents and to grow their career. Our Brookdale University provides training and leadership development for leaders across the organization.
Additionally, we continue to source from employment websites created for under-represented groups to expand our pipeline of candidates. Development We offer learning opportunities for our associates when they join Brookdale and throughout their careers to better serve our residents and to grow their career. Our Brookdale University provides training and leadership development for leaders across the organization.
There are various extremely complex federal and state laws governing a wide array of referrals, relationships, and arrangements and prohibiting fraud by healthcare providers, including those in the senior living industry, and governmental agencies are devoting increasing attention and resources to such anti-fraud initiatives.
Regulation Against Fraud, Abuse, and False Claims There are various extremely complex federal and state laws governing a wide array of referrals, relationships, and arrangements and prohibiting fraud by healthcare providers, including those in the senior living industry, and governmental agencies are devoting increasing attention and resources to such anti-fraud initiatives.
In addition, we have established centralized operations groups to support all of our product lines and communities in areas such as training, regulatory affairs, asset management, dining, clinical services, sales, customer engagement, marketing, and procurement.
In addition, we have established centralized operations groups to support all of our service lines and communities in areas such as training, regulatory affairs, asset management, dining, clinical services, sales, resident engagement, marketing, and procurement.
We also know maintaining overall well-being is important, which is why we offer benefits to cover a spectrum of needs. For example, full-time associates enrolled in one of our medical plans can receive a wellness incentive for completing their annual physical.
In 2023, approximately half of our eligible full-time associates participated in our medical plans. We also know maintaining overall well-being is important, which is why we offer benefits to cover a spectrum of needs. For example, full-time associates enrolled in one of our medical plans can receive a wellness incentive for completing their annual physical.
On November 22, 2005, we completed our initial public offering of common stock, and on July 25, 2006, we acquired American Retirement Corporation, another leading senior living provider that had been operating independently since 1978. On September 1, 2011, we completed the acquisition of Horizon Bay, which was the then-ninth largest operator of senior living communities in the United States.
In 2005, we completed our initial public offering of common stock, and in 2006, we acquired American Retirement Corporation, another leading senior living provider that had been operating independently since 1978. In 2011, we completed the acquisition of Horizon Bay, which was the then-ninth largest operator of senior living communities in the United States.
As of December 31, 2022, we operated a nationwide base of 673 communities in 41 states. • Ability to provide a broad spectrum of care . Given our diverse mix of independent living, assisted living, memory care, and CCRCs communities, we are able to meet a wide range of our customers' needs.
As of December 31, 2023, we operated a nationwide base of 652 communities in 41 states. • Ability to provide a broad spectrum of care . Given our diverse mix of independent living, assisted living, memory care, and CCRCs communities, we are able to meet a wide range of our residents' needs.
Consolidated Corporate Operations Support We have developed a centralized support infrastructure and services platform, which we believe provides us with a significant operational advantage over local and regional operators of senior living communities.
Community Support Functions We have developed a centralized support infrastructure and services platform, which we believe provides us with a significant operational advantage over local and regional operators of senior living communities.
With this strategic priority, we intend to ensure all communities are appropriately priced within their market.
With this strategic priority, we are working to ensure that all communities are appropriately priced within their market.
In addition, a portion of each Executive Director's compensation is directly tied to the operating performance of the community. We continue to take actions intended to simplify the role of our Executive Director to allow them to focus on our residents and their families and our associates.
In addition, a portion of each Executive Director's compensation is directly based on the operating performance of the community, community associate turnover, and resident and family satisfaction. We continue to take actions intended to simplify the role of our Executive Director to allow them to focus on our residents and their families and our associates.
Through our targeted sales and marketing efforts, we plan to drive increased move-ins through enhanced outreach with impactful points of differentiation based on quality, a portfolio of choices, and personalized service delivered by caring and engaged associates. • Attract, engage, develop, and retain the best associates. Brookdale’s culture is based on servant leadership.
Through our targeted sales and marketing efforts, we plan to drive increased move-ins through enhanced outreach with impactful points of differentiation based on quality, clinical and healthcare expertise, a portfolio of choices, and high-quality, personalized service delivered by caring and engaged associates. • Attract, engage, develop, and retain the best associates. Brookdale’s culture is one of people serving people.
We cannot predict with reasonable certainty when the senior housing industry occupancy rate will return to pre-pandemic levels or the extent to which the pandemic’s effect on demand may adversely affect the amount of resident fees we are able to collect from our residents. The primary market of the senior living industry is individuals age 80 and older.
We cannot predict with reasonable certainty when the senior housing industry occupancy rate will return to pre-pandemic levels or the extent to which the pandemic’s effect on demand may adversely affect the amount of resident fees we are able to collect from our residents.
Our Business We are the nation's premier operator of senior living communities, operating and managing 673 communities in 41 states as of December 31, 2022, with the ability to serve more than 60,000 residents. We offer our residents access to a broad continuum of services across the most attractive sectors of the senior living industry.
Our Business We are the nation's premier operator of senior living communities, operating and managing 652 communities in 41 states as of December 31, 2023, with the ability to serve approximately 59,000 residents. We offer our residents access to a broad continuum of services across the most attractive sectors of the senior living industry.
Our vision is to enable those we serve to live well by offering our residents a high-quality healthcare and wellness platform. We believe Brookdale is uniquely positioned to be a key participant and partner in the value-based healthcare ecosystem.
We desire to enable those we serve to live well by offering our residents a high-quality healthcare and wellness platform. We believe Brookdale is uniquely positioned to be a key senior living leader, and partner to providers and payors, in the value-based healthcare ecosystem.
The United States’ unemployment rate remained at or below 4.0% each month during 2022, and more than half of states experienced record low unemployment rates. Labor pressures have resulted in higher-than-typical associate turnover and wage growth, and we have experienced difficulty in filling open positions timely.
The United States unemployment rate remained at or below 4% each month during 2022 and 2023. Labor pressures have resulted in higher-than-typical associate turnover and wage growth, and we have experienced difficulty in filling open positions timely.
The COVID-19 pandemic has presented significant challenges to our industry, as outlined above. Additional challenges in our industry include increased state and local regulation of the assisted living, memory care, and skilled nursing sectors, which has led to an increase in the cost of doing business.
Including continued recovery from the significant challenge of the COVID-19 pandemic to our industry, additional challenges in our industry include increased state and local regulation of the assisted living, memory care, and skilled nursing sectors, which has led to an increase in the cost of doing business.
We are engaged in a variety of innovation initiatives and over time plan to pilot and test new ideas, technologies, and operating models in order to enhance our residents' engagement and experience, improve outcomes, and increase average length of stay and occupancy.
We are engaged in a variety of innovation initiatives and over time plan to pilot and test new ideas, technologies, and operating models in order to enhance our residents' engagement and experience, improve outcomes, increase average length of stay and occupancy, further differentiate Brookdale in the market, and better support our senior living operations.
Medicare and Medicaid Programs Reimbursements from Medicare and Medicaid represented 1.8% and 3.3%, respectively, of our consolidated resident fee revenue for the year ended December 31, 2022. Medicare and Medicaid reimbursements represented 18.0% of our CCRCs segment's resident fee revenue during such period.
Medicare and Medicaid Programs Reimbursements from Medicare and Medicaid represented 1.5% and 3.3%, respectively, of our consolidated resident fee revenue for the year ended December 31, 2023. Medicare and Medicaid reimbursements represented 16.9% of our CCRCs segment's resident fee revenue during such period.
We believe that our successful execution on these strategic priorities and our longer-term growth plans will allow us to achieve our goal to improve profitability and be the first choice in senior living by being the nation’s most trusted and effective senior living provider. Recent Developments COVID-19 Pandemic The COVID-19 pandemic continued to significantly affect our operations during 2022.
We believe that our successful execution on these strategic priorities and our longer-term growth plans will allow us to achieve our goal to improve profitability and be the first choice in senior living by being the nation’s most trusted and effective senior living provider.
In accordance with Medicare laws, CMS makes annual adjustments to Medicare payment rates. Medicaid reimbursement rates for many of our assisted living and memory care communities also are based upon fixed payment systems. Generally, these rates are adjusted annually for inflation. However, those adjustments may not reflect actual increases of the cost of providing healthcare services.
In accordance with Medicare laws, the Centers for Medicare & Medicaid Services ("CMS") makes annual adjustments to Medicare payment rates. Medicaid reimbursement rates for many of our assisted living and memory care communities also are based upon fixed payment systems. Generally, these rates are adjusted annually for inflation.
Management Services As of December 31, 2022, we managed a total of 32 communities (4,725 units) on behalf of others, which represented approximately 8% of our senior housing capacity.
Management Services As of December 31, 2023, we managed a total of 30 communities (4,579 units) on behalf of others, which represented 8% of our senior housing capacity.
We are a learning organization that uses multiple tools to obtain feedback from residents, their families, and our associates to improve our services to meet the changing needs of residents. We expect to strengthen associate engagement for an enhanced resident experience.
We are a learning organization that uses multiple tools to obtain feedback from residents, their families, and our associates to improve our services to meet the changing needs of residents.
We are one of a limited number of large operators that provide a broad range of community locations and service level offerings at varying price levels. The industry has attracted additional investment in the last decade resulting in increased construction and development of new senior housing supply.
We are the largest of a limited number of operators that provide a broad range of community locations and service level offerings at varying price levels. The industry attracted additional investment in the last decade, prior to the start of the COVID-19 pandemic, which resulted in increased construction and development of new senior housing supply.
Our operations are subject to regulation under various federal, state, and local environmental laws, including those relating to: the handling, storage, transportation, treatment, and disposal of medical waste products generated at our communities; identification and warning of the presence of asbestos-containing materials in buildings, as well as removal of such materials; the presence of other substances in the indoor environment; and protection of the environment and natural resources in connection with development or construction of our properties. 20 Some of our communities generate infectious or other hazardous medical waste due to the illness or physical condition of the residents, including, for example, blood-contaminated bandages, swabs and other medical waste products, and incontinence products of those residents diagnosed with an infectious disease.
Our operations are subject to regulation under various federal, state, and local environmental laws, including those relating to: the handling, storage, transportation, treatment, and disposal of medical waste products generated at our communities; identification and warning of the presence of asbestos-containing materials in buildings, as well as removal of such materials; the presence of other substances in the indoor environment; and protection of the environment and natural resources in connection with development or construction of our properties.
We established procedures to comply with HIPAA privacy requirements at these communities. We were required to be in compliance with the HIPAA rule establishing administrative, physical, and technical security standards for health information by 2005. To the best of our knowledge, we are in compliance with these rules.
Rules that became effective in 2003 govern our use and disclosure of health information at certain HIPAA covered communities. We established policies and procedures to comply with HIPAA privacy and security requirements at these communities. We were required to be in compliance with the HIPAA rule establishing administrative, physical, and technical security standards for health information by 2005.
In addition, the rate adjustment may not be sufficient to offset our increased costs. The Senior Living Industry The senior living industry has undergone dramatic growth in the past several decades, marked by the emergence of assisted living communities in the mid-1990s, and it remains highly fragmented with numerous local and regional operators.
In addition, our rate adjustments may not be sufficient to offset our increased costs in the event that labor expenses, inflation, or interest costs grow at rates higher than anticipated. 7 The Senior Living Industry The senior living industry has undergone dramatic growth in the past several decades, marked by the emergence of assisted living communities in the mid-1990s, and it remains highly fragmented with numerous local and regional operators.
We have increased our recruiting efforts to fill existing open positions, resulting in increasing the size of our workforce by approximately 4,800 community associates during 2022. We continue to review wage rates in our markets and make competitive adjustments.
We have increased our recruiting efforts to fill existing open positions, resulting in increasing the size of our workforce since the beginning of 2022. We continue to analyze wage rates in our markets and make competitive adjustments.
Most of these communities also offer (either directly or through access to third-party service providers) custom tailored concierge and personal assistance/private duty services at an additional charge, which may include medication reminders, daily check-in, transportation, shopping, escort, and companion services. 12 In addition to the basic services, our independent living communities that include assisted living also provide residents with personal care and convenience service options to provide assistance with activities of daily living ("ADLs").
Most of these communities also offer (either directly or through access to third-party service providers) custom tailored concierge and personal assistance/private duty services at an additional charge, which may include medication reminders, daily check-in, transportation, shopping, escort, and companion services.
We expect to diversify and optimize our recruiting plans, improve training, educational, and career development opportunities for associates and enhance our already compelling value proposition for our associates in the areas of compensation, leadership, career growth, and meaningful work. • Earn resident and family trust and satisfaction by providing valued high quality care and personalized service.
We also intend to further support enhanced training programs for associates, educational and career development opportunities for associates, and a compelling value proposition for our associates in the areas of compensation, leadership, career growth, and meaningful work. • Earn resident and family trust and satisfaction by providing valued, high-quality care and personalized service.
These requirements vary based on provider type and jurisdiction but generally may include mandatory requirements for vacation of staff, testing of residents and/or staff, providing COVID-19 related paid leave, implementation of infection control standards and procedures, imposition of restrictions on new admissions or readmissions of residents, required screening of all persons entering a community, imposition of restrictions or limitations on who and how residents may be visited, and imposition of mandatory notification requirements to residents, families, staff, and regulatory bodies related to positive COVID-19 cases.
While many of the regulatory requirements were temporary and expired with the end of the public health emergency in May 2023, these requirements generally may include mandatory requirements for vaccination of staff, testing of residents and/or staff, providing COVID-19 related paid leave, implementation of infection control standards and procedures, imposition of restrictions on new admissions or readmissions of residents, required screening of all persons entering a community, imposition of restrictions or limitations on who and how residents may be visited, and imposition of mandatory notification requirements to residents, families, staff, and regulatory bodies related to positive COVID-19 cases.
As of December 31, 2022, we provide memory care services at 339 of our communities, aggregating 8,996 memory care units across our segments. These communities include 108 freestanding memory care communities with 4,203 units included in our Assisted Living and Memory Care segment.
As of December 31, 2023, we provide memory care services at 338 of our communities, aggregating 9,015 memory care units across our segments. These communities include 107 freestanding memory care communities with 4,158 units included in our Assisted Living and Memory Care segment.
With our technology platform, we also expect to identify solutions to reduce complexity, increase productivity, lower costs, and increase our ability to collaborate with third parties. • Improve and grow our senior living portfolio.
We also plan to continue to invest in our technology platform, with the goal of identifying and implementing solutions to reduce complexity, increase productivity, lower costs, and increase our ability to collaborate with third parties. • Improve and grow our senior living portfolio.
We believe that we provide highly valuable services to seniors, and we continue to strive to expand the number of seniors we serve through targeted efforts to increase our occupancy levels and improve controllable expense management, while remaining focused on driving rate and improving margin.
We believe that we provide highly valuable services to seniors, and we continually strive to expand the number of seniors we serve through targeted efforts to increase our occupancy levels while remaining focused on charging an appropriate rate for the services we provide.
These segments were determined based on the way that our chief operating decision maker organizes our business activities for making operating decisions, assessing performance, developing strategy, and allocating capital resources. 11 Communities that we own or lease are included in the Independent Living, Assisted Living and Memory Care, or CCRCs segment, as applicable.
Segments As of December 31, 2023, we had three reportable segments: Independent Living; Assisted Living and Memory Care; and CCRCs. These segments were determined based on the way that our chief operating decision maker organizes our business activities for making operating decisions, assessing performance, developing strategy, and allocating capital resources.
Marketing and Sales Our marketing efforts are intended to create awareness of our brand and services to educate prospects and referral sources about the Brookdale difference. We meet prospects where they are in their journey, whether they are learning about senior living for the first time or need to schedule a visit at one of our communities.
We meet prospects where they are in their journey, whether they are learning about senior living for the first time or need to schedule a visit at one of our communities.
We are subject to federal and state laws designed to protect the confidentiality of patient health information. The United States Department of Health and Human Services has issued rules pursuant to HIPAA relating to the privacy of such information. Rules that became effective in 2003 govern our use and disclosure of health information at certain HIPAA covered communities.
Confidentiality and Privacy Regulation We are subject to federal and state laws designed to protect the confidentiality of patient health information. The United States Department of Health and Human Services has issued rules pursuant to HIPAA relating to the privacy of such information.
We are piloting programs in several areas and plan to roll out initiatives to accelerate our growth further. We plan to explore additional products and services that we may offer to our residents or to seniors living outside of our communities and, in the longer term where opportunities arise, pursue development, investment, and acquisition opportunities. • Enhance healthcare and wellness.
We also plan to continue to explore additional products and services that we may offer to our residents or to seniors living outside of our communities and, in the longer term where opportunities arise, we would expect to pursue development, investment, and acquisition opportunities to further enhance and grow our senior living portfolio. • Enhance healthcare and wellness.
Macroeconomic Conditions A confluence of macroeconomic conditions, including an intensely competitive labor environment and higher inflation and interest rates, affected our operations during 2022 and continue to do so. Labor Pressures Labor costs comprise approximately two-thirds of our total facility operating expense. We began to experience pressures associated with the intensely competitive labor environment during 2021, which continued throughout 2022.
Recent Developments Macroeconomic Conditions A confluence of macroeconomic conditions, including labor pressures, high inflation, and increased interest rates, affected our operations during 2023. 6 Labor Pressures Labor costs comprise approximately two-thirds of our total facility operating expense and are subject to inflationary and labor environment pressures. We began to experience pressures associated with the intensely competitive labor environment during 2021.
In addition, we have and will continue to leverage our centralized corporate functions such as finance, human resources, legal, information technology, and marketing. Seasonality Our senior housing business has typically experienced some seasonality, which we experience in certain regions more than others, due to weather patterns, geography, and higher incidence and severity of flu and other illnesses during winter months.
Seasonality Our senior housing business has typically experienced some seasonality, which we experience in certain regions more than others, due to weather patterns, geography, and higher incidence and severity of flu and other illnesses during winter months.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe ultimate impacts of COVID-19 on our business, results of operations, cash flow, liquidity, and stock price will depend on many factors, some of which cannot be foreseen, including the duration, severity, and breadth of the pandemic and any resurgence or variants of the disease; the impact of COVID-19 on the nation’s economy and debt and equity markets and the local economies in our markets; the development, availability, utilization, and efficacy of COVID-19 testing, therapeutic agents, and vaccines and the prioritization of such resources among businesses and demographic groups; government financial and regulatory relief efforts that may become available to business and individuals, including our ability to qualify for and satisfy the terms and conditions of financial relief; restrictions on visitors and move-ins at our communities as a result of infections at a community or as necessary to comply with regulatory requirements or at the direction of authorities having jurisdiction; perceptions regarding the safety of senior living communities during and after the pandemic; changes in demand for senior living communities and our ability to adapt our sales and marketing efforts to meet that demand; the impact of COVID-19 on our residents’ and their families’ ability to afford our resident fees, including due to changes in unemployment rates, consumer confidence, housing markets, and equity markets caused by COVID-19; changes in the acuity levels of our new residents; the disproportionate impact of COVID-19 on seniors generally and those residing in our communities; the duration and costs of our response efforts, including increased equipment, supplies, labor, litigation, testing, vaccination clinic, health plan, and other expenses; greater use of contract labor and other premium labor due to COVID-19 and general labor market conditions; the impact of COVID-19 on our ability to complete financings and refinancings of various assets or other transactions or to generate sufficient cash flow to cover required debt, interest, and lease payments and to satisfy financial and other covenants in our debt and lease documents; increased regulatory requirements, including the costs of unfunded, mandatory testing of residents and associates and provision of test kits to our health plan participants; increased enforcement actions resulting from COVID-19; government action that may limit our collection or discharge efforts for delinquent accounts; and the frequency and magnitude of legal actions and liability claims that may arise due to COVID-19 or our response efforts.
Biggest changeThe ultimate recovery from the COVID-19 pandemic on our business, results of operations, cash flow, liquidity, and stock price will depend on many factors, some of which cannot be foreseen, including any resurgence or variants of the disease; the impact of the COVID-19 pandemic on the nation’s economy and debt and equity markets and the local economies in our markets; any return of restrictions on visitors and move-ins at our communities as a result of infections at a community or as necessary to comply with regulatory requirements or at the direction of authorities having jurisdiction; perceptions regarding the safety of senior living communities after the pandemic; changes in demand for senior living communities and our ability to adapt our sales and marketing efforts to meet that demand; the impact of the COVID-19 pandemic on our residents’ and their families’ ability to afford our resident fees; changes in the acuity levels of our new residents; the disproportionate impact of the COVID-19 pandemic on seniors; the costs of our response efforts, including increased equipment, supplies, labor, litigation, testing, vaccination clinic, health plan, and other expenses; greater use of contract labor and other premium labor due to the COVID-19 pandemic and general labor market conditions; the impact of the COVID-19 pandemic on our ability to complete financings and refinancings of various assets or other transactions or to generate sufficient cash flow to cover required debt, interest, and lease payments and to satisfy financial and other covenants in our debt and lease documents; and the frequency and magnitude of legal actions and liability claims that may arise due to the COVID-19 pandemic or our response efforts.
The sales price for pending or future dispositions may not meet our expectations due to the underlying performance of such communities or conditions beyond our control, and we may be required to take impairment charges in connection with such sales if the carrying amounts of such assets exceed the proposed sales prices, which could adversely affect our financial condition and results of operations.
The sales price for future dispositions may not meet our expectations due to the underlying performance of such communities or conditions beyond our control, and we may be required to take impairment charges in connection with such sales if the carrying amounts of such assets exceed the proposed sales prices, which could adversely affect our financial condition and results of operations.
We cannot predict with reasonable certainty when our occupancy will return to pre-COVID-19 pandemic levels or the extent to which the pandemic’s effect on occupancy may adversely affect the amount of resident fees we are able to collect from our residents. Our efforts to adapt our sales and marketing efforts to meet demand may not be successful.
We cannot predict with reasonable certainty when our occupancy will return to pre-COVID-19 pandemic 23 levels or the extent to which the pandemic’s effect on occupancy may adversely affect the amount of resident fees we are able to collect from our residents. Our efforts to adapt our sales and marketing efforts to meet demand may not be successful.
If we are not able to obtain additional financing on favorable terms, we also may have to forgo, delay, or abandon some or all of our planned capital expenditures, any potential lease restructuring opportunities 27 that we identify, or investments to support our strategy, which could adversely affect our revenues, results of operations, and cash flow.
If we are not able to obtain additional financing on favorable terms, we also may have to forgo, delay, or abandon some or all of our planned capital expenditures, any potential lease restructuring opportunities that we identify, or investments to support our strategy, which could adversely affect our revenues, results of operations, and cash flow.
The violation of any of these laws or regulations may result in the imposition of fines or other penalties that could increase our costs and otherwise jeopardize our business. 33 Because of incentives allowing a private individual to bring a claim on behalf of the federal government, so-called "whistleblower" suits have become more frequent.
The violation of any of these laws or regulations may result in the imposition of fines or other penalties that could increase our costs and otherwise jeopardize our business. Because of incentives allowing a private individual to bring a claim on behalf of the federal government, so-called "whistleblower" suits have become more frequent.
We may be required to make substantial capital expenditures to comply with those requirements. Legislation was adopted in the State of Florida in March 2018 that requires skilled nursing homes and assisted living communities in Florida to obtain generators and fuel necessary to sustain operations and maintain comfortable temperatures in the event of a power outage.
We may be required to make substantial capital expenditures to comply with those requirements. 31 Legislation was adopted in the State of Florida in March 2018 that requires skilled nursing homes and assisted living communities in Florida to obtain generators and fuel necessary to sustain operations and maintain comfortable temperatures in the event of a power outage.
Federal regulations require building owners and those exercising control over a building's management to identify and warn their employees and certain other employers operating in the building of potential hazards posed by workplace exposure to installed asbestos-containing materials and potential asbestos-containing materials in their buildings. Significant fines can be assessed for violation of these regulations.
Federal regulations require building owners and those exercising control over a building's management to identify and warn their employees and certain other employers operating in the building of potential hazards posed by workplace exposure to 28 installed asbestos-containing materials and potential asbestos-containing materials in their buildings. Significant fines can be assessed for violation of these regulations.
The senior living and healthcare industries are continuously subject to scrutiny by governmental regulators, which could result in reviews, audits, investigations, enforcement actions, or litigation related to regulatory compliance matters. In addition, we are subject to various government reviews, audits, and investigations to verify our compliance with Medicare and Medicaid programs and other applicable laws and regulations.
The senior living and healthcare industries are continuously subject to scrutiny by governmental regulators, which could result in inquiries, reviews, audits, investigations, enforcement actions, or litigation related to regulatory compliance matters. In addition, we are subject to various government reviews, audits, and investigations to verify our compliance with Medicare and Medicaid programs and other applicable laws and regulations.
Also, our insurance policies' deductibles, or self-insured retention, are accrued based on an actuarial projection of future liabilities. If these projections are inaccurate and if there is an unexpectedly large number of successful claims that result in liabilities in excess of our accrued reserves, our operating results could be negatively affected.
Also, our insurance policies' deductibles, or self-insured retention, are accrued based on an actuarial projection of future liabilities. If these projections are inaccurate and if there is an unexpectedly large number of successful 29 claims that result in liabilities in excess of our accrued reserves, our operating results could be negatively affected.
Failure to maintain the security and functionality of our information systems, to prevent a cybersecurity attack or other unauthorized access to our information systems, or to comply with applicable privacy and consumer protection laws, including HIPAA, could expose us to a number of adverse consequences, many of which are not insurable, including: (i) interruptions to our business, (ii) the theft, destruction, loss, misappropriation, or release of sensitive information, including proprietary business information and personally identifiable information of our residents and employees, (iii) significant remediation costs; (iv) negative publicity which could damage our reputation and our relationships with our residents, employees, and referral sources, (v) litigation and potential liability under privacy, security, and consumer protection laws, including HIPAA, or other applicable laws, rules, or regulations, and (vi) government inquiries which may result in sanctions and other criminal or civil fines or penalties.
Failure to maintain the security and functionality of our information systems, to prevent a cybersecurity attack or other unauthorized access to our information systems, or to comply with applicable privacy and consumer protection laws, including HIPAA, could expose us to a number of adverse consequences, many of which are not insurable, including: (i) interruptions to our business, (ii) the theft, destruction, loss, misappropriation, or release of sensitive information, including proprietary business information and personally identifiable information of our residents and associates, (iii) significant remediation costs; (iv) negative publicity which could damage our reputation and our relationships with our residents, associates, and referral sources, (v) litigation and potential liability under privacy, security, and consumer protection laws, including HIPAA, or other applicable laws, rules, or regulations, and (vi) government inquiries which may result in sanctions and other criminal or civil fines or penalties.
Our success depends on our ability to attract and retain qualified management and other associates who are responsible for the day-to-day operations of each of our communities. We compete with various healthcare service providers, other senior living providers, and hospitality and food services companies in attracting and retaining qualified associates.
Our success depends on our ability to attract and retain qualified management and other associates who are responsible for the day-to-day operations of each of our communities. We compete with various healthcare service providers, other senior living 27 providers, and hospitality and food services companies in attracting and retaining qualified associates.
Decreases in the appraised values of our communities, including due to adverse changes in real estate market conditions, or their performance, has resulted, and could continue to result, in available mortgage refinancing amounts that are less than the communities' maturing indebtedness.
Decreases in the appraised values of our communities, including due to adverse changes in real estate market conditions, or their performance, has resulted, and could continue to result, in available mortgage refinancing amounts that are 24 less than the communities' maturing indebtedness.
If we are not able to renew or extend our existing leases, or purchase the communities subject to such leases, at or prior to the end of the existing lease terms, or if the terms of such options are unfavorable or unacceptable to us, our business, results of operations, and cash flow could be adversely affected.
If we are not able to renew, extend, or restructure our existing leases, or purchase the communities subject to such leases, at or prior to the end of the existing lease terms, or if the terms of such options are unfavorable or unacceptable to us, our business, results of operations, and cash flow could be adversely affected.
Claims against us, regardless of their merit or eventual outcome, also could have a material adverse effect on our ability to attract residents or expand our business and could require our management to devote time to matters unrelated to the day-to-day operation of our business.
Claims against us, regardless of their merit or eventual outcome, also could have a material adverse effect on our reputation and ability to attract residents or expand our business and could require our management to devote time to matters unrelated to the day-to-day operation of our business.
Our subsidiaries are legally distinct from us and have no obligation to make funds available to us. Other Market Factors Various factors, including general economic conditions and the spread of contagious illnesses, could adversely affect our financial performance and other aspects of our business.
Our subsidiaries are legally distinct from us and have no obligation to make funds available to us. 32 Other Market Factors Various factors, including general economic conditions and the spread of contagious illnesses, could adversely affect our financial performance and other aspects of our business.
Federal, state, and local laws and regulations also govern the removal, encapsulation, disturbance, handling, and/or disposal of asbestos-containing materials and potential asbestos-containing materials when such materials are in poor condition or in the event of construction, remodeling, renovation, or demolition of a 31 building.
Federal, state, and local laws and regulations also govern the removal, encapsulation, disturbance, handling, and/or disposal of asbestos-containing materials and potential asbestos-containing materials when such materials are in poor condition or in the event of construction, remodeling, renovation, or demolition of a building.
Because our decision to issue securities in any future offering will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing, or nature of our future offerings.
Because our decision to issue securities in any 33 future offering will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing, or nature of our future offerings.
The terms of any such purchase options that are based on fair market value are inherently uncertain and could 29 be unacceptable or unfavorable to us depending on the circumstances at the time of exercise.
The terms of any such purchase options that are based on fair market value are inherently uncertain and could be unacceptable or unfavorable to us depending on the circumstances at the time of exercise.
Because labor represents such a large portion of our 34 operating expenses, changes in federal, state, and local employment-related laws and regulations could increase our cost of doing business.
Because labor represents such a large portion of our operating expenses, changes in federal, state, and local employment-related laws and regulations could increase our cost of doing business.
If the market price of our common stock declines significantly, stockholders may be unable to resell their shares at or above their purchase price. The market price 35 of our common stock may fluctuate or decline significantly in the future.
If the market price of our common stock declines significantly, stockholders may be unable to resell their shares at or above their purchase price. The market price of our common stock may fluctuate or decline significantly in the future.
There 32 can be no assurance that we will be able to obtain liability insurance in the future or, if available, that such coverage will be available on acceptable terms. We face periodic and routine reviews, audits, and investigations by government agencies, and any adverse findings could negatively impact our business, financial condition, results of operations, and cash flow.
There can be no assurance that we will be able to obtain liability insurance in the future or, if available, that such coverage will be available on acceptable terms. We face periodic and routine inquiries, reviews, audits, and investigations by government agencies, and any adverse findings could negatively impact our business, financial condition, results of operations, and cash flow.
In the normal course of business, we enter into interest rate agreements with major financial institutions to manage our risk above certain interest rates on variable rate debt. These agreements only limit our exposure to increases in interest rates above certain levels and generally must be renewed every two to three years.
In the normal course of business, we enter into interest rate agreements with major financial institutions to manage our risk above certain interest rates on variable rate debt. These agreements only limit our exposure to increases in interest rates above certain levels and generally must be renewed every one to three years.
Increases in wages and our increased use of premium labor would result in higher operating costs, and we may not be able to offset the added costs by increasing the rates we charge to our residents or our service charges, which would negatively impact our results of operations and cash flow.
Increases in wages and any further increased use of premium labor would result in higher operating costs, and we may not be able to offset the added costs by increasing the rates we charge to our residents or our service charges, which would negatively impact our results of operations and cash flow.
Due to the competitive environment for new residents in our recovering industry, the higher rate adjustment could slow our occupancy recovery progress or result in a decrease in occupancy in our communities. Any use of promotional or other discounting would offset a portion of such rate adjustments in our RevPAR and RevPOR results.
Due to the competitive environment for new residents in our industry, the adjustment could slow our occupancy recovery progress or result in a decrease in occupancy in our communities. Any use of promotional or other discounting would offset a portion of such rate adjustments in our RevPAR and RevPOR results.
If we are unable to retain and attract seniors with sufficient income, assets, or other resources required to pay the fees associated with independent and assisted living services and other service offerings, our occupancy, revenues, results of operations, and cash flow could decline.
If we are unable to retain and attract seniors with sufficient income, assets, or other resources required to pay the fees associated with independent living, assisted living, and memory care services and other service offerings, our occupancy, revenues, results of operations, and cash flow could decline.
Failure to maintain the security and functionality of our information systems and data, to prevent a cybersecurity attack or breach, or to comply with applicable privacy and consumer protection laws, including HIPAA, could adversely affect our business, reputation, and relationships with our residents, employees, and referral sources and subject us to remediation costs, government inquiries, and liabilities, any of which could materially and adversely impact our revenues, results of operations, cash flow, and liquidity.
Failure to maintain the security and functionality of our information systems and data, to prevent a cybersecurity attack or breach, or to comply with applicable privacy and consumer protection laws, including HIPAA, could adversely affect our business, reputation, and relationships with our residents, associates, and referral sources and subject us to remediation costs, government inquiries, and liabilities, any of which could materially and adversely impact our revenues, results of operations, and cash flow.
The continued COVID-19 pandemic, severe cold and flu season, or an outbreak of other contagious disease in the markets in which we operate could result in a regulatory ban on admissions, decreased occupancy, and otherwise adversely affect our business.
Severe cold and flu season, or an outbreak of COVID-19 or other contagious disease in the markets in which we operate could result in a regulatory ban on admissions, decreased occupancy, and otherwise adversely affect our business.
We are dependent on the proper function and availability of our information systems, including hardware, software, applications, and electronic data storage, to store, process, and transmit our business information, including proprietary business information and personally identifiable information of our residents and employees.
We are dependent on the proper function and availability of our information systems, including hardware, software, applications, and electronic data storage, to store, process, and transmit our business information, including proprietary business information and personally identifiable information of our residents and associates.
The pandemic has also caused substantial volatility in the market prices and trading volumes in the equity markets, including our stock. Our stock price and trading volume may continue to be subject to wide fluctuations as a result of the pandemic and may decline in the future.
The pandemic and uneven recovery has also caused substantial volatility in the market prices and trading volumes in the equity markets, including our stock. Our stock price and trading volume may continue to be subject to wide fluctuations as a result of recovery from the pandemic and may decline in the future.
These factors include work restrictions at our communities due to COVID-19, the necessity of arranging separate leases, mortgage loans, or other financings to provide the capital required to complete these projects; difficulties or delays in obtaining zoning, land use, building, occupancy, licensing, certificate of need, and other required governmental permits and approvals; failure to complete construction of the projects on budget and on schedule; failure of third-party contractors and subcontractors to perform under their contracts; shortages of labor or materials that could delay projects or make them more expensive (including due to supply chain disruptions); adverse weather conditions that could delay completion of projects; increased costs resulting from general economic conditions or increases in the cost of materials or labor 25 (including as a result of inflation and general labor market conditions); and increased costs as a result of changes in laws and regulations.
These factors include the necessity of arranging separate leases, mortgage loans, or other financings to provide the capital required to complete these projects; difficulties or delays in obtaining zoning, land use, building, occupancy, licensing, certificate of need, and other required governmental permits and approvals; failure to complete construction of the projects on budget and on schedule; failure of third-party contractors and subcontractors to perform under their contracts; shortages of labor or materials that could delay projects or make them more expensive (including due to supply chain disruptions); adverse weather conditions that could delay completion of projects; increased costs resulting from general economic conditions or increases in the cost of materials or labor (including as a result of inflation and general labor market conditions); and increased costs as a result of changes in laws and regulations.
Unauthorized parties may also attempt to gain access to our systems or facilities, or those of third parties with whom we do business, through fraud or other forms of deceiving our employees or contractors such as email phishing attacks.
Unauthorized parties 21 may also attempt to gain access to our systems or facilities, or those of third parties with whom we do business, through fraud or other forms of deceiving our associates or contractors such as email phishing attacks.
We believe potential residents and their families have been more cautious, or temporarily delayed their decision, regarding moving into senior living communities during the pandemic, and such caution may persist for some time. From March 2020 through February 2021, we lost 1,330 basis points of weighted average consolidated senior housing occupancy.
We believe potential residents and their families were more cautious, or temporarily delayed their decision, regarding moving into senior living communities during the pandemic, and while waning, such caution may persist for some time. From March 2020 through February 2021, we lost 1,330 basis points of weighted average consolidated senior housing occupancy.
If we fail to attract and retain qualified associates, our ability to conduct our business operations effectively, our overall operating results, and cash flow could be harmed. During 2021 and 2022, we experienced pressures associated with the intensely competitive labor environment, including increased associate turnover and difficulty in filling open positions timely.
If we fail to attract and retain qualified associates, our ability to conduct our business operations effectively, our overall operating results, and cash flow could be harmed. In recent years, we experienced pressures associated with the intensely competitive labor environment, including increased associate turnover and difficulty in filling open positions timely.
In addition, expanded use of telemedicine and home healthcare by seniors, for which regulatory barriers have been relaxed during the pandemic, may result in less demand for our services.
In addition, expanded use of telemedicine and home healthcare by seniors, for which regulatory barriers were relaxed during the pandemic, may result in less demand for our services.
Costs to seniors associated with independent living, assisted living, and memory care communities are not generally reimbursable under government reimbursement programs such as Medicare and Medicaid. For the year ended December 31, 2022, we generated 93.5% of our consolidated resident fee revenue from private pay customers.
Costs to seniors associated with independent living, assisted living, and memory care communities are not generally reimbursable under government reimbursement programs such as Medicare and Medicaid. For the year ended December 31, 2023, we generated 93.7% of our consolidated resident fee revenue from private pay residents.
We continue to execute on key initiatives to rebuild occupancy lost due to the pandemic. By December 31, 2022, we had recovered 760 basis points of weighted average consolidated senior housing occupancy.
We continue to execute on key initiatives to rebuild occupancy lost due to the pandemic. By December 31, 2023, we had recovered 890 basis points of weighted average consolidated senior housing occupancy.
Continued increased competition for, or a shortage of, nurses or other associates, including due to the COVID-19 pandemic, general labor market conditions, low levels of unemployment, or general inflationary pressures, have required and may require that we enhance our pay and benefits package to compete effectively for such associates.
Continued increased competition for, or a shortage of, nurses or other associates, general labor market conditions, low levels of unemployment, or general inflationary pressures, have required and may require that we enhance our pay and benefits package to compete effectively for such associates.
If multiple residents terminate their resident agreements at or around the same time, including as a result of the COVID-19 pandemic, our occupancy, revenues, results of operations, and cash flow could be adversely affected. In addition, because of the demographics of our typical residents, including age and 24 health, resident turnover rates in our communities are difficult to predict.
If multiple residents terminate their resident agreements at or around the same time, our occupancy, revenues, results of operations, and cash flow could be adversely affected. In addition, because of the demographics of our typical residents, including age and health, resident turnover rates in our communities are difficult to predict.
We have recently made the annual rate adjustment effective January 1, 2023 for our in-place private pay residents. The increase was higher than our typical annual rate adjustment in order to help offset our recent increased costs as a result of labor pressures, high inflation, and increased interest rates.
We have recently made the annual rate adjustment effective January 1, 2024 for our in-place private pay residents. The average increase was lower than the prior year increase and was again higher than our typical annual rate adjustment in order to help offset our increased costs as a result of labor pressures, high inflation, and increased interest rates.
The frequency and magnitude of such alleged claims and legal costs may increase due to the COVID-19 pandemic or our response efforts. Many states continue to consider tort reform and how it will apply to the senior living industry.
The frequency and magnitude of such alleged claims and legal costs may increase due to the COVID-19 pandemic or our response efforts and increased turnover and a higher use of contract labor. Many states continue to consider tort reform and how it will apply to the senior living industry.
Current global economic conditions and uncertainties, including due to the COVID-19 pandemic, the potential for failures or realignments of financial institutions, and the related impact on available credit may affect us and our business partners, landlords, counterparties, and residents or prospective residents in an adverse manner including, but not limited to, reducing access to liquid funds or credit, increasing the cost of credit, limiting our ability to manage interest rate risk, increasing the risk that certain of our business partners, landlords, or counterparties would be unable to fulfill their obligations to us, and other impacts which we are unable to fully anticipate.
Current global economic conditions and uncertainties, including geopolitical tensions, conflicts, potential recessions or economic downturns, uncertainty surrounding federal elections, the potential for failures or realignments of financial institutions, and the related impact on available credit may affect us and our business partners, landlords, counterparties, and residents or prospective residents in an adverse manner including, but not limited to, reducing access to liquid funds or credit, increasing the cost of credit, limiting our ability to manage interest rate risk, increasing costs and expenses to us, increasing the risk that certain of our business partners, landlords, or counterparties would be unable to fulfill their obligations to us, and other impacts which we are unable to fully anticipate.
As of December 31, 2022, we had outstanding $3.6 billion principal amount of mortgage financing, $230.0 million of 2.00% convertible senior notes due 2026, $25.6 million principal amount of the senior amortizing notes component of tangible equity units, and $86.5 million letters of credit.
As of December 31, 2023, we had outstanding $3.5 billion principal amount of mortgage financing, $230.0 million of 2.00% convertible senior notes due 2026, $18.0 million principal amount of the senior amortizing notes component of tangible equity units, and $78.1 million letters of credit.
These measures might not be sufficient to enable us to make required payments on our debt or leases, which could result in an adverse effect on our future ability to generate revenues and our results of operations and cash flow. Any contemplated financing, refinancing, restructuring, or sale of assets might not be available on economically favorable terms to us.
These measures might not be sufficient to enable us to make required payments on our debt or leases, which could result in an adverse effect on our future ability to generate revenues and our results of operations and cash flow.
Our debt and lease documents contain financial and other covenants, and any default under such documents could result in the acceleration of our indebtedness and lease obligations, the foreclosure of our mortgaged communities, the termination of our leasehold interests, and/or cross-defaults under our other debt or lease documents, any of which could materially and adversely impact our capital structure, financial condition, results of operations, cash flow, and liquidity and interfere with our ability to pursue our strategy.
Any contemplated financing, refinancing, restructuring, or sale of assets might not be available on economically favorable terms to us. 25 Our debt and lease documents contain financial and other covenants, and any default under such documents could result in the acceleration of our indebtedness and lease obligations, the foreclosure of our mortgaged communities, the termination of our leasehold interests, and/or cross-defaults under our other debt or lease documents, any of which could materially and adversely impact our capital structure, financial condition, results of operations, cash flow, and liquidity and interfere with our ability to pursue our strategy.
In addition, certain of our master leases contain radius restrictions, which limit our ability to own, develop, or acquire new communities within a specified distance from certain existing communities covered by such agreements. These radius restrictions could negatively affect our ability to expand or develop or acquire senior housing communities and operating companies.
In addition, certain of our master leases contain radius restrictions, which limit our ability to own, develop, or acquire new communities within a specified distance from certain existing communities covered by such agreements.
While the industry recovers occupancy, certain competitors may price aggressively in order to capture market share. Consequently, we may encounter competition that could limit our ability to attract and retain residents and associates, raise or maintain resident fees, and expand our business, which could have a material adverse effect on our occupancy, revenues, results of operations, and cash flow.
Consequently, we may encounter competition that could limit our ability to attract and retain residents and associates, raise or maintain resident fees, and expand our business, which could have a material adverse effect on our occupancy, revenues, results of operations, and cash flow.
Competition for the acquisition of strategic assets from buyers with greater financial resources or lower costs of capital than us or that have lower return expectations than we do could limit our ability to compete for strategic acquisitions and therefore to grow our business effectively.
Any future development, investment, or acquisition transactions may not generate any additional income for us or provide any benefit to our business. 22 Competition for the acquisition of strategic assets from buyers with greater financial resources or lower costs of capital than us or that have lower return expectations than we do could limit our ability to compete for strategic acquisitions and therefore to grow our business effectively.
Because the techniques used to obtain unauthorized access to systems change frequently and may be difficult to detect for long periods of time, we may be unable to anticipate these techniques or implement adequate preventive measures.
Because the techniques used to obtain unauthorized access to systems change frequently and may be difficult to detect for long periods of time, including from emerging technologies, such as advanced forms of artificial intelligence and quantum computing, we may be unable to anticipate these techniques or implement adequate preventive measures.
Our failure to comply with applicable covenants could constitute an event of default under the applicable debt or lease documents. Many of our debt and lease documents contain cross-default provisions so that a default under one of these instruments could cause a default under other debt and lease documents (including documents with other lenders and lessors).
Many of our debt and lease documents contain cross-default provisions so that a default under one of these instruments could cause a default under other debt and lease documents (including documents with other lenders and lessors).
Pending disposition transactions are, and any future disposition transactions will be, subject to various closing conditions, including the receipt of regulatory approvals where applicable, likely will result in reductions to our revenue, and may negatively impact our results of operations and cash flow.
Any future disposition transactions will be, subject to various closing conditions, including the receipt of regulatory approvals where applicable, likely will result in reductions to our revenue, and may negatively impact our results of operations and cash flow. We may dispose of owned or leased communities through asset sales and lease terminations and expirations.
There are various extremely complex federal and state laws governing a wide array of referrals, relationships, and arrangements and prohibiting fraud by healthcare providers, including those in the senior living industry, and governmental agencies are devoting increasing attention and resources to such anti-fraud initiatives.
The failure to comply with applicable legal and regulatory requirements could result in a material adverse effect to our business as a whole. 30 There are various extremely complex federal and state laws governing a wide array of referrals, relationships, and arrangements and prohibiting fraud by healthcare providers, including those in the senior living industry, and governmental agencies are devoting increasing attention and resources to such anti-fraud initiatives.
These 28 covenants include a requirement contained in certain of our long-term debt documents for us to maintain liquidity of at least $130.0 million at each quarter-end determination date and a requirement contained in certain of our lease documents for us to maintain stockholders' equity of at least $400.0 million at each quarter-end determination date.
These covenants include a requirement contained in certain of our long-term debt documents for us to maintain liquidity of at least $130.0 million at each quarter-end determination date. As of December 31, 2023, our liquidity was $340.7 million.
Further, if we are unable to reduce our general and administrative expense with respect to completed dispositions or management arrangement terminations in accordance with our expectations, we may not realize the expected benefits of such transactions, which could negatively impact our anticipated results of operations and cash flow. 26 Our execution of our strategy may not be successful, and initiatives undertaken to execute on our strategic priorities may adversely affect our business, financial condition, results of operations, cash flow, and the price of our common stock.
Further, if we are unable to reduce our general and administrative expense with respect to completed dispositions or management arrangement terminations in accordance with our expectations, we may not realize the expected benefits of such transactions, which could negatively impact our anticipated results of operations and cash flow.
We continue to seek opportunities to preserve and enhance our liquidity, including through increasing our RevPAR, maintaining expense discipline, continuing to evaluate our financing structure and the state of debt markets, monetizing non-strategic or underperforming owned assets, and seeking further government-sponsored financial relief related to the COVID-19 pandemic.
We continue to seek opportunities to preserve and enhance our liquidity, including through increasing our RevPAR, maintaining appropriate expense discipline, continuing to refinance maturing debt, continuing to evaluate our capital structure and the state of debt and equity markets, and monetizing non-strategic or underperforming owned assets.
We also have to renew our policies every year and negotiate terms for coverage, exposing us to the volatility of the insurance markets, including the possibility of rate increases and changes in coverage and other terms.
Negative publicity with respect to any lawsuits, claims, or other legal or regulatory proceedings may also negatively impact our reputation. We also have to renew our policies every year and negotiate terms for coverage, exposing us to the volatility of the insurance markets, including the possibility of rate increases and changes in coverage and other terms.
We expect to renew, extend, or exercise purchase options with respect to certain leases in the normal course of business; however, there can be no assurance that these rights will be exercised in the future or that we will be able to satisfy the conditions precedent to exercising any such rights.
We expect to renew, extend, or restructure leases or exercise purchase options with respect to certain leases where economically advantageous; however, there can be no assurance that any renewal, extension, or purchase rights will be exercised in the future, that we will be able to satisfy the conditions precedent to exercising any such renewal, extension, or purchase rights, or that we will be able to successfully negotiate and complete any lease restructuring transactions.
Lease obligations and mortgage debt expose us to increased risk of loss of property, which could harm our ability to generate future revenues and could have an adverse tax effect.
These radius restrictions could negatively affect our ability to expand or develop or acquire senior housing communities and operating companies. 26 Lease obligations and mortgage debt expose us to increased risk of loss of property, which could harm our ability to generate future revenues and could have an adverse tax effect.
Our capital projects are in various stages of planning and development and are subject to a number of factors over which we may have little or no control.
Such projects may be needed to ensure that our communities are in appropriate physical condition to support our strategy and to protect the value of our community portfolio. Our capital projects are in various stages of planning and development and are subject to a number of factors over which we may have little or no control.
Net worth is generally calculated as stockholders' equity, as calculated in accordance with generally accepted accounting principles in the United States ("GAAP"), and in certain circumstances, reduced by intangible assets or liabilities or increased by deferred gains from sale-leaseback transactions and deferred entrance fee revenue.
Net worth is generally calculated as stockholders' equity, as calculated in accordance with generally accepted accounting principles in the United States ("GAAP"), and in certain circumstances, reduced by intangible assets or liabilities and/or increased by accumulated depreciation and amortization, and/or further adjusted for certain other specified adjustments.
Any such closings may require us to incur additional indebtedness and contingent liabilities and may result in unforeseen expenses or compliance issues. Any future development, investment, or acquisition transactions may not generate any additional income for us or provide any benefit to our business.
Any such closings may require us to incur additional indebtedness and contingent liabilities and may result in unforeseen expenses or compliance issues.
Any of the foregoing could materially and adversely impact our revenues, results of operations, cash flow, and liquidity. Failure to complete our capital expenditures in accordance with our plans may adversely affect our anticipated revenues, results of operations, and cash flow.
Any of the foregoing could materially and adversely impact our revenues, results of operations, and cash flow. Failure to complete our capital expenditures in accordance with our plans may adversely affect our anticipated revenues, results of operations, and cash flow. Our planned full-year 2024 non-development capital expenditures include maintenance, renovations, upgrades, and other major building infrastructure projects for our communities.
In addition, an event of default related to an individual property or limited number of properties within a master lease portfolio could result in a default on the entire master lease portfolio. Furthermore, our debt and leases are secured by our communities and, in certain cases, a guaranty by us and/or one or more of our subsidiaries.
In addition, an event of default related to an individual property or limited number of properties within a master lease portfolio could result in a default on the entire master lease portfolio.
Our inability to obtain refinancing proceeds sufficient to cover 2024 and later maturing indebtedness could adversely impact our liquidity, and may cause us to seek additional alternative sources of financing, which may be less attractive or unavailable. There can be no assurance that any such additional financing will be available or on terms that are acceptable to us.
We have completed the refinancing of all of our debt maturities due in 2024. Our inability to obtain refinancing proceeds sufficient to cover 2025 and later maturing indebtedness could adversely impact our liquidity, and may cause us to seek additional alternative sources of financing, which may be less attractive or unavailable.
As of December 31, 2022, our liquidity and our stockholders' equity were $452.6 million and $582.6 million, respectively. In addition, our debt and lease documents generally contain non-financial covenants, such as those requiring us to comply with Medicare or Medicaid provider requirements and maintain insurance coverage.
In addition, our debt and lease documents generally contain non-financial covenants, such as those requiring us to comply with Medicare or Medicaid provider requirements and maintain insurance coverage. Our failure to comply with applicable covenants could constitute an event of default under the applicable debt or lease documents.
If any of these risks actually occurs, our business, financial condition, results of operations, cash flow, liquidity, stock price, and future prospects could be materially and adversely affected. COVID-19 Pandemic The COVID-19 pandemic has adversely impacted, and likely will continue to adversely impact, our business, results of operations, cash flow, liquidity, and stock price, and such impacts may be material.
The COVID-19 pandemic has adversely impacted, and while the recovery has continued in 2023, it could continue to adversely impact, our business, results of operations, cash flow, liquidity, and stock price, and such impacts may be material. The pandemic adversely impacted our business, results of operations, cash flow, and liquidity.
The higher rate increase we implemented in January 2023 (and any rate increases that we implement in future years) could also result in a higher amount of attrition among our residents, which could negatively impact our occupancy, revenues, results of operations and cash flows. 23 Changes in the reimbursement rates, methods, or timing of payment from government reimbursement programs could adversely affect our revenues, results of operations, and cash flow.
In addition, the rate adjustment may not be sufficient to offset our increased costs. The increase we implemented in January 2024 (and any rate increases that we implement in future years) could also result in a higher amount of attrition among our residents, which could negatively impact our occupancy, revenues, results of operations and cash flows.
Disruptions or prolonged downturns in the financial markets may cause us to seek alternative sources of potentially less attractive financing and may require us to further adjust our business plan accordingly. These events also may make it more difficult or costly for us to raise capital, including through the issuance of common stock.
These events also may make it more difficult or costly for us to raise capital, including through the issuance of common stock. Disruptions in the financial markets could have an adverse effect on our business.
We cannot provide assurance that reimbursement levels will not decrease in the future, which could adversely affect our revenues, results of operations, and cash flow.
For the year ended December 31, 2023, Medicare and Medicaid reimbursements represented 16.9% of our CCRCs segment’s resident fee revenue and 4.8% of our consolidated resident fee revenue. We cannot provide assurance that reimbursement levels will not decrease in the future, which could adversely affect our revenues, results of operations, and cash flow.
We cannot predict with reasonable certainty the impacts that COVID-19 ultimately will have on our business, results of operations, cash flow, liquidity, and stock price, and such impacts may be material and persist for some time. Further, our response efforts may delay or negatively impact our strategic initiatives, including plans for future growth.
We cannot predict with reasonable certainty the pace and consistency of the recovery from the COVID-19 pandemic for our business, results of operations, cash flow, liquidity, and stock price, and the residual impacts of the pandemic may be material and persist for some time.
The industry has attracted additional investment resulting in increased construction and development of new senior housing supply over the last several years. In addition, the COVID-19 pandemic has resulted in additional occupancy pressure for our industry, and industry data shows that nearly all markets had fallen to record low occupancy by the first quarter of 2021.
In addition, the COVID-19 pandemic resulted in additional occupancy pressure for our industry, and industry data shows that nearly all markets had fallen to record low occupancy by the first quarter of 2021. While 20 the industry recovers occupancy, certain competitors may price aggressively in order to capture market share.
Third-party staffing agencies from which we source contract labor have increased the rates they charge which has resulted in, and may further result in, increases in the cost of contract labor. If we are unable to fill open positions timely, our reliance on premium labor may continue or increase.
In addition, we have experienced and may continue to experience wage pressures due to minimum wage and minimum salary threshold increases mandated by state and local laws. Third-party staffing agencies from which we source contract labor have increased the rates they charge which has resulted in, and may further result in, increases in the cost of contract labor.
We rely on reimbursement from government programs for a portion of our revenues, primarily in our CCRCs segment. For the year ended December 31, 2022, Medicare and Medicaid reimbursements represented 18.0% of our CCRCs segment’s resident fee revenue and 5.1% of our consolidated resident fee revenue.
Changes in the reimbursement rates, methods, or timing of payment from government reimbursement programs could adversely affect our revenues, results of operations, and cash flow. We rely on reimbursement from government programs for a portion of our revenues, primarily in our CCRCs segment.
Removed
The pandemic, including the response efforts of federal, state, and local government authorities, businesses, individuals, and us, has adversely impacted our business, results of operations, cash flow, and liquidity. We expect this adverse impact to continue into 2023.
Added
If any of these risks actually occurs, our business, financial condition, results of operations, cash flow, liquidity, stock price, and future prospects could be materially and adversely affected. The ordering of the risk factors below is not intended to reflect an indication of priority or likelihood.
Removed
Upon confirmation of positive COVID-19 exposure at a community, we take actions intended to minimize further exposure, including enhanced personal protection protocols, temporarily isolating residents or finding placement in an alternate care setting to best address their care needs, and in some cases, restricting new resident admissions as directed by authorities having jurisdiction.
Added
The industry has attracted additional investment resulting in increased construction and development of new senior housing supply in the last decade, prior to the start of the COVID-19 pandemic.
Removed
We may also restrict visitors at our communities, screen associates and permitted visitors, suspend group outings or programming, and modify communal dining as necessary to comply with regulatory requirements or at the direction of authorities having jurisdiction.
Added
In addition, advances in technology and at-home services may permit more seniors to age-in-place at home and could have an impact on the demand for senior living communities.
Removed
We may revert to more restrictive measures at our communities, including restrictions on visitors and move-ins as a result of infections at a community, as necessary to comply with regulatory requirements, or at the direction of authorities having jurisdiction.
Added
Our execution of our strategy may not be successful, and initiatives undertaken to execute on our strategic priorities may adversely affect our business, financial condition, results of operations, cash flow, and the price of our common stock.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe following table sets forth certain information regarding our owned, leased, and managed communities as of December 31, 2022, or, for occupancy, represents the weighted average occupancy for the month of December 2022. 37 Number of Communities State Units Owned Leased Managed Total Texas 8,018 56 19 11 86 Florida 6,083 43 29 — 72 California 5,214 27 15 2 44 North Carolina 3,401 7 50 — 57 Colorado 3,367 13 11 5 29 Ohio 2,887 15 14 6 35 Illinois 2,816 3 9 1 13 Washington 2,705 13 18 — 31 Arizona 2,054 17 9 — 26 Oregon 1,805 12 11 — 23 Michigan 1,678 9 22 — 31 Tennessee 1,506 16 6 1 23 New York 1,498 10 9 2 21 Kansas 1,117 8 10 — 18 New Jersey 1,024 7 5 — 12 Virginia 964 7 3 — 10 Massachusetts 899 3 3 — 6 Pennsylvania 766 7 3 — 10 Alabama 732 4 — — 4 Oklahoma 688 3 15 — 18 Georgia 656 8 — — 8 South Carolina 611 4 6 1 11 Louisiana 606 6 — 1 7 Connecticut 590 2 3 — 5 Idaho 548 6 1 — 7 Minnesota 538 — 12 — 12 Wisconsin 485 5 7 — 12 Missouri 479 2 — 1 3 New Mexico 426 2 1 — 3 Rhode Island 396 3 — — 3 Mississippi 386 5 — — 5 Indiana 373 4 4 — 8 Maryland 359 3 — 1 4 Arkansas 332 4 — — 4 Nevada 257 4 — — 4 Kentucky 163 2 — — 2 Delaware 105 2 — — 2 Vermont 101 1 — — 1 West Virginia 93 1 — — 1 New Hampshire 90 1 — — 1 Montana 76 1 — — 1 Total 56,892 346 295 32 673 December 2022 occupancy rate (weighted average) 76.4 % 78.0 % 74.3 % 76.8 % 38 Corporate Offices Our main corporate offices are leased, including our 98,656 square foot headquarters in Brentwood, Tennessee and our 156,016 square foot office in Milwaukee, Wisconsin.
Biggest changeThe following table sets forth certain information regarding our owned, leased, and managed communities as of December 31, 2023, or, for occupancy, represents the weighted average occupancy for the month of December 2023. 35 Number of Communities State Units Owned Leased Managed Total Texas 7,834 55 19 11 85 Florida 5,907 43 25 — 68 California 5,021 27 15 — 42 Colorado 3,368 13 11 5 29 North Carolina 3,192 7 45 — 52 Ohio 2,887 15 14 6 35 Illinois 2,818 3 9 1 13 Washington 2,705 13 18 — 31 Arizona 2,054 17 9 — 26 Michigan 1,678 9 22 — 31 New York 1,658 11 9 2 22 Tennessee 1,519 16 6 1 23 Oregon 1,499 11 11 — 22 Kansas 1,119 8 10 — 18 New Jersey 1,024 7 5 — 12 Virginia 964 7 3 — 10 Massachusetts 900 3 3 — 6 Pennsylvania 766 7 3 — 10 Alabama 760 4 — — 4 Georgia 656 8 — — 8 Louisiana 606 6 — 1 7 Connecticut 590 2 3 — 5 Idaho 548 6 1 — 7 Minnesota 538 — 12 — 12 Wisconsin 485 5 7 — 12 Missouri 479 2 — 1 3 Oklahoma 469 3 9 — 12 South Carolina 439 4 3 1 8 New Mexico 414 2 1 — 3 Rhode Island 396 3 — — 3 Mississippi 386 5 — — 5 Indiana 373 4 4 — 8 Maryland 359 3 — 1 4 Arkansas 332 4 — — 4 Nevada 257 4 — — 4 Kentucky 163 2 — — 2 Delaware 105 2 — — 2 Vermont 101 1 — — 1 West Virginia 93 1 — — 1 New Hampshire 90 1 — — 1 Montana 76 1 — — 1 Total 55,628 345 277 30 652 December 2023 occupancy rate (weighted average) 77.5 % 79.6 % 76.2 % 78.1 % 36 Community Support Centers Our main community support centers are leased, including our 98,656 square foot support center in Brentwood, Tennessee and our 156,016 square foot support center in Milwaukee, Wisconsin.
Item 2. Properties Communities As of December 31, 2022, we operated and managed 673 communities across 41 states, with the capacity to serve over 60,000 residents. As of December 31, 2022, we owned 346 communities, leased 295 communities, and managed 32 communities on behalf of others. As of December 31, 2022, 87% of our owned communities are subject to mortgages.
Item 2. Properties Communities As of December 31, 2023, we operated and managed 652 communities across 41 states, with the capacity to serve approximately 59,000 residents. As of December 31, 2023, we owned 345 communities, leased 277 communities, and managed 30 communities on behalf of others. As of December 31, 2023, 86% of our owned communities are subject to mortgages.
Added
Our lease in Milwaukee, Wisconsin expires in 2024, and we have entered into a new lease for a 5,391 square foot support center in Milwaukee, Wisconsin.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe comparisons in this graph are not intended to forecast or be indicative of possible future performance of Brookdale shares or such indices. 12/17 12/18 12/19 12/20 12/21 12/22 Brookdale Senior Living Inc. $ 100.00 $ 69.07 $ 74.95 $ 45.67 $ 53.20 $ 28.14 Russell 3000 100.00 94.76 124.15 150.08 188.60 152.37 S&P Health Care 100.00 106.47 128.64 145.93 184.07 180.47 The performance graph and related information shall not be deemed to be filed as part of this Annual Report on Form 10-K and do not constitute soliciting material and shall not be deemed filed or incorporated by reference into any other filing by us under the Securities Act or the Exchange Act, except to the extent that we specifically incorporate them by reference into such filing. 41 Recent Sales of Unregistered Securities None during the quarter ended December 31, 2022.
Biggest changeThe comparisons in this graph are not intended to forecast or be indicative of possible future performance of Brookdale shares or such indices. 12/18 12/19 12/20 12/21 12/22 12/23 Brookdale Senior Living Inc. $ 100.00 $ 108.51 $ 66.12 $ 77.01 $ 40.75 $ 86.87 Russell 3000 100.00 131.02 158.39 199.03 160.80 202.54 S&P Health Care 100.00 120.82 137.07 172.89 169.51 172.99 The performance graph and related information shall not be deemed to be filed as part of this Annual Report on Form 10-K and do not constitute soliciting material and shall not be deemed filed or incorporated by reference into any other filing by us under the Securities Act or the Exchange Act, except to the extent that we specifically incorporate them by reference into such filing. 39 Recent Sales of Unregistered Securities None during the quarter ended December 31, 2023.
As we have done in the past, we may also pay dividends in the future that exceed our net income for the relevant period as calculated in accordance with GAAP. 40 Share Price Performance Graph The following graph compares the five-year cumulative total return for Brookdale common stock with the comparable cumulative return of the Russell 3000 and S&P Health Care Indices.
As we have done in the past, we may also pay dividends in the future that exceed our net income for the relevant period as calculated in accordance with GAAP. 38 Share Price Performance Graph The following graph compares the five-year cumulative total return for Brookdale common stock with the comparable cumulative return of the Russell 3000 and S&P Health Care Indices.
The repurchase program does not obligate us to acquire any particular amount of common stock and the program may be suspended, modified, or discontinued at any time at our discretion without prior notice. Shares of stock repurchased under the program will be held as treasury shares. As of December 31, 2022, $44.0 million remained available under the repurchase program.
The repurchase program does not obligate us to acquire any particular amount of common stock and the program may be suspended, modified, or discontinued at any time at our discretion without prior notice. Shares of stock repurchased under the program will be held as treasury shares. As of December 31, 2023, $44.0 million remained available under the repurchase program.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers The following table contains information regarding purchases of our common stock made during the three months ended December 31, 2022 by or on behalf of us or any ''affiliated purchaser,'' as defined by Rule 10b-18(a)(3) of the Exchange Act.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers The following table contains information regarding purchases of our common stock made during the three months ended December 31, 2023 by or on behalf of us or any ''affiliated purchaser,'' as defined by Rule 10b-18(a)(3) of the Exchange Act.
The graph assumes that a person invested $100 in Brookdale stock and each of the indices on December 31, 2017 and that dividends are reinvested.
The graph assumes that a person invested $100 in Brookdale stock and each of the indices on December 31, 2018 and that dividends are reinvested.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock is traded on the New York Stock Exchange, or the NYSE, under the symbol "BKD." As of February 17, 2023, there were approximately 355 holders of record of our common stock.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock is traded on the New York Stock Exchange, or the NYSE, under the symbol "BKD." As of February 19, 2024, there were approximately 357 holders of record of our common stock.
Period Total Number of Shares Purchased (1) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in thousands) (2) 10/1/2022 - 10/31/2022 — $ — — $ 44,026 11/1/2022 - 11/30/2022 3,366 $ 3.14 — $ 44,026 12/1/2022 - 12/31/2022 — $ — — $ 44,026 Total 3,366 $ 3.14 — (1) Consists entirely of shares withheld to satisfy tax liabilities due upon the vesting of restricted stock and restricted stock units.
Period Total Number of Shares Purchased (1) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in thousands) (2) 10/1/2023 - 10/31/2023 — $ — — $ 44,026 11/1/2023 - 11/30/2023 3,039 $ 5.25 — $ 44,026 12/1/2023 - 12/31/2023 3,213 $ 5.82 — $ 44,026 Total 6,252 $ 5.54 — (1) Consists entirely of shares withheld to satisfy tax liabilities due upon the vesting of restricted stock and restricted stock units.
(2) On November 1, 2016, we announced that our Board of Directors had approved a share repurchase program that authorizes us to purchase up to $100.0 million in the aggregate of our common stock.
(2) In 2016, our Board of Directors approved a share repurchase program that authorizes us to purchase up to $100.0 million in the aggregate of our common stock.
We may determine to pay a regular quarterly dividend to the holders of our common stock in the future, but in the near term, we anticipate deploying capital to, among other uses, fund planned capital expenditures, any potential lease restructuring opportunities that we identify, investments to support our strategy, or reductions to our debt and lease leverage.
We may determine to pay a regular quarterly dividend to the holders of our common stock in the future, but in the near term, we anticipate deploying capital to, among other uses, fund planned capital expenditures or investments to support our strategy.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

146 edited+32 added−108 removed61 unchanged
Biggest change(in thousands, except communities, units, occupancy, RevPAR, and RevPOR) Years Ended December 31, Increase (Decrease) 2022 2021 Amount Percent Resident fees $ 507,793 $ 475,538 $ 32,255 6.8 % Other operating income $ 10,906 $ 1,512 $ 9,394 NM Facility operating expense $ 359,749 $ 330,942 $ 28,807 8.7 % Number of communities (period end) 68 68 — — % Total average units 12,569 12,556 13 0.1 % RevPAR $ 3,367 $ 3,156 $ 211 6.7 % Occupancy rate (weighted average) 77.0 % 74.2 % 280 bps n/a RevPOR $ 4,371 $ 4,252 $ 119 2.8 % Same Community Operating Results and Data Resident fees $ 501,115 $ 470,072 $ 31,043 6.6 % Other operating income $ 10,649 $ 1,492 $ 9,157 NM Facility operating expense $ 353,334 $ 326,695 $ 26,639 8.2 % Number of communities 67 67 — — % Total average units 12,379 12,376 3 — % RevPAR $ 3,373 $ 3,165 $ 208 6.6 % Occupancy rate (weighted average) 77.0 % 74.2 % 280 bps n/a RevPOR $ 4,384 $ 4,269 $ 115 2.7 % The increase in the segment's resident fees was primarily attributable to an increase in the segment's same community RevPAR, comprised of a 280 basis point increase in same community weighted average occupancy and a 2.7% increase in same community RevPOR.
Biggest change(in thousands, except communities, units, occupancy, RevPAR, and RevPOR) Years Ended December 31, Increase (Decrease) 2023 2022 Amount Percent Resident fees $ 564,012 $ 507,793 $ 56,219 11.1 % Other operating income $ 487 $ 10,906 $ (10,419) (95.5) % Facility operating expense $ 379,854 $ 359,749 $ 20,105 5.6 % Number of communities (period end) 68 68 — — % Total average units 12,569 12,569 — — % RevPAR $ 3,739 $ 3,367 $ 372 11.0 % Occupancy rate (weighted average) 79.4 % 77.0 % 240 bps n/a RevPOR $ 4,711 $ 4,371 $ 340 7.8 % The increase in the segment's resident fees was primarily attributable to an increase in the segment's RevPAR, comprised of a 7.8% increase in RevPOR and a 240 basis point increase in weighted average occupancy.
The Notes and the shares of common stock issuable upon conversion of the Notes, if any, were issued to the initial purchasers in reliance upon Section 4(a)(2) of the Securities Act of 1933, as amended.
The Notes and the shares of common stock issuable upon conversion of the Notes, if any, were issued to the initial purchasers in reliance upon Section 4(a)(2) of the Securities Act of 1933 (the "Securities Act"), as amended.
Adjusted Free Cash Flow Adjusted Free Cash Flow is a non-GAAP liquidity measure that we define as net cash provided by (used in) operating activities before: distributions from unconsolidated ventures from cumulative share of net earnings, changes in prepaid insurance premiums financed with notes payable, changes in operating lease assets and liabilities for lease termination, cash paid/received for gain/loss on facility operating lease termination, and lessor capital expenditure reimbursements under operating leases; plus: property insurance proceeds and proceeds from refundable entrance fees, net of refunds; less: non-development capital expenditures and payment of financing lease obligations.
Adjusted Free Cash Flow Adjusted Free Cash Flow is a non-GAAP liquidity measure that we define as net cash provided by (used in) operating activities before: distributions from unconsolidated ventures from cumulative share of net earnings, changes in prepaid insurance premiums financed with notes payable, changes in operating lease assets and liabilities for lease termination, cash paid/received for gain/loss on facility operating lease termination, and lessor capital expenditure reimbursements under operating leases; plus: property and casualty insurance proceeds and proceeds from refundable entrance fees, net of refunds; less: non-development capital expenditures and payment of financing lease obligations.
Adjusted EBITDA has material limitations as a performance measure, including: (i) excluded interest and income tax are necessary to operate our business under our current financing and capital structure; (ii) excluded depreciation, amortization, and impairment charges may represent the wear and tear and/or reduction in value of our communities, goodwill, and other assets and may be indicative of future needs for capital expenditures; and (iii) we may incur income/expense similar to those for which adjustments are made, such as gain/loss on sale of assets, facility operating lease termination, or debt modification and extinguishment, non-cash stock-based compensation expense, and transaction and other costs, and such income/expense may significantly affect our operating results. 67 The table below reconciles Adjusted EBITDA from net income (loss).
Adjusted EBITDA has material limitations as a performance measure, including: (i) excluded interest and income tax are necessary to operate our business under our current financing and capital structure; (ii) excluded depreciation, amortization, and impairment charges may represent the wear and tear and/or reduction in value of our communities, goodwill, and other assets and may be indicative of future needs for capital expenditures; and (iii) we may incur income/expense similar to those for which adjustments are made, such as gain/loss on sale of assets, facility operating lease termination, or debt modification and extinguishment, non-cash stock-based compensation expense, and transaction and other costs, and such income/expense may significantly affect our operating results. 60 The table below reconciles Adjusted EBITDA from net income (loss).
See "Non-GAAP Financial Measures" below for our definition of the measure and other important information regarding such measure, including reconciliations to the most comparable GAAP measure. 56 Liquidity The following is a summary of cash flows from operating, investing, and financing activities, as reflected in the consolidated statements of cash flows, and our Adjusted Free Cash Flow.
See "Non-GAAP Financial Measures" below for our definition of the measure and other important information regarding such measure, including reconciliations to the most comparable GAAP measure. Liquidity The following is a summary of cash flows from operating, investing, and financing activities, as reflected in the consolidated statements of cash flows, and our Adjusted Free Cash Flow.
We continue to seek opportunities to preserve and enhance our liquidity, including through increasing our RevPAR, maintaining expense discipline, continuing to refinance maturing debt, continuing to evaluate our capital structure and the state of debt and equity markets, and monetizing non-strategic or underperforming owned assets.
We continue to seek opportunities to preserve and enhance our liquidity, including through increasing our RevPAR, maintaining appropriate expense discipline, continuing to refinance maturing debt, continuing to evaluate our capital structure and the state of debt and equity markets, and monetizing non-strategic or underperforming owned assets.
In connection with the offering of the Notes, we entered into privately negotiated capped call transactions ("Capped Call Transactions") with each of Bank of America, N.A., Royal Bank of Canada, Wells Fargo Bank, National Association or their 61 respective affiliates (the "Capped Call Counterparties").
In connection with the offering of the Notes, we entered into privately negotiated capped call transactions ("Capped Call Transactions") with each of Bank of America, N.A., Royal Bank of Canada, Wells Fargo Bank, National Association or their respective affiliates (the "Capped Call Counterparties").
Transactions completed during the period of January 1, 2021 to December 31, 2022 affect the comparability of our results of operations, and summaries of such transactions and their impact on our results of operations are discussed above in "Transaction Activity." We use the operating measures described below in connection with operating and managing our business and reporting our results of operations. • Senior housing operating results and data presented on a same community basis reflect results and data of a consistent population of communities by excluding the impact of changes in the composition of our portfolio of communities.
Transactions completed during the period of January 1, 2022 to December 31, 2023 affect the comparability of our results of operations, and summaries of such transactions and their impact on our results of operations are discussed above in "Transaction Activity." We use the operating measures described below in connection with operating and managing our business and reporting our results of operations. • Senior housing operating results and data presented on a same community basis reflect results and data of a consistent population of communities by excluding the impact of changes in the composition of our portfolio of communities.
Our management uses same community operating results and data for decision making, and we believe such results and data provide useful information to investors, because it enables comparisons of revenue, expense, and other operating measures for a consistent portfolio over time without giving effect to the impacts of communities that were not consolidated and operational for the comparison periods, communities acquired or disposed during the comparison periods (or planned for disposition), and communities with results that are or likely will be impacted by completed or in-process development-related capital expenditure projects. • RevPAR , or average monthly senior housing resident fee revenue per available unit, is defined as resident fee revenue for the corresponding portfolio for the period (excluding revenue from our former Health Care Services segment, revenue for private duty services provided to seniors living outside of our communities, and entrance fee amortization), divided by the weighted average number of available units in the corresponding portfolio for the period, divided by the number of months in the period.
Our management uses same community operating results and data for decision making and components of executive compensation, and we believe such results and data provide useful information to investors, because it enables comparisons of revenue, expense, and other operating measures for a consistent portfolio over time without giving effect to the impacts of communities that were not consolidated and operational for the comparison periods, communities acquired or disposed during the comparison periods (or planned for disposition), and communities with results that are or likely will be impacted by completed or in-process development-related capital expenditure projects. 42 • RevPAR , or average monthly senior housing resident fee revenue per available unit, is defined as resident fee revenue for the corresponding portfolio for the period (excluding revenue from our former Health Care Services segment, revenue for private duty services provided to seniors living outside of our communities, and entrance fee amortization), divided by the weighted average number of available units in the corresponding portfolio for the period, divided by the number of months in the period.
During 2022, 2021, and 2020, we evaluated long-lived depreciable assets and lease right-of-use assets and determined that the carrying amount of these assets exceeded the undiscounted cash flows for certain of our communities. Estimated fair values were determined for these certain properties and we recorded asset impairment charges. The following is a summary of asset impairment expense for these assets.
During 2023, 2022, and 2021, we evaluated long-lived depreciable assets and lease right-of-use assets and determined that the carrying amount of these assets exceeded the undiscounted cash flows for certain of our communities. Estimated fair values were determined for these certain properties, and we recorded asset impairment charges. The following is a summary of asset impairment expense for these assets.
See "Non-GAAP Financial Measures" below for our definition of the measure and other important information regarding such measure, including reconciliations to the most comparable measure in accordance with GAAP. As of December 31, 2022, we had three reportable segments: Independent Living; Assisted Living and Memory Care; and CCRCs.
See "Non-GAAP Financial Measures" below for our definition of the measure and other important information regarding such measure, including reconciliations to the most comparable measure in accordance with GAAP. As of December 31, 2023, we had three reportable segments: Independent Living; Assisted Living and Memory Care; and CCRCs.
Although we have interest rate cap or swap agreements in place for a majority of our long-term variable-rate debt, these agreements only limit our exposure to increases in interest rates above certain levels and generally must be renewed every two to three years.
Although we have interest rate cap or swap agreements in place for a majority of our long-term variable-rate debt, these agreements only limit our exposure to increases in interest rates above certain levels and generally must be renewed every one to three years.
The Notes bear interest at 2.00% per year, payable semi-annually in arrears in cash on April 15 and October 15 of each year, beginning on April 15, 2022. The Notes will mature on October 15, 2026, unless earlier converted, redeemed or repurchased in accordance with their terms.
The Notes bear interest at 2.00% per year, payable semi-annually in arrears in cash on April 15 and October 15 of each year. The Notes will mature on October 15, 2026, unless earlier converted, redeemed or repurchased in accordance with their terms.
Additionally, a quarterly commitment fee of 0.25% per annum was applicable on the unused portion of the facility as of December 31, 2022. The revolving credit facility is currently secured by first priority mortgages and negative pledges on certain of our communities.
Additionally, a quarterly commitment fee of 0.25% per annum was applicable on the unused portion of the facility as of December 31, 2023. The revolving credit facility is currently secured by first priority mortgages and negative pledges on certain of our communities.
Our management uses RevPAR for decision making, and we believe the measure provides useful information to investors, because the measure is an indicator of senior housing resident fee revenue performance that reflects the impact of both senior housing occupancy and rate. 48 • RevPOR , or average monthly senior housing resident fee revenue per occupied unit, is defined as resident fee revenue for the corresponding portfolio for the period (excluding revenue from our former Health Care Services segment, revenue for private duty services provided to seniors living outside of our communities, and entrance fee amortization), divided by the weighted average number of occupied units in the corresponding portfolio for the period, divided by the number of months in the period.
Our management uses RevPAR for decision making and components of executive compensation, and we believe the measure provides useful information to investors, because the measure is an indicator of senior housing resident fee revenue performance that reflects the impact of both senior housing occupancy and rate. • RevPOR , or average monthly senior housing resident fee revenue per occupied unit, is defined as resident fee revenue for the corresponding portfolio for the period (excluding revenue from our former Health Care Services segment, revenue for private duty services provided to seniors living outside of our communities, and entrance fee amortization), divided by the weighted average number of occupied units in the corresponding portfolio for the period, divided by the number of months in the period.
We believe that presentation of Adjusted EBITDA as a performance measure is useful to investors because (i) it is one of the metrics used by our management for budgeting and other planning purposes, to review our historic and prospective core operating performance, and to make day-to-day operating decisions; (ii) it provides an assessment of operational factors that management can impact in the short-term, namely revenues and the controllable cost structure of the organization, by eliminating items related to our financing and capital structure and other items that management does not consider as part of our underlying core operating performance and that management believes impact the comparability of performance between periods; and (iii) we believe that this measure is used by research analysts and investors to evaluate our operating results and to value companies in our industry.
We believe that presentation of Adjusted EBITDA as a performance measure is useful to investors because (i) it is one of the metrics used by our management for budgeting and other planning purposes, to review our historic and prospective core operating performance, and to make day-to-day operating decisions; (ii) it provides an assessment of operational factors that management can impact in the short-term, namely revenues and the controllable cost structure of the organization, by eliminating items related to our financing and capital structure and other items that management does not consider as part of our underlying core operating performance and that management believes impact the comparability of performance between periods; (iii) we believe that this measure is used by research analysts and investors to evaluate our operating results and to value companies in our industry; and (iv) we use the measure for components of executive compensation.
Our inability to obtain refinancing proceeds sufficient to cover 2024 and later maturing indebtedness could adversely impact our liquidity, and may cause us to seek additional alternative sources of financing, which may be less attractive or unavailable.
Our inability to obtain refinancing proceeds sufficient to cover 2025 and later maturing indebtedness could adversely impact our liquidity, and may cause us to seek additional alternative sources of financing, which may be less attractive or unavailable.
To support our strategy and to protect the value of our community portfolio and ensure that our communities are in appropriate 59 physical condition, over the intermediate term, we expect that our community-level non-development capital expenditures, net of lessor reimbursements, will be at annual levels in a similar range of recent and 2023 projected per unit spend.
To support our strategy and to protect the value of our community portfolio and ensure that our communities are in appropriate physical condition, over the intermediate term, we expect that our community-level non-development capital expenditures, net of lessor reimbursements, will be at annual levels in a similar range of recent and 2024 projected per unit spend.
We have no planned development capital expenditures for 2023, as we plan to prioritize our capital expenditures on community-level non-development expenditures for the near-term in order to support our communities and execution on our strategy.
We have no planned development capital expenditures for 2024, as we plan to prioritize our capital expenditures on community-level non-development expenditures for the near-term in order to support our communities and execution on our strategy.
Many of our long-term variable rate debt instruments include provisions that obligate us to obtain additional interest rate cap agreements upon the maturity of the existing interest rate cap agreements. The annual aggregate scheduled maturities (including recurring principal payments) of long-term debt outstanding as of December 31, 2022 are as follows (in thousands).
Many of our long-term variable rate debt instruments include provisions that obligate us to obtain additional interest rate cap agreements upon the maturity of the existing interest rate cap agreements. 53 The annual aggregate scheduled maturities (including recurring principal payments) of long-term debt outstanding as of December 31, 2023 are as follows (in thousands).
We are responsible for all operating costs, including repairs, property taxes, and insurance. As of December 31, 2022, the weighted average remaining lease term of our operating and financing leases was 5.2 and 3.6 years , respectively. The lease terms generally provide for renewal or extension options from 5 to 20 years, and, in some instances, purchase options.
We are responsible for all operating costs, including repairs, property taxes, and insurance. As of December 31, 2023, the weighted average remaining lease term of our operating and financing leases was 5.7 and 2.3 years , respectively. The lease terms generally provide for renewal or extension options from 5 to 20 years, and, in some instances, purchase options.
Furthermore, our long-term debt and leases are secured by our communities and, in certain cases, a guaranty by us and/or one or more of our subsidiaries.
Furthermore, our mortgage debt is secured by our communities and, in certain cases, our long-term debt and leases are secured by a guaranty by us and/or one or more of our subsidiaries.
General and administrative expense includes transaction and organizational restructuring costs of $1.2 million and $3.8 million for the years ended December 31, 2022 and 2021, respectively. Transaction costs include those directly related to acquisition, disposition, financing and leasing activity, and are primarily comprised of legal, finance, consulting, professional fees, and other third-party costs.
General and administrative expense includes transaction and organizational restructuring costs of $3.9 million and $1.2 million for the years ended December 31, 2023 and 2022, respectively. Transaction costs include those directly related to acquisition, disposition, financing and leasing activity, and are primarily comprised of legal, finance, consulting, professional fees, and other third-party costs.
The remaining community lease payments are subject to variable annual escalators primarily based upon the change in the consumer price index. An additional 1% increase in the consumer price index would have resulted in additional cash lease payments of approximately $0.2 million for the twelve months ended December 31, 2022.
The remaining community lease payments are subject to variable annual escalators primarily based upon the change in the consumer price index. An additional 1% increase in the consumer price index would have resulted in additional cash lease payments of approximately $0.3 million for the twelve months ended December 31, 2023.
Comparison of Years Ended December 31, 2022 and 2021 Summary Operating Results The following table summarizes our overall operating results for the years ended December 31, 2022 and 2021.
Comparison of Years Ended December 31, 2023 and 2022 Summary Operating Results The following table summarizes our overall operating results for the years ended December 31, 2023 and 2022.
Available capacity under the facility will vary from time to time based upon borrowing base calculations related to the appraised value and performance of the communities securing the credit facility and the variable interest rate of the credit facility.
Available capacity under the facility will vary from time to time based upon certain calculations related to the appraised value and performance of the communities securing the credit facility and the variable interest rate of the credit facility.
As of December 31, 2022, we are in compliance with the financial covenants of our debt agreements and long-term leases. 64 Summary of Contractual Obligations The following table presen ts a summary of our material indebtedness and lease obligations, as of December 31, 2022.
As of December 31, 2023, we are in compliance with the financial covenants of our debt agreements and long-term leases. 57 Summary of Contractual Obligations The following table presen ts a summary of our material indebtedness and lease obligations, as of December 31, 2023.
We currently estimate our historical principal sources of liquidity, primarily our cash flows from operations, together with cash balances on hand, cash equivalents, and marketable securities will be sufficient to fund our liquidity needs for at least the next 12 months.
We currently estimate our historical principal sources of liquidity, primarily our cash flows from operations, together with cash balances on hand, cash equivalents, and marketable securities, and proceeds from financings and refinancings of various assets will be sufficient to fund our liquidity needs for at least the next 12 months.
Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on February 15, 2022.
Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on February 22, 2023.
Included in our current liabilities is $200.8 million of the current portion of operating and financing lease obligations, for which the associated right-of-use assets are excluded from current assets on our consolidated balance sheet.
Included in our current liabilities is $193.7 million of the current portion of operating and financing lease obligations, for which the associated right-of-use assets are excluded from current assets on our consolidated balance sheet.
The substantial majority of our lease arrangements are structured as master leases. Under a master lease, numerous communities are leased through an indivisible lease. We typically guarantee the performance and lease payment obligations of our subsidiary lessees under the master leases.
The substantial majority of our lease arrangements are structured as master leases. Under a master lease, numerous communities are leased through an indivisible lease. In certain cases, we guarantee the performance and lease payment obligations of our subsidiary lessees under the master leases.
These estimates require significant judgment, and as a result these estimates are uncertain and our actual exposure may be different from our estimates. Subsequent changes in actual experience are monitored and estimates are updated as information becomes available. As of December 31, 2022, we accrued reserves of $104.0 million for general liability, professional liability, and workers' compensation programs.
These estimates require significant judgment, and as a result these estimates are uncertain and our actual exposure may be different from our estimates. Subsequent changes in actual experience are monitored and estimates are updated as information becomes available. As of December 31, 2023, we accrued reserves of $100.8 million for general liability, professional liability, and workers' compensation programs.
Future events that may result in impairment charges include differences in the projected occupancy rates or monthly service fee rates, changes in the cost structure of existing communities, and our decision to dispose of assets, including execution on our ongoing capital recycling program through exiting non-strategic or underperforming owned assets or leases.
Future events that may result in impairment charges include differences in the projected occupancy rates or monthly service fee rates, changes in the cost structure of existing communities, and our decision to dispose of assets, including through exiting non-strategic or underperforming owned assets or leases.
During the current year, we recorded $29.6 million of non-cash impairment charges, primarily for right-of-use assets for certain leased communities with decreased occupancy and future cash flow estimates as a result of the continuing impacts of the COVID-19 pandemic and for natural disaster related property damage sustained at certain communities during the year, including property damage sustained from Hurricane Ian in September 2022 and Winter Storm Elliott in December 2022.
During the prior year, we recorded $29.6 million of non-cash impairment charges, primarily for certain leased communities with decreased occupancy and future cash flow estimates as a result of the continued impacts of the COVID-19 pandemic and for natural 49 disaster related property damage sustained at certain communities during the year, including property damage sustained from Hurricane Ian in September 2022 and Winter Storm Elliott in December 2022.
Adjusted Free Cash Flow has material limitations as a liquidity measure, including: (i) it does not represent cash available for dividends, share repurchases, or discretionary expenditures since certain non-discretionary expenditures, including mandatory debt principal payments, are not reflected in this measure; (ii) the cash portion of non-recurring charges related to gain/loss on facility lease termination generally represent charges/gains that may significantly affect our liquidity; and (iii) the impact of timing of cash expenditures, including the timing of non-development capital expenditures, limits the usefulness of the measure for short-term comparisons.
Adjusted Free Cash Flow has material limitations as a liquidity measure, including: (i) it does not represent cash available for dividends, share repurchases, or discretionary expenditures since certain non-discretionary expenditures, including mandatory debt principal payments, are not reflected in this measure; (ii) the cash portion of non-recurring charges related to gain/loss on facility lease termination generally represent charges/gains that may significantly affect our liquidity; and (iii) the impact of timing of cash expenditures, including the timing of non-development capital expenditures, limits the usefulness of the measure for short-term comparisons. 61 The table below reconciles Adjusted Free Cash Flow from net cash provided by (used in) operating activities.
Discussion of our financial condition and results of operations for the year ended December 31, 2022 compared to the year ended December 31, 2021 is presented below. Discussion of our financial condition and results of operations for the year ended December 31, 2021 compared to the year ended December 31, 2020 can be found in "Item 7.
Discussion of our financial condition and results of operations for the year ended December 31, 2022 compared to the year ended December 31, 2021 can be found in "Item 7.
In addition, following certain corporate events that occur prior to the maturity date or following the issuance of a notice of redemption, we will increase the conversion rate for a holder who elects to convert our Notes in connection with such a corporate event or who elects to convert any Notes called (or deemed called) for redemption during the related redemption period in certain circumstances.
In addition, following certain corporate events that occur prior to the maturity date or following the issuance of a notice of redemption, we will increase the conversion rate for a holder who elects to convert our Notes in connection with such a corporate event or who elects to convert any Notes called (or deemed called) for redemption during the related redemption period in certain circumstances. 54 We may not redeem the Notes prior to October 21, 2024.
Other Non-operating Income (Loss) . The increase in other non-operating income is due to increased income recognized for insurance recoveries from our property and casualty insurance policies. Benefit (Provision) for Income Taxes.
The increase in other non-operating income was primarily due to increased income recognized for insurance recoveries from our property and casualty insurance policies. Benefit (Provision) for Income Taxes.
As of December 31, 2022, we had approximately $1.6 billion of long-term variable rate debt, at a weighted average interest rate of 6.68%. Increases in prevailing interest rates as a result of inflation or other factors will increase our payment obligations on our variable-rate obligations to the extent they are unhedged and may increase our future borrowing and hedging costs.
As of December 31, 2023, we had $1.5 billion of long-term variable rate debt, at a weighted average interest rate of 7.74%. Increases in prevailing interest rates as a result of inflation or other factors will increase our payment obligations on our variable-rate obligations to the extent they are unhedged and may increase our future borrowing and hedging costs.
Financial Statements and Supplementary Data." Long-Lived Asset Impairment As of December 31, 2022, our long-lived assets were comprised primarily of $4.5 billion and $0.6 billion of net property, plant and equipment and leasehold intangibles and operating lease right-of-use assets, respectively.
Financial Statements and Supplementary Data." Long-Lived Asset Impairment As of December 31, 2023, our long-lived assets were comprised primarily of $4.3 billion and $0.7 billion of net property, plant and equipment and leasehold intangibles and operating lease right-of-use assets, respectively.
Approximately 89% of our community lease payments are subject to a weighted average maximum annual increase of 2.7% for community leases subject to fixed annual escalators or variable annual escalators based on the consumer price index subject to a cap.
Approximately 89% of our community lease payments for the twelve months ended December 31, 2023 are subject to a weighted average maximum annual increase of 2.7% for community leases subject to fixed annual escalators or variable annual escalators based on the consumer price index subject to a cap.
The segment's same community facility operating expense for the years ended December 31, 2022 and 2021 excludes $6.2 million and $1.6 million, respectively, of natural disaster expense, consisting primarily of remediation of storm damage as a result of Hurricane Ian and Winter Storm Elliott in 2022. 53 CCRCs Segment The following table summarizes the operating results and data for our CCRCs segment for the years ended December 31, 2022 and 2021, including operating results and data on a same community basis.
The segment's same community facility operating expense for the years ended December 31, 2023 and 2022 excludes $0.1 million and $5.9 million, respectively, of natural disaster expense, consisting primarily of remediation of storm damage as a result of Hurricane Ian and Winter Storm Elliott in 2022. 47 CCRCs Segment The following table summarizes the operating results and data for our CCRCs segment for the years ended December 31, 2023 and 2022, including operating results and data on a same community basis.
The decrease in reimbursed costs and costs incurred on behalf of managed communities was primarily attributable to terminations of management agreements subsequent to the beginning of the prior year, partially offset by an increase in reimbursed community labor costs for communities managed in both years. General and Administrative Expense.
The decrease in reimbursed costs and costs incurred on behalf of managed communities was primarily attributable to terminations of management agreements subsequent to the beginning of the prior year, partially offset by an increase in community costs incurred as a result of broad inflationary pressure for communities managed in both years. General and Administrative Expense.
Over the near-term, we expect that our liquidity requirements will primarily arise from: • working capital; • operating costs such as labor costs, severance costs, general and administrative expense, and supply costs; • debt, interest, and lease payments; • transaction costs and investment in our healthcare and wellness initiatives; • capital expenditures and improvements, including the renovation of our current communities and remediation or replacement of assets as a result of casualty losses; • cash collateral required to be posted in connection with our financial instruments and insurance programs; and • other corporate initiatives (including information systems and other strategic projects).
Over the near-term, we expect that our liquidity requirements will primarily arise from: • working capital; • operating costs such as labor costs, severance costs, general and administrative expense, and supply costs; • debt, interest, and lease payments; • transaction costs and investment in our healthcare and wellness initiatives; • capital expenditures and improvements; • cash collateral required to be posted in connection with our financial instruments and insurance programs; and • other corporate initiatives (including information systems and other strategic projects).
We also had a separate secured letter of credit facility providing for up to $15.0 million of letters of credit as of December 31, 2022, under which $13.9 million had been issued as of that date.
We also had a separate secured letter of credit facility providing for up to $15.0 million of letters of credit as of December 31, 2023, under which $14.5 million had been issued as of that date.
We expect to continue to assess our financing alternatives periodically and access the capital markets opportunistically. If our existing resources are insufficient to satisfy our liquidity requirements, we may need to sell additional equity or debt securities.
Funding our planned capital expenditures or investments to support our strategy may require additional capital. We expect to continue to assess our financing alternatives periodically and access the capital markets opportunistically. If our existing resources are insufficient to satisfy our liquidity requirements, we may need to sell additional equity or debt securities.
As of December 31, 2022, we had $1.0 billion of operating and financing lease obligations. For the twelve months ending December 31, 2023, we will be required to make approximately $233.4 million and $48.6 million of cash lease payments in connection with our existing operating and financing leases, respectively.
As of December 31, 2023, we had $1.0 billion of operating and financing lease obligations, and for the twelve months ending December 31, 2024, we will be required to make approximately $281.0 million of cash lease payments in connection with our existing operating and financing leases.
The increase in the segment's same community weighted average occupancy primarily reflects the impact of our execution on key initiatives to rebuild occupancy lost due to the pandemic. The increase in the segment's same community RevPOR was primarily the result of in-place rent increases.
The increase in the segment's same community RevPOR was primarily the result of the current year rate increase. The increase in the segment's same community weighted average occupancy primarily reflects the impact of our execution on key initiatives to rebuild occupancy lost due to the pandemic.
The increase in the segment's facility operating expense was partially offset by the disposition of communities since the beginning of the prior year, which resulted in $14.1 million less in facility operating expense during the year ended December 31, 2022 compared to the prior year.
The increase in the segment's facility operating expense was partially offset by the disposition of 23 communities since the beginning of the prior year, which resulted in $7.9 million less in facility operating expense during the year ended December 31, 2023 compared to the prior year.
As of such date, $1.4 billion, or 92%, of our long-term variable rate debt is subject to interest rate cap or swap agreements, and $128.7 million of our long-term variable rate debt is not subject to any interest rate cap or swap agreements.
As of such date, $1.4 billion, or 93%, of our long-term variable rate debt is subject to interest rate cap or swap agreements, and $0.1 billion of our long-term variable rate debt is not subject to any interest rate cap or swap agreements.
During the years ended December 31, 2022 and 2021, we recognized $80.5 million and $12.4 million, respectively, of government grants and employee retention credits as other operating income based on our estimates of our satisfaction of the 49 conditions of the grants and credits during the year, including $61.1 million during 2022 of grants from the Phase 4 general distribution from the Provider Relief Fund.
During the years ended December 31, 2023 and 2022, we recognized $9.1 million and $80.5 million, respectively, of government grants and employee retention credits as other operating income based on our estimates of our satisfaction of the conditions of the grants and credits during the year, including for the year ended December 31, 2022, $61.1 million of grants from the Phase 4 general distribution from the Public Health and Social Services Emergency Fund ("Provider Relief Fund").
During the current year, we recognized a $73.9 million non-cash gain on sale of communities for the amendment of leases for 16 communities that were previously accounted for as failed sale-leaseback transactions, as the amendment resulted in the transfer of control of the assets of the communities for accounting purposes and qualification as a sale.
The decrease in gain on sale of communities, net was due to a $73.9 million non-cash gain on sale of communities in the prior year for the amendment of leases for 16 communities that were previously accounted for as failed sale-leaseback transactions, as the amendment resulted in the transfer of control of the assets of the communities for accounting purposes and qualification as a sale.
Shortfalls in cash flows from estimated operating results or other principal sources of liquidity may have an adverse impact on our ability to fund our planned capital expenditures, to pursue any potential lease restructuring opportunities that we identify, or to fund investments to support our strategy.
Shortfalls in cash flows from estimated operating results or other principal sources of liquidity may have an adverse impact on our ability to fund our planned capital expenditures or to fund investments to support our strategy.
The credit facility matures on January 15, 2024 and we have the option to extend the facility for two additional terms of one year each subject to the satisfaction of certain conditions. Amounts drawn under the facility will bear interest at SOFR plus an applicable margin which was 2.75% as of December 31, 2022.
The credit facility matures in January 2027, and we have the option to extend the facility for two additional terms of approximately one year each subject to the satisfaction of certain conditions. Amounts drawn under the facility will bear interest at SOFR plus an applicable margin which was 3.00% as of December 31, 2023.
We anticipate that our 2023 capital expenditures will be funded from cash on hand, cash equivalents, marketable securities, cash flows from operations, reimbursements from lessors, and approximately $20.0 million of reimbursement from our property and casualty insurance policies. As of December 31, 2022, the average age of the buildings in our consolidated senior housing portfolio was approximately 25 years.
We anticipate that our 2024 capital expenditures will be funded from cash on hand, cash equivalents, marketable securities, cash flows from operations, and reimbursements from lessors. As of December 31, 2023, the average age of the buildings in our consolidated senior housing portfolio was approximately 26 years.
Our community-level non-development capital expenditures, net of lessor reimbursements, were $2,651 per unit in 2022, and our 2023 plans equate to approximately $3,200 per unit.
Our community-level non-development capital expenditures, net of lessor reimbursements, were $3,112 per unit in 2023, and our 2024 plans equate to approximately $3,100 per unit.
Those assumptions include future revenues, facility operating expenses, and cash flows, including sales proceeds that we would receive upon a sale of the assets using estimated capitalization rates in the case of communities. We corroborate the estimated capitalization rates we use in these calculations with capitalization rates observable from recent market transactions.
Those assumptions include future revenues, facility operating expenses, and cash flows, including sales proceeds that we would receive upon a sale of the assets using estimated capitalization rates in the case of communities.
As of December 31, 2022, we had approximately $ 2.3 billion of long-term fixed rate debt (including our $230.0 million principal amount of 2.00% convertible senior notes due 2026 and our $25.6 million principal amount of the senior amortizing notes component of the Units previously described), at a weighted average interest rate of 4.00% .
As of December 31, 2023, we had $2.2 billion of long-term fixed rate debt (including our $230.0 million principal amount of 2.00% convertible senior notes due 2026 and our $18.0 million principal amount of the senior amortizing notes component of our tangible equity units), at a weighted average interest rate of 4.07%.
As of that date, we owned 346 communities (31,597 units), leased 295 communities (20,570 units), and managed 32 communities (4,725 units). The following discussion should be read in conjunction with our consolidated financial statements and the related notes, which are included in "Item 8. Financial Statements and Supplementary Data" of this Annual Report on Form 10-K.
As of that date, we owned 345 communities (31,205 units), leased 277 communities (19,844 units), and managed 30 communities (4,579 units). The following discussion should be read in conjunction with our consolidated financial statements and the related notes, which are included in "Item 8. Financial Statements and Supplementary Data" of this Annual Report on Form 10-K.
The increase in the segment's same community weighted average occupancy primarily reflects the impact of our execution on key initiatives to rebuild occupancy lost due to the pandemic. The increase in the segment's same community RevPOR was primarily the result of in-place rent increases.
The increase in the segment's RevPOR was primarily the result of the current year rate increase. The increase in the segment's weighted average occupancy primarily reflects the impact of our execution on key initiatives to rebuild occupancy lost due to the pandemic.
As of such date, 92.0 %, or $ 3.5 billion, of our total debt obligations represented non-recourse property-level mortgage financings.
As of such date, 91.9%, or $3.4 billion, of our total debt obligations represented non-recourse property-level mortgage financings.
Credit Facilities On December 11, 2020, we entered into a revolving credit agreement with Capital One, National Association, as administrative agent and lender and the other lenders from time to time parties thereto. The agreement provides a commitment amount of up to $80.0 million which can be drawn in cash or as letters of credit.
Credit Facilities In December 2023, we amended our revolving credit agreement with Capital One, National Association, as administrative agent and lender and the other lenders from time to time parties thereto. The amended agreement provides an expanded commitment amount of up to $100.0 million which can be drawn in cash or as letters of credit.
We also had a separate secured letter of credit facility providing up to $15.0 million of letters of credit as of December 31, 2022 under which $13.9 million had been issued as of that date. Long-Term Leases As of December 31, 2022, we operated 295 communities under long-term leases (246 operating leases and 49 financing leases).
We also had a separate secured letter of credit facility providing up to $15.0 million of letters of credit as of December 31, 2023 under which $14.5 million had been issued as of that date. 55 Long-Term Leases As of December 31, 2023, we operated 277 communities under long-term leases (263 operating leases and 14 financing leases).
Certain of our master leases contain radius restrictions, which limit our ability to own, develop, or acquire new communities within a specified distance from certain existing communities covered by such agreements. These radius restrictions could negatively affect our ability to expand, develop, or acquire senior housing communities and operating companies.
Certain of our master leases contain radius restrictions, which limit our ability to own, develop, or acquire new communities within a specified distance from certain existing communities covered by such agreements.
The increase in the segment's resident fees was partially offset by the disposition of nine communities (695 units) since the beginning of the prior year, which resulted in $15.0 million less in resident fees during the year ended December 31, 2022 compared to the prior year.
The increase in the segment's resident fees was partially offset by the disposition of 23 communities since the beginning of the prior year, which resulted in $5.3 million less in resident fees during the year ended December 31, 2023 compared to the prior year.
For the Years Ended December 31, (in millions) 2022 2021 2020 Operating lease right-of-use assets $ 13.7 $ 16.6 $ 76.3 Property, plant and equipment and leasehold intangibles, net 15.9 6.4 29.3 Total $ 29.6 $ 23.0 $ 105.6 These impairment charges are primarily due to the COVID-19 pandemic and lower than expected operating performance at these communities and reflect the amount by which the carrying amounts of the assets exceeded their estimated fair value.
For the Years Ended December 31, (in millions) 2023 2022 2021 Operating lease right-of-use assets $ 8.3 $ 13.7 $ 16.6 Property, plant and equipment and leasehold intangibles, net 6.3 15.9 6.4 Total $ 14.6 $ 29.6 $ 23.0 These impairment charges are primarily due to decreased occupancy and future cash flow estimates at certain communities, including as a result of the impacts of the COVID-19 pandemic, and reflect the amount by which the carrying amounts of the assets exceeded their estimated fair value.
Our failure to comply with applicable covenants could constitute an event of default under the applicable debt or lease documents. Many of our debt and lease documents contain cross-default provisions so that a default under one of these instruments could cause a default under other debt and lease documents (including documents with other lenders and lessors).
Many of our debt and lease documents contain cross-default provisions so that a default under one of these instruments could cause a default under other debt and lease documents (including documents with other lenders and lessors).
As of December 31, 2022, $72.6 million of letters of credit and no cash borrowings were outstanding under our $80.0 million secured credit facility, and the facility had $5.0 million of availability.
As of December 31, 2023, $63.6 million of letters of credit and no cash borrowings were outstanding under our $100.0 million secured credit facility, and the facility had $32.9 million of availability.
Resident Fee Revenue and Facility Operating Expense Impacts of Transaction Activity The table below sets forth our resident fee revenue and facility operating expense attributable to our former Health Care Services segment and communities disposed since January 1, 2020.
Resident Fee Revenue and Facility Operating Expense Impacts of Transaction Activity The table below sets forth our resident fee revenue and facility operating expense attributable to our former Health Care Services segment and communities disposed since January 1, 2021. Refer to Note 3 to the consolidated financial statements contained in "Item 8.
These covenants include a requirement contained in certain of our long-term debt documents for us to maintain liquidity of at least $130.0 million at each quarter-end determination date and a requirement contained in certain of our lease documents for us to maintain stockholders' equity of at least $400.0 million at each quarter-end determination date.
These covenants include a requirement contained in certain of our long-term debt documents for us to maintain liquidity of at least $130.0 million at each quarter-end determination date. As of December 31, 2023, our liquidity was $340.7 million.
During the years ended December 31, 2022, 2021, and 2020, we reduced our estimate of the amount of 66 aggregate accrued liabilities for these programs based on recent claims experience, resulting in decreases to operating expenses by $12.0 million, $14.2 million, and $4.2 million, respectively. New Accounting Pronouncements See Note 2 to the consolidated financial statements contained in "Item 8.
During the years ended December 31, 2022 and 2021, we reduced our estimate of the amount of 59 aggregate accrued liabilities for these programs based on recent claims experience, resulting in decreases to operating expenses of $12.0 million and $14.2 million, respectively.
Years Ended December 31, (in thousands) 2022 2021 Net cash provided by (used in) operating activities $ 3,281 $ (94,634) Net cash provided by (used in) investing activities (67,429) 181,457 Net cash provided by (used in) financing activities 100,382 (113,657) Net increase (decrease) in cash, cash equivalents, and restricted cash $ 36,234 $ (26,834) Net cash provided by (used in) operating activities $ 3,281 $ (94,634) Distributions from unconsolidated ventures from cumulative share of net earnings (561) (6,191) Changes in operating lease assets and liabilities for lease termination — 2,380 Changes in assets and liabilities for lessor capital expenditure reimbursements under operating leases (13,718) (30,965) Non-development capital expenditures, net (168,166) (137,410) Payment of financing lease obligations (22,221) (19,874) Adjusted Free Cash Flow (1) $ (201,385) $ (286,694) (1) Adjusted Free Cash Flow includes: • $69.5 million and $3.9 million benefit for the years ended December 31, 2022 and 2021, respectively, from government grants and credits received. • $3.1 million and $20.8 million recoupment for the years ended December 31, 2022 and 2021, respectively, of accelerated/advanced Medicare payments. • $31.6 million paid during both the years ended December 31, 2022 and 2021, for deferred payroll taxes for the year ended December 31, 2020. • $1.2 million and $3.8 million for the years ended December 31, 2022 and 2021, respectively, for transaction and organizational restructuring costs.
Years Ended December 31, (in thousands) 2023 2022 Net cash provided by (used in) operating activities $ 162,923 $ 3,281 Net cash provided by (used in) investing activities (113,364) (67,429) Net cash provided by (used in) financing activities (174,439) 100,382 Net increase (decrease) in cash, cash equivalents, and restricted cash $ (124,880) $ 36,234 Net cash provided by (used in) operating activities $ 162,923 $ 3,281 Distributions from unconsolidated ventures from cumulative share of net earnings (430) (561) Changes in assets and liabilities for lessor capital expenditure reimbursements under operating leases (9,844) (13,718) Non-development capital expenditures, net (216,511) (168,166) Property and casualty insurance proceeds 24,704 — Payment of financing lease obligations (8,473) (22,221) Adjusted Free Cash Flow (1) $ (47,631) $ (201,385) (1) Adjusted Free Cash Flow includes: • $28.3 million and $69.5 million benefit for the years ended December 31, 2023 and 2022, respectively, from government grants and credits received. • $3.1 million recoupment for the year ended December 31, 2022 of accelerated/advanced Medicare payments. • $31.6 million paid during the year ended December 31, 2022 for deferred payroll taxes for the year ended December 31, 2020. • $3.9 million and $1.2 million for the years ended December 31, 2023 and 2022, respectively, for transaction and organizational restructuring costs.
Due to lower operating performance for certain of our communities resulting from the COVID-19 pandemic, during 2021 and 2022 we sought and obtained non-agency mortgage financings to partially refinance maturing Freddie Mac and Fannie Mae indebtedness.
Due to lower operating performance of our communities, generally, resulting from the COVID-19 pandemic, during 2021 and 2022 we sought and obtained non-agency mortgage financings to partially refinance maturing Freddie Mac and Fannie Mae indebtedness. In December 2023, we obtained a $179.5 million loan pursuant to Fannie Mae's DUS program to partially refinance maturing indebtedness.
As of December 31, 2022, 78% of our $1.6 billion of outstanding long-term variable rate debt is indexed to LIBOR plus a weighted average margin of 229 basis points and 22% of our outstanding long-term variable rate debt is indexed to SOFR plus a weighted average margin of 237 basis points.
As of December 31, 2023, our $1.5 billion of outstanding long-term variable rate debt is indexed to SOFR plus a weighted average margin of 239 basis points.
Financial Statements and Supplementary Data" for more information about the lease 63 reclassification. The aggregate amounts of future minimum lease payments, including community, office, and equipment leases, recognized on the consolidated balance sheet as of December 31, 2022 are as follows (in millions).
The aggregate amounts of future minimum lease payments, including community, office, and equipment leases, recognized on the consolidated balance sheet as of December 31, 2023 are as follows (in millions).
Years Ending December 31, Community Count Total Units 2023 35 1,468 2024 7 904 2025 121 10,289 2026 41 1,994 2027 24 2,555 Thereafter 67 3,360 Total 295 20,570 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 us to maintain prescribed minimum liquidity, net worth, and stockholders' equity levels and lease coverage ratios.
Years Ending December 31, Community Count Total Units 2024 6 857 2025 122 10,331 2026 2 153 2027 24 2,555 2028 12 1,344 Thereafter 111 4,604 Total 277 19,844 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 us to maintain prescribed minimum liquidity, net worth, and stockholders' equity levels and lease coverage ratios.
Years Ending December 31, Operating Lease Payments Financing Lease Payments Total Minimum Lease Payments 2023 $ 233.4 $ 48.6 $ 282.0 2024 219.3 49.3 268.6 2025 217.5 37.2 254.7 2026 102.7 37.9 140.6 2027 99.6 5.8 105.4 Thereafter 135.3 24.2 159.5 Total minimum lease payments $ 1,007.8 $ 203.0 $ 1,210.8 Debt and Lease Covenants Certain of our long-term debt and lease documents contain restrictions and financial covenants, such as those requiring us to maintain prescribed minimum liquidity, net worth, and stockholders' equity levels and debt service and lease coverage ratios, and requiring us not to exceed prescribed leverage ratios, in each case on a consolidated, portfolio-wide, multi-community, single-community, and/or entity basis.
Years Ending December 31, Operating Lease Payments Financing Lease Payments Total Minimum Lease Payments 2024 $ 260.7 $ 20.3 $ 281.0 2025 260.5 6.8 267.3 2026 145.8 6.9 152.7 2027 147.6 6.1 153.7 2028 84.8 5.9 90.7 Thereafter 251.6 20.6 272.2 Total minimum lease payments $ 1,151.0 $ 66.6 $ 1,217.6 Debt and Lease Covenants Certain of our long-term debt and lease documents contain restrictions and financial covenants, such as those requiring us to maintain prescribed minimum liquidity, net worth, and stockholders' equity levels and debt service and lease coverage ratios, and requiring us not to exceed prescribed leverage ratios, in each case on a consolidated, portfolio-wide, multi-community, single-community, and/or entity basis.
The increase in the segment's resident fees was partially offset by the disposition of one community (120 units) since the beginning of the prior year period, which resulted in $6.5 million less in resident fees during the year ended December 31, 2022 compared to the prior year.
The increase in the segment's resident fees was partially offset by the disposition of two communities since the beginning of the prior year, which resulted in $12.8 million less in resident fees during the year ended December 31, 2023 compared to the prior year.
Our actual liquidity and capital funding requirements depend on numerous factors, including our operating results, our actual level of capital expenditures, general economic conditions, and the cost of capital, as well as other factors described in "Item 1A. Risk Factors." The amount of mortgage financing available for our communities is generally dependent on their appraised 58 values and performance.
Our actual liquidity and capital funding requirements depend on numerous factors, including our operating results, our actual level of capital expenditures, general economic conditions, and the cost of capital, as well as other factors described in "Item 1A.
For our LIBOR and SOFR interest rate cap and swap agreements as of December 31, 2022, the weighted average fixed interest rate is 4.14%, and the weighted average remaining term is 1.2 years.
For our SOFR interest rate cap and swap agreements as of December 31, 2023, the weighted average fixed interest rate is 3.91%, and the weighted average remaining term is 0.8 years.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

7 edited+0 added−1 removed2 unchanged
Biggest changeIn the normal course of business, we enter into certain interest rate cap and swap agreements with major financial institutions to manage our risk above certain interest rates on variable rate debt.
Biggest changeIn the normal course of business, we enter into certain interest rate cap and swap agreements with major financial institutions to manage our risk above certain interest rates on variable rate debt. As of December 31, 2023, our $1.5 billion of outstanding long-term variable rate debt is indexed to SOFR plus a weighted average margin of 239 basis points.
Accordingly, our annual interest expense related to long-term variable rate debt is directly affected by movements in LIBOR or SOFR.
Accordingly, our annual interest expense related to long-term variable rate debt is directly affected by movements in SOFR.
The costs of obtaining additional interest rate cap agreements may offset the benefits of our existing interest rate cap agreements. 69 The table below reflects the additional annual debt interest expense that would have resulted for the respective basis point increases in LIBOR and SOFR as of December 31, 2022.
The costs of obtaining additional interest rate cap agreements may offset the benefits of our existing interest rate cap agreements. 62 The table below reflects the additional annual debt interest expense that would have resulted for the respective basis point increases in SOFR as of December 31, 2023.
As of December 31, 2022, $1.4 billion, or 92%, of our long-term variable rate debt is subject to interest rate cap or swap agreements and $128.7 million of our variable rate debt is not subject to any interest rate cap or swap agreements.
As of December 31, 2023, $1.4 billion, or 93%, of our long-term variable rate debt is subject to interest rate cap or swap agreements and $0.1 billion of our variable rate debt is not subject to any interest rate cap or swap agreements.
As of December 31, 2022, 59.6%, or $2.3 billion, of our long-term debt had a weighted average fixed interest rate of 4.00%. As of December 31, 2022, we had $1.6 billion of long-term variable rate debt, at a weighted average interest rate of 6.68%.
As of December 31, 2023, 59.0%, or $2.2 billion, of our long-term debt had a weighted average fixed interest rate of 4.07%. As of December 31, 2023, we had $1.5 billion of long-term variable rate debt, at a weighted average interest rate of 7.74%.
Increase in Index (in basis points) Annual Interest Expense Increase (1) (in millions) 100 $ 4.4 200 6.1 500 10.9 1,000 17.5 (1) Amounts are after consideration of interest rate cap and swap agreements in place as of December 31, 2022, for which the weighted average remaining term is 1.2 years . 70
Increase in Index (in basis points) Annual Interest Expense Increase (1) (in millions) 100 $ 1.5 200 2.9 500 6.4 1,000 11.4 (1) Amounts are after consideration of interest rate cap and swap agreements in place as of December 31, 2023. 63
For our LIBOR and SOFR interest rate cap and swap agreements as of December 31, 2022, the weighted average fixed interest rate is 4.14%, and the weighted average remaining term is 1.2 years.
For our SOFR interest rate cap and swap agreements as of December 31, 2023, the weighted average fixed interest rate is 3.91%, and the weighted average remaining term is 0.8 years.
Removed
As of December 31, 2022, 78%, of our $1.6 billion of outstanding long-term variable rate debt is indexed to LIBOR plus a weighted average margin of 229 basis points and 22% of our outstanding long-term variable rate debt is indexed to SOFR plus a weighted average margin of 237 basis points.

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