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What changed in Brookdale Senior Living Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Brookdale Senior Living Inc.'s 2023 and 2024 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 2024 report.

+383 added−372 removedSource: 10-K (2025-02-19) vs 10-K (2024-02-21)

Top changes in Brookdale Senior Living Inc.'s 2024 10-K

383 paragraphs added · 372 removed · 294 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

72 edited+41 added−18 removed150 unchanged
Biggest changeThe increase primarily resulted from merit and market wage rate adjustments, more hours worked with higher occupancy during the period, and an increase in the use of premium labor, primarily overtime. The labor component of our facility operating expense in our same community portfolio increased 1.2% during 2023 compared to the prior year.
Biggest changeThe labor component of our facility operating expense in our same community portfolio increased 3.0% during 2024 compared to the prior year. The increase primarily resulted from wage rate adjustments and an additional day of expense during 2024 as a result of the leap year, partially offset by a decrease in the use of premium labor, primarily contract labor.
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.
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.
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.
Through our comprehensive network of 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.
With respect to our participation in federal healthcare reimbursement programs, the government or private individuals acting on behalf of the government may bring an action under the False Claims Act alleging that a healthcare provider has defrauded the government and seek treble damages for false claims and the payment of additional monetary civil penalties.
With respect to our participation in federal healthcare reimbursement programs, the government or private individuals acting on behalf of the 17 government may bring an action under the False Claims Act alleging that a healthcare provider has defrauded the government and seek treble damages for false claims and the payment of additional monetary civil penalties.
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.
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. 16 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.
We believe that the quality of our communities, coupled with support provided by our community support infrastructure has enabled us to attract high-quality, professional community Executive Directors. 12 Depending upon the size and type of the community, each Executive Director is supported by key leaders, a Health and Wellness Director (or nursing director), and/or a Sales Director.
We believe that the quality of our communities, coupled with support provided by our community support infrastructure has enabled us to attract high-quality, professional community Executive Directors. Depending upon the size and type of the community, each Executive Director is supported by key leaders, a Health and Wellness Director (or nursing director), and/or a Sales Director.
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.
Partially as a result of tax law changes enacted through REIT Investment Diversification and Empowerment Act ("RIDEA"), we 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.
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.
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.
These committees promote resident involvement and satisfaction and enable community management to be more responsive to their residents' needs and desires. 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.
These committees promote resident involvement and satisfaction and enable community management to be more responsive to their residents' needs and desires. 14 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.
However, those adjustments may not reflect actual 17 increases of the cost of providing healthcare services. In addition, Medicaid reimbursement can be impacted negatively by state budgetary pressures, which may lead to reduced reimbursement or delays in receiving payments.
However, those adjustments may not reflect actual increases of the cost of providing healthcare services. In addition, Medicaid reimbursement can be impacted negatively by state budgetary pressures, which may lead to reduced reimbursement or delays in receiving payments.
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.
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 19 products of those residents diagnosed with an infectious disease.
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.
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.
Our senior management team has extensive experience in the senior living industry, including operating and managing a broad range of senior living assets, and related healthcare, hospitality, and real estate experience. • Geographically diverse, high-quality, purpose-built communities .
Our senior management team has extensive experience in the senior living industry, including operating and managing a broad range of senior living assets, and related healthcare, hospitality, and real estate experience. 12 • Geographically diverse, high-quality, purpose-built communities .
Although building layouts will vary depending on specific location, the community may include (i) private studio, one-bedroom, and one-bedroom deluxe apartments, or (ii) individual rooms for one or two residents in wings or "neighborhoods" scaled to a single-family home, that would include a living room, dining room, patio or enclosed porch, laundry room, and personal care area, as well as a caregiver work station.
Although building layouts will vary depending on specific location, the community may include (i) private studio, one-bedroom, and one-bedroom deluxe apartments, or (ii) individual rooms for one or two residents in wings or "neighborhoods" scaled to a single-family home, that would include a living room, dining room, patio or enclosed porch, laundry room, and personal care area, as well as a care partner work station.
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.
Segments As of December 31, 2024, 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.
In 2014, we completed our acquisition of Emeritus Corporation through a merger, which was the then-second largest operator of senior living communities in the United States. Since our acquisition of Emeritus, we have disposed of over 350 communities through sales of owned communities and terminations of triple-net lease obligations.
In 2014, we completed our acquisition of Emeritus Corporation through a merger, which was the then-second largest operator of senior living communities in the United States. Since our acquisition of Emeritus, we have disposed of over 380 communities through sales of owned communities and terminations of triple-net lease obligations.
Some of the laws and regulations that impact our industry include: state and local laws impacting licensure, protecting consumers against unfair and deceptive trade practices, and generally affecting the communities' management of property and equipment and how we otherwise conduct our operations, such as fire, health, safety, and privacy laws and regulations; federal and state laws governing Medicare and Medicaid, which regulate allowable costs, pricing, quality of services, quality of care, food service, resident rights (including abuse and neglect) and fraud; federal and state residents' rights statutes and regulations; anti-kickback and physician self-referral ("Stark") laws; safety and health standards set by the Occupational Safety and Health Administration; and federal, state, and local employment-related laws and regulations.
Some of the laws and regulations that impact our industry include: state and local laws impacting licensure, protecting consumers against unfair and deceptive trade practices, and generally affecting the communities' management of property and equipment and how we otherwise conduct our operations, such as fire, health, safety, and privacy laws and regulations; federal and state laws governing Medicare and Medicaid, which regulate reimbursable costs, rates, quality of services, quality of care, food service, resident rights (including abuse and neglect) and fraud; federal and state residents' rights statutes and regulations; anti-kickback and physician self-referral ("Stark") laws; safety and health standards set by the Occupational Safety and Health Administration; and federal, state, and local employment-related laws and regulations.
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.
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, 2024, of which approximately 90% operated five or fewer communities.
Our 2023 annual incentive plan included the strategic objective of retaining key community leadership (Executive Directors, Health and Wellness Directors, and Sales Directors) in our same community portfolio. As a result of our retention initiatives, our retention of key community leaders in our same community portfolio increased for 2023 compared to 2022.
Our 2024 annual incentive plan included the strategic objective of retaining key community leadership (Executive Directors, Health and Wellness Directors, and Sales Directors) in our same community portfolio. As a result of our retention initiatives, our retention of key community leaders in our same community portfolio increased for 2024 compared to 2023.
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.
While the number varies depending upon the particular community, as of December 31, 2024 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.
The table below shows the number of communities and units within each of our senior housing segments and the All Other category as of December 31, 2023.
The table below shows the number of communities and units within each of our senior housing segments and the All Other category as of December 31, 2024.
As an example, we have been piloting our Brookdale HealthPlus program in a growing number of assisted living communities in certain markets. Brookdale HealthPlus, which is a community-based, technology-enabled, proactive care coordination program, is designed to help improve residents' quality of life through evidence-based preventative care coordination.
As an example, we expanded our Brookdale HealthPlus® program to a growing number of assisted living communities in certain markets. Brookdale HealthPlus®, which is a community-based, technology-enabled, proactive care coordination program, is designed to help improve residents' quality of life through evidence-based preventative care coordination.
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.
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 not only a partner to providers and payors, but to be the senior living leader in the value-based healthcare ecosystem.
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.
As of December 31, 2024, we operated a nationwide base of 647 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.
The information within, or that can be accessed through, our website addresses is not part of this report. 19
The information within, or that can be accessed through, our website addresses is not part of this report. 20
We optimized our field recruiting strategy through close collaboration with local operational leadership on current and anticipated workforce planning needs, leveraging an agile market and region-based approach to provide targeted hiring support, while continuously improving systems and processes. We implemented additional ways to support recruiting from military settings.
We optimized our field recruiting strategy through close collaboration with local operational leadership on current and anticipated workforce planning needs, leveraging an agile market and region-based approach to provide targeted hiring support, while continuously improving systems and processes. Additionally, we have implemented ways to support recruiting from military settings, including veterans.
Medicaid is a medical assistance program administered by each state, funded with federal and state funds pursuant to which healthcare benefits are available to certain indigent or disabled patients. We receive reimbursements under Medicaid (including state Medicaid waiver programs) for many of our assisted living and memory care communities.
Medicaid is a medical assistance program administered by each state, funded with federal and state funds pursuant to which healthcare benefits are available to certain indigent or disabled patients. We receive reimbursements under Medicaid for certain of our CCRC communities and through state Medicaid waiver programs for many of our skilled nursing and assisted living and memory care units.
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 Business We are the nation's premier operator of senior living communities, operating and managing 647 communities in 41 states as of December 31, 2024, with the ability to serve approximately 58,000 residents. We offer our residents access to a broad continuum of services across the most attractive sectors of the senior living industry.
We continue to work to reduce our reliance on premium labor while maintaining focus on meeting our residents' needs, providing high-quality care and personalized service, and remaining in compliance with applicable regulatory requirements. We continue to optimize our recruiting efforts to fill open positions, analyze wage rates in our markets, and make competitive adjustments.
We continue to work to reduce our reliance on overtime while remaining focused on meeting our residents' needs, providing high-quality care and personalized service, and remaining in compliance with applicable regulatory requirements. We continue to optimize our recruiting efforts to fill open positions, analyze wage rates in our markets, and make competitive adjustments.
Over the near term, as occupancy continues to recover, we believe we can further improve controllable expense management and margin through leverage of fixed expenses while we continue to meet our residents' needs, provide high-quality care and personalized service, and remain in compliance with applicable regulatory requirements.
Over the near term, as occupancy continues to recover, we believe we can further improve controllable expense management and margin through leverage of fixed expenses while we continue to remain focused on meeting our residents' needs, providing high-quality care and personalized service, and remaining in compliance with applicable regulatory requirements.
As we lengthen our associates' tenure, we anticipate an enhanced resident experience. 5 The above three priorities coupled with robust supply-demand fundamentals are intended to provide long-term returns to our stockholders by driving organic growth through focusing on growing RevPAR (as defined below), Adjusted EBITDA (as defined below), and cash flow.
As we lengthen our associates' tenure, we believe this will translate into an even better resident experience. 5 The above three priorities coupled with robust supply-demand fundamentals are intended to provide long-term returns to our stockholders by driving organic growth through focusing on growing RevPAR (as defined below), Adjusted EBITDA (as defined below), and cash flow.
While the impacts of the intensely competitive labor environment have moderated in 2023, we may continue to experience labor cost pressure as a result of the labor environment conditions described above.
While the impacts of the intensely competitive labor environment have continued to moderate in 2024, we may continue to experience labor cost pressure as a result of the labor environment conditions described above.
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.
Our owned communities generated 58.8% of our resident fee revenue, and our leased communities generated 41.2% 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, 2024.
Beginning in 2021, to cover existing open positions, we needed to increase our reliance on more expensive premium labor, primarily contract labor and overtime. By increasing the number of shifts staffed with full- and part-time Brookdale associates rather than contract labor, our reliance on contract labor has moderated to pre-pandemic levels in the second half of 2023.
Beginning in 2021, to cover existing open positions, we needed to increase our reliance on more expensive premium labor, primarily contract labor and overtime. By increasing the number of shifts staffed with full- and part-time Brookdale associates rather than contract labor, our contract labor costs have returned to pre-pandemic inflation-adjusted levels.
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.
Management Services As of December 31, 2024, we managed a total of 28 communities (4,256 units) on behalf of others, which represented 8% of our senior housing capacity.
Brookdale is committed to inclusion and diversity – built on a foundation of trust, partnership, courage, and passion. We define diversity as the representation of associates from different groups, ideas, perspectives, and values. We define inclusion as a culture of policies and practices that actively engages and provides each of our associates with the opportunity to be successful at Brookdale.
We define diversity as the representation of associates from different groups, ideas, perspectives, and values. We define inclusion as a culture of policies and practices that actively engages and provides each of our associates with the opportunity to be successful at Brookdale.
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.
As of December 31, 2024, we provide memory care services at 336 of our communities, aggregating 8,962 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.
NIC data shows that new construction starts and openings for the senior housing industry have decreased significantly for 2023 compared to the peaks in the last decade.
NIC data shows that new construction starts and openings for the senior housing industry have decreased significantly for 2023 and 2024 compared to the peaks in the decade prior to the start of the COVID-19 pandemic.
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.
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.
Although our seasonal pattern varies from year to year and occupancy patterns have been affected by the COVID-19 pandemic, historically our average monthly occupancy has generally begun to decline sequentially toward the end of the fourth quarter of the year, and we have generally expected average monthly occupancy to begin to increase towards the end of the second quarter each year with the third quarter historically being the highest occupancy growth period of the year.
Although our seasonal pattern varies from year to year, our average monthly occupancy generally begins to decline sequentially toward the end of the fourth quarter of the year, and we generally expect average monthly occupancy to begin to increase towards the end of the second quarter each year with the third quarter historically being the highest occupancy growth period of the year.
Communities Units % of Total Units Average Number of Units per Community Independent Living 68 12,563 22.6 % 185 Assisted Living and Memory Care 537 33,755 60.7 % 63 CCRCs 17 4,731 8.5 % 278 All Other 30 4,579 8.2 % 153 Total 652 55,628 100.0 % 85 For the year ended December 31, 2023, we generated 93.7% of our resident fee revenue from private pay residents, 4.8% from government reimbursement programs (primarily Medicaid and Medicare), and 1.5% from other payor sources.
Communities Units % of Total Units Average Number of Units per Community Independent Living 68 12,581 22.8 % 185 Assisted Living and Memory Care 534 33,524 60.8 % 63 CCRCs 17 4,734 8.6 % 278 All Other 28 4,256 7.8 % 152 Total 647 55,095 100.0 % 85 10 For the year ended December 31, 2024, we generated 93.8% of our resident fee revenue from private pay residents, 4.8% from government reimbursement programs (primarily Medicaid and Medicare), and 1.4% from other payor sources.
During the pilot, an independent third party found that Brookdale HealthPlus delivered measurable favorable outcomes compared to seniors with similar attributes living at home or in competitive senior living properties; and as a result, we expect to introduce Brookdale HealthPlus to additional communities.
For the third consecutive year, an independent third party found that Brookdale HealthPlus® delivered measurable favorable outcomes compared to seniors with similar attributes living at home or in competitive senior living properties, with this year's outcomes showing even greater improvement than the previous year. As a result, we expect to introduce Brookdale HealthPlus® to additional communities.
The market for acquiring and/or operating senior living communities is highly competitive, and some of our present and potential senior living competitors have, or may obtain, greater financial resources than us and may have a lower cost of capital.
Over the long term we plan to evaluate and, where opportunities arise, pursue development, investment, and acquisition opportunities. The market for acquiring and/or operating senior living communities is highly competitive, and some of our present and potential senior living competitors have, or may obtain, greater financial resources than us and may have a lower cost of capital.
Medicare is a federal program that provides certain hospital and medical insurance benefits to persons age 65 and over and certain disabled persons. We receive revenue for our skilled nursing services from Medicare.
Medicare and Medicaid reimbursements represented 15.5% of our CCRCs segment's resident fee revenue during such period. Medicare is a federal program that provides certain hospital and medical insurance benefits to persons age 65 and over and certain disabled persons. We receive revenue for our skilled nursing services from Medicare.
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.
Our major senior housing competitors include Atria Senior Living Inc., Life Care Services, LLC, Discovery Senior Living, LLC, Erickson Senior Living, LLC, and Sunrise Senior Living, LLC and multiple regional providers with large localized market presence, as well as a large number of not-for-profit entities.
Inclusion and Diversity To attract and retain associates, we are committed to maintaining a welcoming and inclusive environment where people have an equal chance to grow and succeed.
Welcoming and Inclusive Environment To attract and retain associates, we are committed to maintaining a welcoming and inclusive environment built on a foundation of trust, partnership, courage, and passion where people have an equal chance to grow and succeed.
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.
Recent Developments Macroeconomic Conditions A confluence of macroeconomic conditions, including labor pressures, high inflation, and elevated interest rates, continued to affect our operations during 2024. 6 Labor Pressures Labor costs comprise approximately two-thirds of our total facility operating expense and are subject to inflationary and labor environment pressures.
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.
Further, we believe our centralized community support infrastructure allows our community-based leaders and personnel to focus on resident care and family connections. 13 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.
(in thousands) Resident Fee and Management Fee Revenue % of Total Independent Living $ 564,012 19.7 % Assisted Living and Memory Care 1,960,432 68.3 % CCRCs 332,826 11.6 % All Other 10,161 0.4 % Total resident fee and management fee revenue $ 2,867,431 100.0 % Further operating results and financial metrics from our three reportable segments are discussed further in "Item 7.
(in thousands) Resident Fee and Management Fee Revenue % of Total Independent Living $ 598,922 20.1 % Assisted Living and Memory Care 2,038,660 68.3 % CCRCs 334,468 11.2 % All Other 10,521 0.4 % Total resident fee and management fee revenue $ 2,982,571 100.0 % Further operating results and financial metrics from our three reportable segments are discussed further in "Item 7.
This program helps equip future leaders with the skills they need to advance their career with Brookdale. Talent Acquisition, Engagement, Development, and Retention We want to attract people who want to do challenging yet rewarding work and who want to make a difference in the lives of others.
Talent Acquisition, Engagement, Development, and Retention We want to attract people who want to do challenging yet rewarding work and who want to make a difference in the lives of others.
Competition The senior living industry is highly competitive. We compete with numerous organizations, including not-for-profit entities, that offer similar communities and services, community-based service programs, retirement communities, convalescent centers, and other senior living providers.
We compete with numerous organizations, including not-for-profit entities, that offer similar communities and services, community-based service programs, retirement communities, convalescent centers, and other senior living providers. In general, regulatory and other barriers to competitive entry in the independent living, assisted living, and memory care sectors of the senior living industry are not substantial.
We also believe that it is important to hear from our associates as a way to engage and retain them. To that end, in 2023, we conducted engagement pulse surveys for specific populations to focus on certain actions to engage and retain them.
We also believe that it is important to hear from our associates as a way to engage and retain them and have various listening systems that are utilized for feedback. To that end, in 2024, we conducted an associate engagement survey for all associates to focus on certain actions to engage and retain them.
Assisted Living and Memory Care Communities Our assisted living and memory care communities offer housing and 24-hour assistance with ADLs for our residents. Residents typically enter an assisted living or memory care community due to a relatively immediate need for services that may have been triggered by a medical event.
Residents typically enter an assisted living or memory care community due to a relatively immediate need for services that may have been triggered by a medical event. 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.
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.
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.
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.
In 2024, 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, all associates have access to free short-term counseling and well-being coaching.
Furthermore, any failure to comply with these laws can result in significant protracted litigation, government investigation, penalties, or other damages which could harm our reputation and have a material adverse effect on our business.
Furthermore, any failure to comply with these laws can result in significant protracted litigation, government investigation, penalties, or other damages which could harm our reputation and have a material adverse effect on our business. 18 Medicare and Medicaid Programs Reimbursements from Medicare and Medicaid represented 1.3% and 3.5%, respectively, of our consolidated resident fee revenue for the year ended December 31, 2024.
Federal, state, and local officials are increasingly focusing their efforts on enforcement of these laws and regulations. This is particularly true for large for-profit, multi-community providers like us.
Industry Regulation The regulatory environment surrounding the senior living industry continues to intensify in the number and type of laws and regulations affecting it. Federal, state, and local officials are increasingly focusing their efforts on enforcement of these laws and regulations. This can be particularly true for large for-profit, multi-community providers like us.
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 senior living communities and our comprehensive network help to provide seniors with care, connection, and services in an environment that feels like home. 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.
In addition to internal development opportunities, we have also launched multiple programs to advance fees and tuition assistance for certain associates to pursue relevant certifications. 14 Retention We believe the performance of our individual communities and of our company as a whole are correlated to retention of our key community leaders.
In addition to internal development opportunities, we have also developed a program to build business acumen skills to drive improved community performance, and associates continue to have opportunities for professional development through our advanced fee and tuition assistance programs. 15 Retention We believe the performance of our individual communities and of our company as a whole are correlated to retention of our key community leaders.
Interest Rates As of December 31, 2023, we had $1.5 billion of long-term variable rate debt outstanding which is indexed to the Secured Overnight Financing Rate ("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 SOFR.
As of December 31, 2024, we had $4.1 billion of debt outstanding, including $3.0 billion of long-term fixed rate debt at a weighted average interest rate of 4.50% and $1.1 billion of long-term variable rate debt outstanding which is indexed to the Secured Overnight Financing Rate ("SOFR") plus a weighted average margin of 241 basis points.
To the best of our knowledge, we are in compliance with these rules. In addition, states have begun to enact more comprehensive privacy laws and regulations addressing consumer rights to data protection or transparency. There are five states with comprehensive privacy laws effective in 2023.
To the best of our knowledge, we are in compliance with these rules. States have continued to enact and enforce comprehensive privacy laws and regulations addressing individual consumer rights regarding data protection and/or transparency. These legislative and regulatory developments will continue to influence the design and operation of our business and our privacy and security efforts.
The regulatory environment continues to intensify in the number and types of laws and regulations affecting us, accompanied by increased enforcement activity by state and local officials. In addition, there continue to be various federal and state legislative and regulatory proposals to implement cost containment measures that would limit payments to healthcare providers in the future.
The regulatory environment continues to intensify in the number and types of laws and regulations affecting us, accompanied by increased enforcement activity by state and local officials.
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.
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, we have and will continue to leverage our centralized community support functions such as finance, human resources, legal, information technology, and marketing.
In addition, we have and will continue to leverage our centralized community support functions such as finance, human resources, legal, information technology, and marketing to meet individualized community needs. Our size, geographic footprint, and emergency response expertise enables us to provide effective solutions for our resident population in adverse weather events.
By increasing 13 the number of shifts staffed with full- and part-time Brookdale associates rather than contract labor, our reliance on contract labor has moderated to pre-pandemic levels in the second half of 2023.
We seek to ensure that our communities are staffed with the appropriate mix of full and part-time associates. By increasing the number of shifts staffed with our full- and part-time associates rather than contract labor, our contract labor costs have returned to pre-pandemic inflation-adjusted levels.
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.
We also recognize the importance of financial wellbeing, which is why we offer access to a financial wellness program for all associates.
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.
Development We offer ongoing learning opportunities for our associates beyond the onboarding programs they participate in when they join Brookdale to ensure they have learning solutions available to them to build long-term careers at Brookdale and better serve our residents throughout their careers. Our Brookdale University provides training and leadership development for leaders across the organization.
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.
We began to experience pressures associated with the intensely competitive labor environment during 2021. Labor pressures have resulted in higher-than-typical associate turnover and wage growth, and we have experienced difficulty in filling open positions timely. We have increased our recruiting efforts to fill existing open positions, resulting in increasing the size of our workforce since the beginning of 2022.
Approximately 60% of our associates and 17% of individuals in our leadership roles are people of color. During 2023, we continued to focus on hiring the best associates and reducing turnover in order to decrease our use of more expensive premium labor. We seek to ensure that our communities are staffed with full and part-time associates.
As of December 31, 2024, we employed approximately 36,000 associates, 68% of whom were full-time. Approximately 1,400 centralized and regional community support associates support our community-based associates. During 2024, we continued to focus on hiring the best associates and reducing turnover in order to decrease our use of more expensive premium labor.
Associates enrolled in a Brookdale medical plan are also eligible to participate in a free coach-led digital program for chronic back, knee, or hip pain. They also are able to use a mobile phone application to help individuals process and cope with life’s challenges, for free.
In addition, full-time associates enrolled in one of our medical plans can receive a wellness incentive for completing their annual physical. Associates enrolled in a Brookdale medical plan are also eligible to participate in a free coach-led digital program for weight loss, diabetes management and reversal, as well as chronic back, knee, or hip pain.
The United States consumer price index increased 10% since December 2021. Despite our mitigation efforts and with higher occupancy, our non-labor facility operating expense in our same community portfolio increased 7.7% for 2023 compared to the prior year.
Despite our mitigation efforts and with higher occupancy, our non-labor facility operating expense in our same community portfolio increased 7.0% for 2024 compared to the prior year, primarily resulting from broad inflationary pressure, an additional day of expense due to the leap year, and increases in estimated insurance expense, property repair expense primarily as a result of severe weather events, and marketing expense.
We continue to work to reduce our reliance on premium labor while maintaining focus on meeting our residents' needs, providing high-quality care and personalized service, and remaining in compliance with applicable regulatory requirements. The labor component of our facility operating expense in our same community portfolio increased 11.0% during 2022 compared to the prior year.
We continue to work to reduce our reliance on overtime while committing to remain focused on meeting our residents' needs, providing high-quality care and personalized service, and remaining in compliance with applicable regulatory requirements. We continue to optimize our recruiting efforts to fill open positions, analyze wage rates in our markets, and make competitive adjustments.
Removed
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.
Added
We operate and manage independent living, assisted living, memory care, and continuing care retirement communities ("CCRCs"). As of December 31, 2024, we owned 353 communities (32,206 units), leased 266 communities (18,633 units), and managed 28 communities (4,256 units).
Removed
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.
Added
The United States consumer price index increased 21% since December 2020.
Removed
The increase primarily resulted from wage rate adjustments, partially offset by a decrease in the use of premium labor, primarily contract labor, as our associate turnover has declined and the size of our workforce has increased since the beginning of 2022.
Added
Interest Rates We are highly leveraged and have significant debt obligations.
Removed
The SOFR increased since the beginning of 2022, ending 2023 more than 500 basis points higher than year-end 2021. For 2023, our debt interest expense increased 32.9% compared to the prior year, substantially all due to an increase in our interest expense associated with our long-term variable rate debt.
Added
Accordingly, our annual interest expense related to long-term variable rate debt is directly affected by movements in SOFR. We have completed the refinancing of all of our debt maturities due in 2025.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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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.
Biggest changeA future health crisis could also result in 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; changes in demand for senior living communities and our ability to adapt our sales and marketing efforts to meet that demand; changes in our residents’ and their families’ ability to afford our resident fees; changes in the acuity levels of our new residents; increased costs for 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; impacts 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 increases in the frequency and magnitude of legal actions and liability claims that may arise due to such health crisis or our response efforts.
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.
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 23 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.
Our level of indebtedness and our long-term leases could adversely affect our future operations and/or impact our stockholders for several reasons, including, without limitation: • We may have little or no cash flow apart from cash flow that is dedicated to required interest, principal, and lease payments; • Increases in our outstanding indebtedness, leverage, and long-term lease obligations will increase our vulnerability to adverse changes in general economic and industry conditions, as well as to competitive pressure; • Increases in our outstanding indebtedness may limit our ability to obtain additional financing for working capital, capital expenditures, acquisition and development, general corporate, and other purposes; and • Our ability to pay dividends to our stockholders (should we initiate dividend payments in the future) may be limited.
Our level of indebtedness and our long-term leases could adversely affect our future operations and/or impact our stockholders for several reasons, including, without limitation: • We may have little or no cash flow apart from cash flow that is dedicated to required interest, principal, and lease payments; 26 • Increases in our outstanding indebtedness, leverage, and long-term lease obligations will increase our vulnerability to adverse changes in general economic and industry conditions, as well as to competitive pressure; • Increases in our outstanding indebtedness may limit our ability to obtain additional financing for working capital, capital expenditures, acquisition and development, general corporate, and other purposes; and • Our ability to pay dividends to our stockholders (should we initiate dividend payments in the future) may be limited.
Therefore, if an event of default has occurred under any of our debt or lease documents, subject to cure provisions in certain instances, the respective lender or lessor would have the right to declare all the related outstanding amounts of indebtedness or cash lease obligations immediately due and payable, to foreclose on our mortgaged communities, to terminate our leasehold interests, to foreclose on other collateral securing the indebtedness and leases, to discontinue our operation of leased communities, and/or to pursue other remedies available to such lender or lessor.
Therefore, if an event of default has occurred under any of our debt or lease documents, subject to cure provisions in certain instances, the respective lender or lessor would have the right to declare all the related outstanding amounts of indebtedness or cash lease obligations immediately due and payable, to foreclose 27 on our mortgaged communities, to terminate our leasehold interests, to foreclose on other collateral securing the indebtedness and leases, to discontinue our operation of leased communities, and/or to pursue other remedies available to such lender or lessor.
Additionally, our amended and restated certificate of incorporation provides that Section 203 of the Delaware General Corporation Law, which restricts certain business combinations with interested stockholders in certain situations, will not apply to us. We are a holding company with no operations and rely on our operating subsidiaries to provide us with funds necessary to meet our financial obligations.
Additionally, our amended and restated certificate of incorporation provides that Section 203 of the Delaware General Corporation Law, which restricts certain business combinations with interested stockholders in certain situations, will not apply to us. 33 We are a holding company with no operations and rely on our operating subsidiaries to provide us with funds necessary to meet our financial obligations.
As a result of this concentration, the conditions of local economies and real estate markets, changes in governmental regulations, acts of nature, and other factors that may result in a decrease in demand for senior living services in these areas could have an adverse effect on our financial condition, revenues, results of operations, and cash flow.
As a result of this concentration, the conditions of local economies and real estate markets, changes in governmental 21 regulations, acts of nature, and other factors that may result in a decrease in demand for senior living services in these areas could have an adverse effect on our financial condition, revenues, results of operations, and cash flow.
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.
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.
Further, if additional funds are raised through the issuance of additional equity securities, the percentage ownership of our stockholders would be diluted. Any newly issued equity securities may have rights, preferences, or privileges senior to those of our common stock. Human Capital The transition of management or unexpected departure of our key officers could harm our business.
Further, if additional funds are raised through the issuance of additional equity securities, the percentage ownership of our stockholders would be diluted. Any newly issued equity securities may have rights, preferences, or privileges senior to those of our common stock. 28 Human Capital The transition of management or unexpected departure of our key officers could harm our business.
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.
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.
If we experience a greater number of losses than we anticipate, or if certain claims are not covered by insurance, our results of operations and financial condition could be adversely affected. The senior living industry entails an inherent risk of liability, particularly given the demographics of our residents and the services we provide.
If we experience a greater 30 number of losses than we anticipate, or if certain claims are not covered by insurance, our results of operations and financial condition could be adversely affected. The senior living industry entails an inherent risk of liability, particularly given the demographics of our residents and the services we provide.
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.
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 (“AI”) and quantum computing, we may be unable to anticipate these techniques or implement adequate preventive measures.
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.
In addition, we have experienced and may continue to experience wage pressures due to minimum wage and minimum salary threshold increases mandated by federal, 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.
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.
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.
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.
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 the industry recovers occupancy, certain competitors may price aggressively in order to capture market share.
We are unable to predict the future course of federal, state, and local legislation or regulation. If regulatory requirements increase, whether through enactment of new laws or regulations or changes in the enforcement of existing rules, our business, results of operations, and cash flow could be adversely affected.
We are unable to predict the future course of federal, state, and local legislation or regulation. If regulatory 31 requirements increase, whether through enactment of new laws or regulations or changes in the enforcement of existing rules, our business, results of operations, and cash flow could be adversely affected.
We may issue all of the shares of our common stock that are authorized but unissued (and not otherwise reserved for issuance under our stock incentive plan or purchase plans, outstanding warrants, outstanding convertible senior notes, or outstanding tangible equity units) without any action or approval by our stockholders.
We may issue all of the shares of our common stock that are authorized but unissued (and not otherwise reserved for issuance under our stock incentive or purchase plans, outstanding warrants, outstanding convertible senior notes, or outstanding tangible equity units) without any action or approval by our stockholders.
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.
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.
Future offerings of debt or equity securities by us may adversely affect the market price of our common stock. In the future, we may attempt to increase our capital resources by offering additional debt or equity securities, including commercial paper, medium-term notes, senior or subordinated notes, convertible securities, series of preferred shares, or shares of our common stock.
Future offerings of debt or equity securities by us may adversely affect the market price of our common stock. In the future, we may attempt to increase our capital resources by offering additional debt or equity securities, including commercial paper, medium-term notes, senior or subordinated notes, convertible securities, series of preferred shares, or shares 34 of our common stock.
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.
Due to the competitive environment for new residents in our industry, our rate adjustments 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.
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.
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.
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.
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.
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.
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 associates or contractors such as email phishing attacks.
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.
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.
Components of our information systems that we develop or procure from third parties may contain defects in design or manufacture or other problems that could unexpectedly compromise the security or functionality of our information systems.
Components of our information systems that we develop or procure from third parties may contain defects in design or manufacture or other 22 problems that could unexpectedly compromise the security or functionality of our information systems.
Partially as a result of tax law changes enacted through RIDEA, we now compete more directly with the various publicly-traded healthcare REITs for the acquisition of senior housing properties.
Partially as a result of tax law changes enacted through RIDEA, we compete more directly with the various publicly-traded healthcare REITs for the acquisition of senior housing properties.
If applicable, compliance with ADA requirements could require removal of access barriers and non-compliance could result in imposition of government fines or an award of damages to private litigants.
If applicable, compliance with ADA 32 requirements could require removal of access barriers and non-compliance could result in imposition of government fines or an award of damages to private litigants.
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.
In addition, the rate adjustment may not be sufficient to offset our increased costs. The increase we implemented in January 2025 (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.
If we are unable to extend or refinance our indebtedness prior to scheduled maturity dates, our liquidity and financial condition could be adversely impacted.
If we are unable to extend or 25 refinance our indebtedness prior to scheduled maturity dates, our liquidity and financial condition could be adversely impacted.
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.
We have completed the refinancing of all of our debt maturities due in 2025. Our inability to obtain refinancing proceeds sufficient to cover 2026 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.
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 pandemic adversely impacted our business, results of operations, cash flow, and liquidity. 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.
Federal, state, and local officials are increasingly focusing their efforts on enforcement of these laws and regulations. This is particularly true for large for-profit, multi-community providers like us. Future regulatory developments as well as mandatory increases in the scope and severity of deficiencies determined by survey or inspection officials could cause our operations to suffer.
Federal, state, and local officials are increasingly focusing their efforts on enforcement of these laws and regulations. This can be particularly true for large for-profit, multi-community providers like us. Future regulatory developments as well as mandatory increases in the scope and severity of deficiencies determined by survey or inspection officials could cause our operations to suffer.
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.
Further, 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.
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.
Current global economic conditions and uncertainties, including geopolitical tensions, conflicts, potential recessions or economic downturns, uncertainty surrounding a new presidential administration, 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.
Given the location of our communities, we are particularly susceptible to revenue loss, cost increase, or damage caused by severe weather conditions including winter storms or natural disasters such as hurricanes, wildfires, earthquakes, or tornados.
Given the location of our communities, we have experienced and are particularly susceptible to revenue loss, cost increase, or damage caused by severe weather conditions including winter storms or natural disasters such as hurricanes, wildfires, earthquakes, or tornados.
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.
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, 2024, we generated 93.8% of our consolidated resident fee revenue from private pay residents.
Several publicly-traded and non-traded real estate investment trusts, or REITs, and private equity firms have similar asset acquisition objectives as we do, along with greater financial resources and/or lower costs of capital than we are able to obtain.
Several publicly-traded and non-traded REITs and private equity firms have similar asset acquisition objectives as we do, along with greater financial resources and/or lower costs of capital than we are able to obtain.
In addition, new disclosure standards and rules related to environmental matters have been adopted and may continue to be introduced in various states and other jurisdictions. In October 2023, California adopted new carbon and climate-related reporting requirements for large public and private companies doing business in the state.
In addition, new disclosure standards and rules related to environmental matters have been adopted and may continue to be introduced in various states and other jurisdictions. In October 2023, California adopted new carbon and climate-related reporting requirements for large public and private companies doing business in the state. Further, the SEC finalized climate change disclosure rules in 2024.
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.
We have recently made the annual rate adjustment effective January 1, 2025 for our in-place private pay residents. The average increase 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 elevated interest rates.
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.
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, 2024, our liquidity was $389.3 million.
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.
The frequency and magnitude of such alleged claims and legal costs may increase due to 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.
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.
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.
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.
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.
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.
Further, because many of our outstanding debt and lease documents contain cross-default and cross-collateralization provisions, a default by us related to one community could affect a significant number of our other communities and their corresponding financing arrangements and leases. Our leases generally provide for renewal or extension options and, in certain cases, purchase options.
Further, because many of our outstanding debt and lease documents contain cross-default and cross-collateralization provisions, a default by us related to one community could affect a significant number of our other communities and their corresponding financing arrangements and leases.
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.
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.
Although we do not believe that we have incurred such liabilities as would have a material adverse effect on our business, financial condition, and results of operations, we could be subject to substantial future liability for environmental contamination that we have no knowledge about as of the date of this report and/or for which we may not be at fault.
Although we do not believe that we have incurred such liabilities as would have a material adverse effect on our business, financial condition, and results of operations, we could be subject to substantial future liability for environmental contamination that we have no knowledge about as of the date of this report and/or for which we may not be at fault. 29 Failure to comply with existing environmental laws could result in increased expenditures, litigation, and potential loss to our business and in our asset value, which would have an adverse effect on our financial condition, results of operations, and cash flow.
As a result, the living spaces we lease may be unoccupied for a period of time, which could adversely affect our occupancy, revenues, results of operations, and cash flow.
As a result, the living spaces we lease may be unoccupied for a period of time, which could adversely affect our occupancy, revenues, results of operations, and cash flow. 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.
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.
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.
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.
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. 24 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.
Our current policies provide for deductibles for each claim and contain various exclusions from coverage. We use our wholly-owned captive insurance company for the purpose of insuring certain portions of our risk retention under our general and professional liability insurance programs.
We use our wholly-owned captive insurance company for the purpose of insuring certain portions of our risk retention under our general and professional liability insurance programs.
Due to the average age and prevalence of chronic medical conditions among our residents, they generally are at disproportionately higher risk of becoming severely ill from COVID-19.
Due to the average age and prevalence of chronic medical conditions among our residents, they generally are at disproportionately higher risk of becoming severely ill from COVID-19 or any similar future pandemic, epidemic, or outbreak of an infectious disease or other public health crisis.
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.
As of December 31, 2024, we had outstanding $3.7 billion principal amount of mortgage financing, $369.4 million of 3.50% convertible senior notes due 2029, $23.3 million of 2.00% convertible senior notes due 2026, $9.4 million principal amount of the senior amortizing notes component of tangible equity units, and $75.3 million letters of credit.
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.
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.
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.
Severe cold and flu season, 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. The market price and trading volume of our common stock may be volatile, which could result in rapid and substantial losses for our stockholders.
The market price and trading volume of our common stock may be volatile, which could result in rapid and substantial losses for our stockholders. The market price of our common stock may be highly volatile and could be subject to wide fluctuations. In addition, the trading volume in our common stock may fluctuate and cause significant price variations to occur.
The market price of our common stock may be highly volatile and could be subject to wide fluctuations. In addition, the trading volume in our common stock may fluctuate and cause significant price variations to occur. If the market price of our common stock declines significantly, stockholders may be unable to resell their shares at or above their purchase price.
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.
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.
Any such closings may require us to incur additional indebtedness and contingent liabilities and may result in unforeseen expenses or compliance issues.
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.
Certain claims and lawsuits allege large damage amounts and may require significant costs to defend and resolve. As a result, we maintain general liability, professional liability, and other insurance policies in amounts and with coverage and deductibles we believe are appropriate, based on the nature and risks of our business, historical experience, availability, and industry standards.
As a result, we maintain general liability, professional liability, excess liability, and other insurance policies in amounts and with coverage and deductibles we believe are appropriate, based on the nature and risks of our business, historical experience, availability, and industry standards. Our current policies provide for deductibles for each claim and contain various exclusions from coverage.
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 COVID-19 pandemic has adversely impacted, and while the recovery has continued in 2024, any future pandemic, epidemic or outbreak of an infectious disease in the markets in which we operate or that otherwise effects our communities could adversely impact, our business, results of operations, cash flow, liquidity, and stock price, and such impacts may be material.
We have been and are currently involved in litigation and claims incidental to the conduct of our business, which we believe are generally comparable to other companies in the senior living and healthcare industries, including, but not limited to, putative class action claims from time to time regarding staffing at our communities and compliance with consumer protection laws and the Americans with Disabilities Act.
We have been and are currently involved in litigation and claims incidental to the conduct of our business, which we believe are generally comparable to other companies in the senior living and healthcare industries.
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 provide assurance that reimbursement levels will not decrease in the future, which could adversely affect our revenues, results of operations, and cash flow.
We have significant indebtedness and lease obligations, and we intend to continue financing our communities through mortgage financing, long-term leases, and other types of financing. Our required lease payments are generally subject to an escalator that is either fixed or tied to changes in the consumer price index or leased property revenue.
We have significant indebtedness and lease obligations, and we intend to continue financing our communities through mortgage financing, long-term leases, and other types of financing. Our required lease payments are generally subject to an escalator that is fixed. We cannot give any assurance that we will generate sufficient cash flow from operations to cover required interest, principal, and lease payments.
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.
The market price of our common stock may fluctuate or decline significantly in the future.
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.
In the decade prior to start of the COVID-19 pandemic in 2020, the industry historically attracted investments resulting in continuous increases in construction and development of new senior housing supply, and if this development were to return to pre-pandemic levels, it could result in increased competition.
We compete with numerous organizations, including not-for-profit entities, that offer similar communities and services, community-based service programs, retirement communities, convalescent centers, and other senior living providers. In general, regulatory and other barriers to competitive entry in the independent living, assisted living, and memory care sectors of the senior living industry are not substantial.
In general, regulatory and other barriers to competitive entry in the independent living, assisted living, and memory care sectors of the senior living industry are not substantial.
Further, the SEC is expected to finalize a climate change disclosure proposal in 2024. As the nature, scope and complexity of environmental and climate change reporting, diligence and disclosure requirements expand, significant effort and expenses could be required to comply with the evolving requirements.
While the SEC rules are currently stayed pending litigation, as the nature, scope and complexity of environmental and climate change reporting, diligence and disclosure requirements expand, significant effort and expenses could be required to comply with the evolving requirements. As our disclosure obligations increase, third parties may make claims or bring litigation relating to those disclosures which may be costly.
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.
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 such caution could recur with a future pandemic, epidemic, or outbreak.
Such reimbursement levels may not remain at levels comparable to present levels or may not be sufficient to cover the costs allocable to patients eligible for reimbursement. Senior housing construction and development, lower industry occupancy, and increased competition, may have an adverse effect on our occupancy, revenues, results of operations, and cash flow. The senior living industry is highly competitive.
Senior housing construction and development, lower industry occupancy, and increased competition, may have an adverse effect on our occupancy, revenues, results of operations, and cash flow. The senior living industry is highly competitive. We compete with numerous organizations, including not-for-profit entities, that offer similar communities and services, community-based service programs, retirement communities, convalescent centers, and other senior living providers.
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.
We rely on reimbursement from government programs for a portion of our revenues, primarily in our CCRCs segment. For the year ended December 31, 2024, Medicare and Medicaid reimbursements represented 15.5% of our CCRCs segment’s resident fee revenue and 4.8% of our consolidated resident fee revenue.
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.
Our planned full-year 2025 non-development capital expenditures include maintenance, renovations, upgrades, and other major building infrastructure projects for our communities. Such projects may be needed to ensure that our communities are in appropriate physical condition to support our strategy, to meet regulatory standards, to protect the value of our community portfolio, and to remain competitive in our markets.
Removed
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.
Added
Such reimbursement levels may not remain at levels comparable to present levels or may not be sufficient to cover the costs allocable to patients eligible for reimbursement.
Removed
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.
Added
To the extent we integrate AI into our operations, this may increase the cybersecurity and privacy risks, including the risk of unauthorized or misuse of AI tools we are exposed to, and threat actors may leverage AI to engage in automated, targeted, and coordinated attacks of our systems.
Removed
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.
Added
Any of the foregoing could materially and adversely impact our revenues, results of operations, and cash flow. If the redesign and consolidation of certain technology platforms, including through the implementation of a core enterprise resource planning system, or ERP, does not proceed as expected or is not completed successfully, our business and financial results may be adversely impacted.
Removed
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.
Added
We have begun a transformative process of redesigning numerous workflows that is intended to modernize and consolidate certain of our technology platforms and streamline associated processes across our organization to carry out certain financial and operational functions. As part of this process, we are designing and implementing a new ERP system.
Removed
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.
Added
We are currently in the design phases of the project and expect implementation of individual modules of the ERP and other aspects of this process to occur throughout 2025.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThese relationships enable us to leverage specialized knowledge and insights, to help ensure our cybersecurity strategies and processes remain effective. Our collaboration with these third parties includes regular audits, routine system monitoring, threat assessments, and consultation on potential security enhancements.
Biggest changeRecognizing the complexity and evolving nature of cybersecurity threats, we have engaged external experts and rely on software support from third-party vendors to assist with evaluating, monitoring, and testing our information technology systems. These relationships enable us to leverage specialized knowledge and insights, to help ensure our cybersecurity strategies and processes remain effective.
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.
In the event of a cybersecurity incident, the CISO is equipped with a written incident response plan. 35 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.
We require third-party service providers with access to personal, confidential, or proprietary information to implement and maintain comprehensive cybersecurity practices consistent with applicable legal standards and industry best practices.
Our collaboration with these third parties includes regular audits, routine system monitoring, threat assessments, and consultation on potential security enhancements. We require third-party service providers with access to personal, confidential, or proprietary information to implement and maintain comprehensive cybersecurity practices consistent with applicable legal standards and industry best practices.
Risk Factors ." To date, the aforementioned cybersecurity risks and any incidents that we, or our third-party vendors, have experienced have not materially affected us, including our business, strategy, results of operations, or financial condition. 34 Recognizing the complexity and evolving nature of cybersecurity threats, we have engaged external experts and rely on software support from third-party vendors to assist with evaluating, monitoring, and testing our information technology systems.
Further information is discussed in "Item 1A. Risk Factors ." To date, the aforementioned cybersecurity risks and any incidents that we, or our third-party vendors, have experienced have not materially affected us, including our business, strategy, results of operations, or financial condition.
Removed
In the event of a cybersecurity incident, the CISO is equipped with a written incident response plan.

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, 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.
Biggest changeThe following table sets forth certain information regarding our owned, leased, and managed communities as of December 31, 2024, or, for occupancy, represents the weighted average occupancy for the month of December 2024. 36 Number of Communities State Units Owned Leased Managed Total Texas 7,667 53 19 11 83 Florida 5,907 44 24 — 68 California 5,021 31 11 — 42 Colorado 3,368 13 11 5 29 North Carolina 3,193 7 45 — 52 Ohio 2,887 15 14 6 35 Illinois 2,823 3 9 1 13 Washington 2,705 19 12 — 31 Arizona 2,054 17 9 — 26 Michigan 1,678 9 22 — 31 Tennessee 1,518 16 6 1 23 Oregon 1,499 11 11 — 22 New York 1,441 11 9 1 21 Kansas 1,120 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 New Mexico 426 2 1 — 3 Rhode Island 398 3 — — 3 Mississippi 386 5 — — 5 Maryland 359 3 — 1 4 South Carolina 333 4 3 — 7 Arkansas 332 4 — — 4 Indiana 310 3 4 — 7 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 55,095 353 266 28 647 December 2024 weighted average occupancy 78.4 % 80.8 % 81.2 % 79.5 % 37 Community Support Centers Our main community support centers are leased, including our 52,755 square foot support center in Brentwood, Tennessee and our 5,391 square foot support center in Milwaukee, Wisconsin.
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.
Item 2. Properties Communities As of December 31, 2024, we operated and managed 647 communities across 41 states, with the capacity to serve approximately 58,000 residents. As of December 31, 2024, we owned 353 communities, leased 266 communities, and managed 28 communities on behalf of others. As of December 31, 2024, 90% of our owned communities are subject to mortgages.
Removed
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. 12/18 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.
Biggest changeThe comparisons in this graph are not intended to forecast or be indicative of possible future performance of Brookdale shares or such indices. 12/19 12/20 12/21 12/22 12/23 12/24 Brookdale Senior Living Inc. $ 100.00 $ 60.94 $ 70.98 $ 37.55 $ 80.06 $ 69.19 Russell 3000 100.00 120.89 151.91 122.73 154.59 191.39 S&P Health Care 100.00 113.45 143.09 140.29 143.18 146.87 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. 40 Recent Sales of Unregistered Securities Other than as previously disclosed, none during the quarter ended December 31, 2024.
The average price paid per share for such share withholding is based on the closing price per share on the vesting date of the restricted stock and restricted stock units or, if such date is not a trading day, the trading day immediately prior to such vesting date.
The average price paid per share for such share withholding is based on the closing price per share on the vesting date of the restricted stock units or, if such date is not a trading day, the trading day immediately prior to such vesting date.
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.
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. 39 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, 2023, $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, 2024, $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, 2023 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, 2024 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, 2018 and that dividends are reinvested.
The graph assumes that a person invested $100 in Brookdale stock and each of the indices on December 31, 2019 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 19, 2024, there were approximately 357 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 17, 2025, there were approximately 328 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) 10/1/2023 - 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.
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) 10/1/2024 - 10/31/2024 — $ — — $ 44,026 11/1/2024 - 11/30/2024 2,398 $ 5.20 — $ 44,026 12/1/2024 - 12/31/2024 — $ — — $ 44,026 Total 2,398 $ 5.20 — (1) Consists entirely of shares withheld to satisfy tax liabilities due upon the vesting of restricted stock units.

Item 7. Management's Discussion & Analysis

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

130 edited+34 added−50 removed59 unchanged
Biggest changeYears Ended December 31, (in thousands) 2023 2022 Net income (loss) $ (189,070) $ (238,340) Provision (benefit) for income taxes 8,784 (1,559) Equity in (earnings) loss of unconsolidated ventures 3,996 10,782 Loss (gain) on debt modification and extinguishment, net 2,702 1,357 Non-operating loss (gain) on sale of assets, net (1,441) (595) Other non-operating (income) loss (21,687) (12,114) Interest expense 238,274 204,717 Interest income (23,146) (6,935) Income (loss) from operations 18,412 (42,687) Depreciation and amortization 342,712 347,444 Asset impairment 40,572 29,618 Loss (gain) on sale of communities, net (36,296) (73,850) Operating lease expense adjustment (45,739) (34,896) Non-cash stock-based compensation expense 11,985 14,466 Transaction and organizational restructuring costs 3,892 1,210 Adjusted EBITDA (1) $ 335,538 $ 241,305 (1) Adjusted EBITDA includes a $9.1 million and $80.5 million benefit for the years ended December 31, 2023 and 2022, respectively, of government grants and credits recognized in other operating income.
Biggest changeYears Ended December 31, (in thousands) 2024 2023 Net income (loss) $ (201,994) $ (189,070) Provision (benefit) for income taxes 4,646 8,784 Equity in (earnings) loss of unconsolidated ventures — 3,996 Loss (gain) on debt modification and extinguishment, net 20,762 2,702 Non-operating loss (gain) on sale of assets, net (923) (1,441) Other non-operating (income) loss (9,376) (21,687) Interest expense 252,575 238,274 Interest income (19,162) (23,146) Income (loss) from operations 46,528 18,412 Depreciation and amortization 357,788 342,712 Asset impairment 8,557 40,572 Loss (gain) on sale of communities, net — (36,296) Operating lease expense adjustment (48,793) (45,739) Non-cash stock-based compensation expense 14,184 11,985 Transaction, legal, and organizational restructuring costs 7,930 3,892 Adjusted EBITDA $ 386,194 $ 335,538 60 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.
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.
The 2026 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 2026 Notes will mature on October 15, 2026, unless earlier converted, redeemed or repurchased in accordance with their terms.
Holders of the Notes may convert all or any portion of their Notes at their option at any time prior to the close of business on the business day immediately preceding July 15, 2026, only under the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on December 31, 2021 (and only during such calendar quarter), if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (2) during the five business day period after any ten consecutive trading day period (the "measurement period") in which the trading price per $1,000 principal amount of Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our common stock and the conversion rate for the Notes on each such trading day; (3) if we call any or all of the Notes for redemption, at any time prior to the close of business on the second scheduled trading day immediately preceding the redemption date, but only with respect to the Notes called (or deemed called) for redemption; or (4) upon the occurrence of specified corporate events.
Holders of the 2026 Notes may convert all or any portion of their 2026 Notes at their option at any time prior to the close of business on the business day immediately preceding July 15, 2026, only under the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on December 31, 2021 (and only during such calendar quarter), if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (2) during the five business day period after any ten consecutive trading day period (the "measurement period") in which the trading price per $1,000 principal amount of the 2026 Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our common stock and the conversion rate for the 2026 Notes on each such trading day; (3) if we call any or all of the 2026 Notes for redemption, at any time prior to the close of business on the second scheduled trading day immediately preceding the redemption date, but only with respect to the 2026 Notes called (or deemed called) for redemption; or (4) upon the occurrence of specified corporate events.
On or after July 15, 2026, holders may convert all or any portion of their Notes at any time prior to the close of business on the second scheduled trading day immediately preceding the maturity date regardless of the foregoing conditions.
On or after July 15, 2026, holders may convert all or any portion of their 2026 Notes at any time prior to the close of business on the second scheduled trading day immediately preceding the maturity date regardless of the foregoing conditions.
For the periods presented herein, such other items include non-cash impairment charges, operating lease expense adjustment, non-cash stock-based compensation expense, gain/loss on sale of communities, and transaction and organizational restructuring costs. 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.
For the periods presented herein, such other items include non-cash impairment charges, operating lease expense adjustment, non-cash stock-based compensation expense, gain/loss on sale of communities, and transaction, legal, and organizational restructuring costs. 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.
We may redeem for cash all or (subject to certain limitations) any portion of the Notes, at our option, on or after October 21, 2024 and prior to the 51st scheduled trading day immediately preceding the maturity date if the last reported sale price of our common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption at a redemption price equal to 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.
We may redeem for cash all or (subject to certain limitations) any portion of the 2026 Notes, at our option, on or after October 21, 2024 and prior to the 51st scheduled trading day immediately preceding the maturity date if the last reported sale price of our common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption at a redemption price equal to 100% of the principal amount of the 2026 Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.
The Capped Call Transactions are expected generally to reduce or offset potential dilution to holders of our common stock upon conversion of the Notes and/or offset the potential cash payments that we could be required to make in excess of the principal amount of any converted Notes upon conversion thereof, with such reduction and/or offset subject to a cap based on the cap price.
The Capped Call Transactions are expected generally to reduce or offset potential dilution to holders of our common stock upon conversion of the 2026 Notes and/or offset the potential cash payments that we could be required to make in excess of the principal amount of any converted Notes upon conversion thereof, with such reduction and/or offset subject to a cap based on the cap price.
If we undergo a fundamental change (as defined in the Indenture) prior to the maturity date, holders may require us to repurchase for cash all or any portion of their Notes at a fundamental change repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date.
If we undergo a fundamental change (as defined in the Indenture) prior to the maturity date, holders may require us to repurchase for cash all or any portion of their 2026 Notes at a fundamental change repurchase price equal to 100% of the principal amount of the 2026 Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date.
The conversion rate for the Notes is initially 123.4568 shares of our common stock per $1,000 principal amount of Notes (equivalent to an initial conversion price of approximately $8.10 per share of common stock). The conversion rate will be subject to adjustment in some events but will not be adjusted for any accrued and unpaid interest.
The conversion rate for the 2026 Notes is initially 123.4568 shares of our common stock per $1,000 principal amount of the 2026 Notes (equivalent to an initial conversion price of approximately $8.10 per share of common stock). The conversion rate will be subject to adjustment in some events but will not be adjusted for any accrued and unpaid interest.
The Notes are effectively junior in right of payment to any of our secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally junior to all indebtedness and other liabilities (including trade payables) and any preferred equity of our current or future subsidiaries.
The 2026 Notes are effectively junior in right of payment to any of our secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally junior to all indebtedness and other liabilities (including trade payables) and any preferred equity of our current or future subsidiaries.
The Capped Call Transactions are separate transactions entered into by us with the Capped Call Counterparties and are not part of the terms of the Notes. The Capped Call Transactions had a cost of $15.9 million, which was paid on October 1, 2021 from the proceeds of the Notes.
The Capped Call Transactions are separate transactions entered into by us with the Capped Call Counterparties and are not part of the terms of the 2026 Notes. The Capped Call Transactions had a cost of $15.9 million, which was paid on October 1, 2021 from the proceeds of the 2026 Notes.
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").
In connection with the offering of the 2026 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").
RevPOR is a significant driver of our senior housing revenue performance. • Weighted average occupancy rate reflects the percentage of units at our owned and leased communities being utilized by residents over a reporting period.
RevPOR is a significant driver of our senior housing revenue performance. • Weighted average occupancy reflects the percentage of units at our owned and leased communities being utilized by residents over a reporting period.
The Capped Call Transactions initially cover, subject to customary anti-dilution adjustments, the number of shares of our common stock that initially underlie the Notes and initially have an exercise price of $8.10 per share of common stock.
The Capped Call Transactions initially cover, subject to customary anti-dilution adjustments, the number of shares of our common stock that initially underlie the 2026 Notes and initially have an exercise price of $8.10 per share of common stock.
The Notes are our senior unsecured obligations and rank senior in right of payment to any of our indebtedness that is expressly subordinated in right of payment to the Notes, and equal in right of payment to any of our indebtedness that is not so subordinated.
The 2026 Notes are our senior unsecured obligations and rank senior in right of payment to any of our indebtedness that is expressly subordinated in right of payment to the 2026 Notes, and equal in right of payment to any of our indebtedness that is not so subordinated.
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.
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 2025 projected per unit spend.
We measure RevPOR at the consolidated level, as well as at the segment level with respect to our Independent Living, Assisted Living and Memory Care, and CCRCs segments.
We measure RevPOR at the consolidated level, as well as at the segment level with respect to our Independent Living, Assisted Living and Memory 42 Care, and CCRCs segments.
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. Discussion of our financial condition and results of operations for the year ended December 31, 2023 compared to the year ended December 31, 2022 is presented below.
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. Discussion of our financial condition and results of operations for the year ended December 31, 2024 compared to the year ended December 31, 2023 is presented below.
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.
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, 2024, we had three reportable segments: Independent Living; Assisted Living and Memory Care; and CCRCs.
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.
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. • 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 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.
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 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 COVID-19 pandemic.
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.
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 COVID-19 pandemic.
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.
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 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.
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.
The increase in reimbursed costs and costs incurred on behalf of managed communities was primarily attributable to an increase in community costs incurred as a result of broad inflationary pressure for communities managed in both periods, partially offset by terminations of management agreements subsequent to the beginning of the prior year. General and Administrative Expense.
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).
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, legal, and other costs, and such income/expense may significantly affect our operating results.
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.
Discussion of our financial condition and results of operations for the year ended December 31, 2023 compared to the year ended December 31, 2022 can be found in "Item 7.
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).
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. 52 The annual aggregate scheduled maturities (including recurring principal payments) of long-term debt outstanding as of December 31, 2024 are as follows (in thousands).
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.
As of December 31, 2024, we are in compliance with the financial covenants of our debt agreements and long-term leases. Summary of Contractual Obligations The following table presen ts a summary of our material indebtedness and lease obligations, as of December 31, 2024.
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.
Comparison of Years Ended December 31, 2024 and 2023 Summary Operating Results The following table summarizes our overall operating results for the years ended December 31, 2024 and 2023.
There is no assurance that financing will continue to be available on terms consistent with our expectations or at all, or that our efforts will be successful in monetizing certain assets.
There is no assurance that financing will continue to be available on terms consistent with our expectations or at all, or that our efforts will be successful in monetizing certain assets or exercising extension options.
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.
General and administrative expense includes transaction, legal, and organizational restructuring costs of $7.9 million and $3.9 million for the years ended December 31, 2024 and 2023, 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.
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.
As of such date, $1.0 billion, or 91%, 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.
No sinking fund is provided for the Notes.
No sinking fund is provided for the 2026 Notes.
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.
O ur inability to obtain refinancing proceeds sufficient to cover 2026 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.
Asset Impairment . During the current year, we recorded $40.6 million of non-cash impairment charges, primarily due to a non-cash impairment charge of $26.0 million on our investment in the Health Care Services venture (the "HCS Venture") as a result of our decision to sell our equity interest prior to the recovery of its market value.
During the prior year, we recognized $40.6 million of non-cash impairment charges, primarily due to a non-cash impairment charge of $26.0 million on our investment in the Health Care Services venture as a result of our decision to sell our equity interest prior to the recovery of its market value.
Welltower Lease Amendments During the three months ended June 30, 2023, we entered into amendments to our existing lease arrangements with Welltower Inc. ("Welltower") pursuant to which we continue to lease 74 communities. In connection with the amendments, we extended the maturity of one lease involving 39 communities from December 31, 2026 until June 30, 2032.
Business." During 2023, we entered into amendments to our existing lease arrangements with Welltower Inc. (“Welltower”) pursuant to which we continue to lease 74 communities. In connection with the amendments, we extended the maturity of one lease involving 39 communities from December 31, 2026 until June 30, 2032.
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.
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, 2023, filed with the SEC on February 21, 2024.
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.
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, 2024, we accrued reserves of $117.1 million for general liability, professional liability, and workers' compensation programs.
The amended leases for 35 of such communities were prospectively classified as operating leases subsequent to the amendment. For 2023, the classification of such lease costs as operating lease expense resulted in a $19.3 million increase in cash lease payments for operating leases and an offsetting decrease in cash lease payments for financing leases.
The amended leases for 35 of such communities were prospectively classified as operating leases subsequent to the amendment. For 2024 compared to 2023, the classification of such lease costs as operating lease expense resulted in a $9.9 million increase in cash lease payments for operating leases and an offsetting decrease in cash lease payments for financing leases.
Development capital expenditures include community expansions, major community redevelopment and repositioning projects, and the development of new communities. 52 The following table summarizes our capital expenditures for the year ended December 31, 2023 for our consolidated business.
Development capital expenditures include community expansions, major community redevelopment and repositioning projects, and the development of new communities. 51 The following table summarizes our capital expenditures for the year ended December 31, 2024 for our consolidated business.
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.
As of December 31, 2024, we had $1.1 billion of long-term variable rate debt, at a weighted average interest rate of 6.89%. 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.
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.
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.
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.
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, 2024, our liquidity was $389.3 million.
(2) Excludes deferred financing costs of $29.0 million as of December 31, 2023. (3) Represents contractual interest for all fixed-rate obligations and interest on variable rate instruments at the December 31, 2023 rate applicable for each instrument excluding the impact of interest rate cap and swap agreements.
(2) Excludes deferred financing costs of $49.1 million as of December 31, 2024. (3) Represents contractual interest for all fixed rate obligations and interest on variable rate instruments at the December 31, 2024 rate applicable for each instrument excluding the impact of interest rate cap and swap agreements.
We are required to spend approximately $50.0 million in aggregate for the 24-month period ending December, 31, 2025 for capital expenditures under certain of our community leases and approximately $20.0 million in aggregate thereafter under the initial lease terms of such leases.
We are required to spend approximately $28.0 million in aggregate for the 24-month period ending December, 31, 2026 for capital expenditures under certain of our community leases and approximately $125.0 million in aggregate thereafter under the initial lease terms of such leases.
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.
During 2024, 2023, and 2022, 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 lease maturities of our senior housing community leases are as follows without giving effect to future renewals or extension options.
The existing lease maturities of our senior housing community leases as of December 31, 2024 are as follows (without giving effect to future renewals or extension options).
The difference between our effective tax rate for the years ended December 31, 2023 and 2022 was primarily due to an increase in the tax expense resulting from the valuation allowance recorded against state income tax operating losses.
Benefit (Provision) for Income Taxes. The difference between our effective tax rate for the years ended December 31, 2024 and 2023 was primarily due to an increase in the tax expense resulting from the valuation allowance recorded against operating losses.
Factors that could cause such differences include those described in this section and "Item 1A. Risk Factors" of this Annual Report on Form 10-K. Executive Overview and Recent Developments For information regarding our business, including our strategy and recent developments regarding macroeconomic conditions and resident fee increases, refer to "Item 1.
Factors that could cause such differences include those described in this section and "Item 1A. Risk Factors" of this Annual Report on Form 10-K. 41 Executive Overview and Recent Developments For information regarding our business, including our strategy and recent developments regarding macroeconomic conditions, community acquisitions and community lease amendments, refer to "Item 1.
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).
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; • investment in our healthcare and wellness initiatives; • transaction consideration and related expenses, including consideration for the acquisition of 30 communities pursuant to agreements with certain of our lessors; • 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).
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.
As of December 31, 2024, our $1.1 billion of outstanding long-term variable rate debt is indexed to SOFR plus a weighted average margin of 241 basis points.
We recorded an aggregate deferred federal, state, and local tax benefit of $58.4 million for the year ended December 31, 2022, which was partially offset by an increase in the valuation allowance of $57.1 million. Liquidity and Capital Resources This section includes the non-GAAP liquidity measure Adjusted Free Cash Flow.
We recorded an aggregate deferred federal, state, and local tax benefit of $41.5 million for the year ended December 31, 2023, which was offset by an increase in the valuation allowance of $49.1 million. Liquidity and Capital Resources This section includes the non-GAAP liquidity measure Adjusted Free Cash Flow.
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.
Financial Statements and Supplementary Data." Long-Lived Asset Impairment As of December 31, 2024, our long-lived assets were comprised primarily of $4.6 billion and $1.1 billion of net property, plant and equipment and leasehold intangibles and operating lease right-of-use assets, respectively.
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.
Included in our current liabilities is $111.1 million of the current portion of operating lease obligations, for which the associated right-of-use assets are excluded from current assets on our consolidated balance sheet.
The change in Adjusted Free Cash Flow was primarily attributable to the increase in net cash provided by operating activities and an increase in property and casualty insurance proceeds compared to the prior year, partially offset by a $48.3 million increase in non-development capital expenditures, net compared to the prior year.
The change in Adjusted Free Cash Flow was primarily attributable to a $29.8 million decrease in non-development capital expenditures, net and the increase in net cash provided by operating activities compared to the prior year, partially offset by a $16.2 million decrease in property and casualty insurance proceeds 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.
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 $33.1 million less in facility operating expense during the year ended December 31, 2024 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.
The increase in the segment's resident fees was partially offset by the disposition of communities since the beginning of the prior year, which resulted in $41.0 million less in resident fees during the year ended December 31, 2024 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.
The increase in the segment's resident fees was partially offset by the disposition of communities since the beginning of the prior year, which resulted in $14.2 million less in resident fees during the year ended December 31, 2024 compared to the prior year.
We are highly leveraged and have significant debt and lease obligations. As of December 31, 2023, we had $3.7 billion of debt outstanding at a weighted average interest rate of 5.58%. As of such date, 91.9%, or $3.4 billion, of our total debt obligations represented non-recourse property-level mortgage financings.
We are highly leveraged and have significant debt and lease obligations. As of December 31, 2024, we had $4.1 billion of debt outstanding at a weighted average interest rate of 5.15%. As of such date, 88.4%, or $3.6 billion, of our total debt obligations represented non-recourse property-level mortgage financings.
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.
In addition, following certain corporate events that occur prior to the maturity date or following the issuance of a notice of redemption, we will 53 increase the conversion rate for a holder who elects to convert its 2026 Notes in connection with such a corporate event or who elects to convert any 2026 Notes called (or deemed called) for redemption during the related redemption period in certain circumstances.
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 December 31, 2024, we had $3.0 billion of long-term fixed rate debt (including our $23.3 million principal amount of 2.00% convertible senior notes due 2026, our $369.4 million principal amount of 3.50% convertible senior notes due 2029, and our $9.4 million principal amount of the senior amortizing notes component of our tangible equity units), at a weighted average interest rate of 4.50%.
The decrease in the segment's facility operating expense was primarily attributable to the disposition of two communities since the beginning of the prior year, which resulted in $10.6 million less in facility operating expenses expense during the year ended December 31, 2023 compared to the prior year.
The decrease in the segment's facility operating expense was primarily attributable to the disposition of communities since the beginning of the prior year, which resulted in $14.9 million less in facility operating expense during the year ended December 31, 2024 compared to the prior year.
Adjusted EBITDA Adjusted EBITDA is a non-GAAP performance measure that we define as net income (loss) excluding: benefit/provision for income taxes, non-operating income/expense items, and depreciation and amortization; and further adjusted to exclude income/expense associated with non-cash, non-operational, transactional, cost reduction, or organizational restructuring 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.
We urge investors to review the following reconciliations of these non-GAAP financial measures from the most comparable financial measures determined in accordance with GAAP. 59 Adjusted EBITDA Adjusted EBITDA is a non-GAAP performance measure that we define as net income (loss) excluding: benefit/provision for income taxes, non-operating income/expense items, and depreciation and amortization; and further adjusted to exclude income/expense associated with non-cash, non-operational, transactional, legal, cost reduction, or organizational restructuring 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.
We account for Capped Call Transactions separately from the Notes and recognized the cost as a reduction of additional paid-in capital in the year ended December 31, 2021 as the Capped Call Transactions are indexed to our common stock.
We account for Capped Call Transactions separately from the 2026 Notes and recognized the cost as a reduction of additional paid-in capital in the year ended December 31, 2021 as the Capped Call Transactions are indexed to our common stock. Refer to Note 7 to the consolidated financial statements contained in "Item 8.
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.
The following is a summary of asset impairment expense for these assets. 58 For the Years Ended December 31, (in millions) 2024 2023 2022 Operating lease right-of-use assets $ 4.6 $ 8.3 $ 13.7 Property, plant and equipment and leasehold intangibles, net 4.0 6.3 15.9 Total $ 8.6 $ 14.6 $ 29.6 These impairment charges are primarily due to lower than expected occupancy and decreased future cash flow estimates at certain communities, and reflect the amount by which the carrying amounts of the assets exceeded their estimated fair value.
Convertible Senior Notes On October 1, 2021, we issued $230.0 million principal amount of 2.00% convertible senior notes due 2026 (the "Notes"). We received net proceeds of $224.3 million at closing after the deduction of the initial purchasers’ discount. We used $15.9 million of the net proceeds to pay the cost of the capped call transactions described below.
Convertible Senior Notes 2026 Convertible Senior Notes On October 1, 2021, we issued $230.0 million principal amount of 2.00% convertible senior notes due 2026 (the "2026 Notes"). We received net proceeds of $224.3 million at closing after the deduction of the initial purchasers’ discount.
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.
During the year ended December 31, 2022, we reduced our estimate of the amount of aggregate accrued liabilities for these programs based on recent claims experience, resulting in a decrease to operating expenses of $12.0 million.
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.
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.
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.
For our SOFR interest rate cap and swap agreements as of December 31, 2024, the weighted average fixed interest rate is 4.15%, and the weighted average remaining term is 0.7 years.
We recorded an aggregate deferred federal, state, and local tax benefit of $41.5 million for the year ended December 31, 2023, which was offset by an increase in the valuation allowance of $49.1 million.
We recorded an aggregate deferred federal, state, and local tax benefit of $43.7 million for the year ended December 31, 2024, which was offset by an increase in the valuation allowance of $47.3 million.
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.
We are responsible for all operating costs, including repairs, property taxes, and insurance. As of December 31, 2024, the weighted average remaining lease term of our operating and financing leases was 10.3 and 0.8 years , respectively. The lease terms generally provide for renewal or extension options, or in certain cases, purchase options.
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.
As of December 31, 2024, we had $1.6 billion of operating and financing lease obligations, and for the twelve months ending December 31, 2025, we will be required to make approximately $240.0 million of cash lease payments in connection with our existing operating and financing leases (after giving effect to our planned acquisition transactions for 30 communities subsequent to December 31, 2024).
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.
As of December 31, 2024, $39.5 million of letters of credit and no cash borrowings were outstanding under our $100.0 million secured credit facility, and the facility had $60.5 million of availability.
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.
Those assumptions include asset holding periods, 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.
Organizational restructuring costs include those related to our efforts to reduce general and administrative expense and our senior leadership changes, including severance.
Legal costs include charges associated with putative class action litigation. Organizational restructuring costs include those related to our efforts to reduce general and administrative expense and our senior leadership changes, including severance.
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.
Years Ending December 31, Operating Lease Payments Financing Lease Payments Total Minimum Lease Payments 2025 $ 233.2 $ 10.7 $ 243.9 2026 182.0 7.1 189.1 2027 185.0 6.3 191.3 2028 182.5 6.1 188.6 2029 185.0 6.1 191.1 Thereafter 1,089.5 15.3 1,104.8 Total minimum lease payments $ 2,057.2 $ 51.6 $ 2,108.8 56 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.
As of December 31, 2023, our long-term variable rate debt had a weighted average interest rate of 7.74%. We are subject to market risks from changes in interest rates and increases or decreases in prevailing interest rates would change our payment obligations on our variable-rate obligations. (4) Reflects future minimum lea se payments prior to giving effect to variable payments.
As of December 31, 2024, our long-term variable rate debt had a weighted average interest rate of 6.89%. We are subject to market risks from changes in interest rates and increases or decreases in prevailing interest rates would change our payment obligations on our variable-rate obligations.
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.
The revolving credit facility is currently secured by first priority mortgages and negative pledges on certain of our communities. 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.
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 continue to focus on increasing our RevPAR, maintaining appropriate expense discipline, continuing to refinance or exercise available extension options for maturing debt, continuing to evaluate our capital structure and the state of debt and equity markets, and monetizing non-strategic or underperforming owned assets.
The labor component of the segment's facility operating expense increased 3.3% compared to the prior year. 46 Assisted Living and Memory Care Segment The following table summarizes the operating results and data for our Assisted Living and Memory Care segment for the years ended December 31, 2023 and 2022, including operating results and data on a same community basis.
The segment's same community facility operating expense for the year ended December 31, 2024 excludes $1.3 million of natural disaster expense. 45 Assisted Living and Memory Care Segment The following table summarizes the operating results and data for our Assisted Living and Memory Care segment for the years ended December 31, 2024 and 2023, including operating results and data on a same community basis.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThe 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.
Biggest changeThe 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, 2024.
Accordingly, our annual interest expense related to long-term variable rate debt is directly affected by movements in SOFR.
Accordingly, our annual 61 interest expense related to long-term variable rate debt is directly affected by movements in SOFR.
In 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.
In 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, 2024, our $1.1 billion of outstanding long-term variable rate debt is indexed to SOFR plus a weighted average margin of 241 basis points.
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, 2024, $1.0 billion, or 91%, 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.
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.
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 costs of obtaining additional interest rate cap agreements may offset the benefits of our existing interest rate cap agreements.
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
Increase in Index (in basis points) Annual Interest Expense Increase (1) (in millions) 100 $ 2.9 200 4.3 500 8.1 1,000 13.2 (1) Amounts are after consideration of interest rate cap and swap agreements in place as of December 31, 2024. 62
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.
For our SOFR interest rate cap and swap agreements as of December 31, 2024, the weighted average fixed interest rate is 4.15%, and the weighted average remaining term is 0.7 years.
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%.
As of December 31, 2024, 72.8%, or $3.0 billion, of our long-term debt had a weighted average fixed interest rate of 4.50%. As of December 31, 2024, we had $1.1 billion of long-term variable rate debt, at a weighted average interest rate of 6.89%.

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