Brookdale Senior Living Inc

Previous wording

We are the nation's premier operator of senior living communities, operating and managing 652 communities in 41 states as of March 31, 2024, 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. We operate and manage independent living, assisted living, memory care, and continuing care retirement communities ("CCRCs").

Current wording

We are the nation's premier operator of senior living communities, operating and managing 649 communities in 41 states as of June 30, 2024, 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. We operate and manage independent living, assisted living, memory care, and continuing care retirement communities ("CCRCs"). As of June 30, 2024, we owned 342 communities (30,970 units), leased 277 communities (19,857 units), and managed 30 communities (4,579 units).

Previous wording

As of March 31, 2024, our total operations included 652 communities with a capacity to serve approximately 59,000 residents. As of that date, we owned 345 communities (31,169 units), leased 277 communities (19,844 units), and managed 30 communities (4,579 units). The following discussion should be read in conjunction with our condensed consolidated financial statements and the related notes, which are included in "Item 1. Financial Statements" of this Quarterly Report on Form 10-Q. The results of operations for any particular period are not necessarily indicative of results for any future period.

Current wording

The following discussion should be read in conjunction with our condensed consolidated financial statements and the related notes, which are included in "Item 1. Financial Statements" of this Quarterly Report on Form 10-Q. The results of operations for any particular period are not necessarily indicative of results for any future period.

Previous wording

•Weighted average occupancy rate reflects the percentage of units at our owned and leased communities being utilized by residents over a reporting period. We measure occupancy rates with respect to our Independent Living, Assisted Living and Memory Care, and CCRCs segments, and also measure this metric both on a consolidated senior housing and a same community basis. Our management uses weighted average occupancy, and we believe the measure provides useful information to investors, because it is a significant driver of our senior housing revenue performance.

Current wording

•Weighted average occupancy reflects the percentage of units at our owned and leased communities being utilized by residents over a reporting period. We measure occupancy rates with respect to our Independent Living, Assisted Living and Memory Care, and CCRCs segments, and also measure this metric both on a consolidated senior housing and a same community basis. Our management uses weighted average occupancy, and we believe the measure provides useful information to investors, because it is a significant driver of our senior housing revenue performance.

Previous wording

The decrease in net loss was primarily attributable to the increase in resident fees, partially offset by the increase in facility operating expense.

Current wording

The increase in net loss was primarily attributable to a $36.3 million gain on sale of communities, net recognized during the three months ended June 30, 2023 for the sale of our one remaining entrance fee community and the increase in facility operating expense, partially offset by the increase in resident fees.

Previous wording

The increase in the segment's resident fees was primarily attributable to an increase in the segment's RevPAR, comprised of a 4.7% increase in RevPOR and a 100 basis point increase in weighted average occupancy. The increase in the segment's RevPOR was primarily the result of annual in-place rate increases effective January 1, 2024. 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.

Current wording

The increase in the segment's resident fees was primarily attributable to an increase in the segment's RevPAR, comprised of a 4.9% increase in RevPOR and a 100 basis point increase in weighted average occupancy. The increase in the segment's RevPOR was primarily the result of annual in-place rate increases effective January 1, 2024. 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.

Previous wording

Facility Operating Lease Expense. The increase in facility operating lease expense was primarily due to the change in classification of lease costs from financing leases to operating leases as a result of lease amendments subsequent to the prior year period.

Current wording

Facility Operating Lease Expense. The increase in facility operating lease expense was primarily due to the change in classification of lease costs from financing leases to operating leases as a result of lease amendments in the prior year period.

Previous wording

Depreciation and Amortization. The increase in depreciation and amortization expense was primarily due to the completion of community renovations, apartment upgrades, and other major building infrastructure projects since the beginning of the prior year period, partially offset by the change in classification of lease costs from financing leases to operating leases as a result of lease amendments subsequent to the prior year period.

Current wording

Depreciation and Amortization. The increase in depreciation and amortization expense was primarily due to the completion of community renovations, apartment upgrades, and other major building infrastructure projects since the beginning of the prior year period, partially offset by the change in classification of lease costs from financing leases to operating leases as a result of lease amendments in the prior year period.

Previous wording

Interest Expense. The decrease in interest expense was primarily due to an increase in the fair value of interest rate derivatives in the current period and a decrease in interest expense on financing lease obligations primarily due to the change in classification of lease costs from financing leases to operating leases as a result of lease amendments subsequent to the prior year period. These changes were partially offset by an increase in interest expense on long-term debt primarily as a result of increases in variable interest rate indices.

Current wording

Interest Expense. The increase in interest expense was primarily due to an increase in the fair value of interest rate derivatives in the prior period and an increase in interest expense on long-term debt primarily as a result of increases in variable interest rate indices.

Previous wording

We recorded an aggregate deferred federal, state, and local tax benefit of $7.6 million for the three months ended March 31, 2024, which was partially offset by an increase in the valuation allowance of $7.2 million.

Current wording

We recorded an aggregate deferred federal, state, and local tax benefit of $9.1 million for the three months ended June 30, 2024, which was offset by an increase in the valuation allowance of $9.2 million.

Previous wording

We evaluate our deferred tax assets each quarter to determine if a valuation allowance is required based on whether it is more likely than not that some portion of the deferred tax asset would not be realized. Our valuation allowance as of March 31, 2024 and December 31, 2023 was $481.4 million and $474.2 million, respectively.

Current wording

We evaluate our deferred tax assets each quarter to determine if a valuation allowance is required based on whether it is more likely than not that some portion of the deferred tax asset would not be realized. Our valuation allowance as of June 30, 2024 and December 31, 2023 was $490.5 million and $474.2 million, respectively.

Previous wording

The increase in facility operating expense was primarily attributable to a 4.3% increase in same community facility operating expense primarily resulting from broad inflationary pressure, an additional day of expense due to the leap year, and an increase in property repair expense primarily as a result of severe weather events, partially offset by a decrease in the use of premium labor, primarily contract labor. The increase was partially offset by the disposition of communities since the beginning of the prior year period, which resulted in $13.7 million less in facility operating expense during the three months ended March 31, 2024 compared to the prior year period.

Current wording

The increase in facility operating expense was primarily attributable to a 4.0% increase in same community facility operating expense, primarily resulting from broad inflationary pressure, an additional day of expense due to the leap year, an increase in estimated insurance expense, and an increase in property repair expense primarily as a result of severe weather events, partially offset by a decrease in the use of premium labor, primarily contract labor. The increase was partially offset by the disposition of communities since the beginning of the prior year period, which resulted in $26.4 million less in facility operating expense during the six months ended June 30, 2024 compared to the prior year period.

Previous wording

The increase in Adjusted EBITDA was primarily attributable to the increase in resident fees, partially offset by the increase in facility operating expense and the change in classification of $7.4 million of lease payments for 35 communities as cash facility operating lease payments as a result of lease amendments subsequent to the prior year period.

Current wording

The increase in Adjusted EBITDA was primarily attributable to the increase in resident fees, partially offset by the increase in facility operating expense and the change in classification of $9.9 million of lease payments for 35 communities as cash facility operating lease payments as a result of lease amendments in the prior year period.

Previous wording

The increase in the segment's facility operating expense was primarily attributable to broad inflationary pressure, an additional day of expense due to the leap year, an increase in property repair expense primarily as a result of severe weather events, and increased wireless internet access provided for residents, partially offset by a decrease in the use of premium labor. The segment's same community facility operating expense for the three months ended March 31, 2024 and 2023 excludes $0.4 million and $0.2 million, respectively, of natural disaster expense.

Current wording

The increase in the segment's facility operating expense was primarily attributable to broad inflationary pressure, an additional day of expense due to the leap year, an increase in property repair expense primarily as a result of severe weather events, and increased wireless internet access provided for residents, and an increase in estimated insurance expense, partially offset by a decrease in estimated incentive compensation costs. The segment's same community facility operating expense for the six months ended June 30, 2024 excludes $0.4 million of natural disaster expense.

Previous wording

The increase in the segment's facility operating expense was primarily attributable to an increase in the segment's same community facility operating expense primarily attributable to broad inflationary pressure, an additional day of expense due to the leap year, and an increase in property repair expense primarily as a result of severe weather events, partially offset by a decrease in the use of premium labor, primarily contract labor and a decrease in credit losses. The increase in the segment's facility operating expense was partially offset by the disposition of communities since the beginning of the prior year period, which resulted in $7.4 million less in facility operating expense during the three months ended March 31, 2024 compared to the prior year period. The segment's same community facility operating expense for the three months ended March 31, 2024 and 2023 excludes $2.4 million and $0.3 million, respectively, of natural disaster expense, consisting primarily of remediation of winter storm damage.

Current wording

The increase in the segment's facility operating expense was primarily attributable to an increase in the segment's same community facility operating expense primarily attributable to broad inflationary pressure, an additional day of expense due to the leap year, an increase in estimated insurance expense, and an increase in property repair expense primarily as a result of severe weather events, partially offset by a decrease in the use of premium labor, primarily contract labor, a decrease in estimated incentive compensation costs, and a decrease in credit losses. The increase in the segment's facility operating expense was partially offset by the disposition of communities since the beginning of the prior year period, which resulted in $15.7 million less in facility operating expense during the six months ended June 30, 2024 compared to the prior year period. The segment's same community facility operating expense for the six months ended June 30, 2024 and 2023 excludes $2.4 million and $0.7 million, respectively, of natural disaster expense.

Previous wording

The decrease in the segment's resident fees was primarily attributable to the disposition of communities since the beginning of the prior year period, which resulted in $6.8 million less in resident fees during the three months ended March 31, 2024 compared to the prior year period. The decrease was partially offset by an increase in the segment's same community RevPAR, comprised of a 200 basis point increase in same community weighted average occupancy and a 2.7% increase in the segment's same community RevPOR. 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 annual in-place rate increases effective January 1, 2024, partially offset by an occupancy mix shift to more independent living residents.

Current wording

The decrease in the segment's resident fees was primarily attributable to the disposition of communities since the beginning of the prior year period, which resulted in $10.7 million less in resident fees during the six months ended June 30, 2024 compared to the prior year period. The decrease was partially offset by an increase in the segment's same community RevPAR, comprised of a 220 basis point increase in same community weighted average occupancy and a 1.1% increase in same community RevPOR. 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 annual in-place rate increases effective January 1, 2024, partially offset by an occupancy mix shift to more independent living residents.

Previous wording

General and Administrative Expense. The decrease in general and administrative expense was primarily attributable to a decrease in organizational restructuring costs compared to the prior year period, primarily for severance costs for our senior leadership changes during the three months ended March 31, 2023. General and administrative expense includes transaction and organizational restructuring costs of $0.4 million and $3.6 million for the three months ended March 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. Organizational restructuring costs include those related to our efforts to reduce general and administrative expense and our senior leadership changes, including severance costs.

Current wording

General and Administrative Expense. The decrease in general and administrative expense was primarily attributable to a decrease in organizational restructuring costs compared to the prior year period, primarily for severance costs for our senior leadership changes during the six months ended June 30, 2023, partially offset by an increase in non-cash stock-based compensation expense compared to the prior year period. General and administrative expense includes transaction and organizational restructuring costs of $0.5 million and $3.7 million for the six months ended June 30, 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. Organizational restructuring costs include those related to our efforts to reduce general and administrative expense and our senior leadership changes, including severance costs.

Previous wording

Benefit (Provision) for Income Taxes. The difference between our effective tax rate for the three months ended March 31, 2024 and 2023 was primarily due to an increase in the tax benefit on the vesting of restricted stock units and restricted stock awards for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023.

Current wording

Benefit (Provision) for Income Taxes. The difference between our effective tax rate for the six months ended June 30, 2024 and 2023 was primarily due to an increase in the tax benefit on the vesting of restricted stock units for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023.

Previous wording

The change in net cash provided by (used in) operating activities was primarily attributable to an increase in incentive compensation payments, a decrease in cash received associated with government grants and credits, and an increase in facility operating expense compared to the prior year period, partially offset by increases in resident fees compared to the prior year period. Net cash used in operating activities of $1.1 million for the three months ended March 31, 2024 primarily reflects the impact of $45.0 million of net cash used for changes in operating assets and liabilities, including payments under our annual and long-term incentive compensation programs and annual insurance premium payments made during the period. We expect that net cash provided by (used in) changes in operating assets and liabilities may fluctuate in future periods as a result of a number of factors, including the timing of collection of resident fees and the timing of payments for employee compensation and other expenditures. Changes in operating assets and liabilities are generally neutral over an entire annual period.

Current wording

The decrease in net cash provided by operating activities was primarily attributable to $25.3 million in cash received in the prior year period associated with government grants and credits, an increase in incentive compensation payments, and an increase in facility operating expense compared to the prior year period, partially offset by an increase in resident fees compared to the prior year period.

Previous wording

The decrease in net cash used in investing activities was primarily attributable to a $49.7 million decrease in purchases of marketable securities and a $5.3 million decrease in cash paid for capital expenditures compared to the prior year period.

Current wording

The decrease in net cash used in investing activities was primarily attributable to a $91.2 million decrease in purchases of marketable securities and a $13.9 million decrease in cash paid for capital expenditures compared to the prior year period. These changes were partially offset by a reduction in net proceeds from sale of assets of $36.0 million and a reduction in the sale and maturities of marketable securities of $35.1 million.

Previous wording

The increase in net cash provided by financing activities was primarily attributable to $50.0 million of debt secured by first priority mortgages on 11 communities during the three months ended March 31, 2024.

Current wording

The change in net cash provided by (used in) financing activities was primarily attributable to $50.0 million of debt secured by first priority mortgages on 11 communities in the current year period and the repayment of $29.6 million of mortgage debt upon the sale of our one remaining entrance fee community in the prior year period.

Previous wording

The change in Adjusted Free Cash Flow was primarily attributable to the change in net cash provided by (used in) operating activities, partially offset by a $12.3 million decrease in non-development capital expenditures, net compared to the prior year period.

Current wording

The change in Adjusted Free Cash Flow was primarily attributable to the decrease in net cash provided by operating activities, partially offset by a $24.8 million decrease in non-development capital expenditures, net compared to the prior year period.

Previous wording

•operating costs such as labor costs, severance costs, general and administrative expense, and supply costs;

Current wording

•operating costs such as labor costs, general and administrative expense, and supply costs;

Previous wording

We are highly leveraged and have significant debt and lease obligations. As of March 31, 2024, we had $3.8 billion of debt outstanding at a weighted average interest rate of 5.62%. As of such date, 91.1%, or $3.4 billion, of our total debt obligations represented non-recourse property-level mortgage financings.

Current wording

We are highly leveraged and have significant debt and lease obligations. As of June 30, 2024, we had $3.7 billion of debt outstanding at a weighted average interest rate of 5.61%. As of such date, 91.3%, or $3.4 billion, of our total debt obligations represented non-recourse property-level mortgage financings.

Previous wording

As of March 31, 2024, we had $1.0 billion of operating and financing lease obligations, and for the twelve months ending March 31, 2025, we will be required to make approximately $278.4 million of cash lease payments in connection with our existing operating and financing leases.

Current wording

As of June 30, 2024, we had $0.9 billion of operating and financing lease obligations, and for the twelve months ending June 30, 2025, we will be required to make approximately $274.6 million of cash lease payments in connection with our existing operating and financing leases.

Previous wording

Total liquidity of $355.1 million as of March 31, 2024 included $318.5 million of unrestricted cash and cash equivalents (excluding restricted cash of $77.1 million) and $36.5 million of availability on our secured credit facility. Total liquidity as of March 31, 2024 increased $14.4 million from total liquidity of $340.7 million as of December 31, 2023. The increase was primarily attributable to $50.0 million of mortgage debt proceeds, partially offset by negative $26.3 million of Adjusted Free Cash Flow and repayments of mortgage debt.

Current wording

Total liquidity of $345.8 million as of June 30, 2024 included $290.0 million of unrestricted cash and cash equivalents (excluding restricted cash of $72.5 million), $19.7 million of marketable securities, and $36.1 million of availability on our secured credit facility. Total liquidity as of June 30, 2024 increased $5.2 million from total liquidity of $340.7 million as of December 31, 2023. The increase was primarily attributable to $50.0 million of mortgage debt proceeds, partially offset by negative $31.8 million of Adjusted Free Cash Flow and repayments of mortgage debt.

Previous wording

Our actual liquidity and capital funding requirements depend on numerous factors, including our operating results, our actual level of capital expenditures, general economic conditions, and the cost of capital, as well as other factors described in "Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the Securities and Exchange Commission ("SEC") on February 21, 2024. Since the amount of mortgage financing available for our communities is generally dependent on their appraised values and performance, decreases in their appraised values, including due to adverse changes in real estate market conditions, or their performance, could result in available mortgage refinancing amounts that are less than the communities’ maturing indebtedness. In addition, our inability to satisfy underwriting criteria for individual communities may limit our access to our historical lending sources for such communities, including Fannie Mae and Freddie Mac. As of March 31, 2024, 10% of our owned communities were unencumbered by mortgage debt.

Current wording

Our actual liquidity and capital funding requirements depend on numerous factors, including our operating results, our actual level of capital expenditures, general economic conditions, and the cost of capital, as well as other factors described in "Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the Securities and Exchange Commission ("SEC") on February 21, 2024. Since the amount of mortgage financing available for our communities is generally dependent on their appraised values and performance, decreases in their appraised values, including due to adverse changes in real estate market conditions, or their performance, could result in available mortgage refinancing amounts that are less than the communities’ maturing indebtedness. In addition, our inability to satisfy underwriting criteria for individual communities may limit our access to our historical lending sources for such communities, including Fannie Mae and Freddie Mac. As of June 30, 2024, 9% of our owned communities were unencumbered by mortgage debt.

Previous wording

As of March 31, 2024, our current liabilities exceeded current assets by $98.5 million. Included in our current liabilities is $197.7 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 condensed consolidated balance sheets. We currently estimate our historical principal sources of liquidity, primarily our cash flows from operations, together with cash balances on hand and cash equivalents, and proceeds from financings and refinancings of various assets will be sufficient to fund our liquidity needs for at least the next 12 months. We continue to seek opportunities to preserve and enhance our liquidity, including through 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. 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.

Current wording

As of June 30, 2024, our current liabilities exceeded current assets by $129.3 million. Included in our current liabilities is $200.3 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 condensed consolidated balance sheets. We currently estimate our historical principal sources of liquidity, primarily our cash flows from operations, together with cash balances on hand and cash equivalents, and proceeds from financings and refinancings of various assets will be sufficient to fund our liquidity needs for at least the next 12 months. We continue to seek opportunities to preserve and enhance our liquidity, including through 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. 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.

Previous wording

The following table summarizes our capital expenditures for the three months ended March 31, 2024 for our consolidated business.

Current wording

The following table summarizes our capital expenditures for the six months ended June 30, 2024 for our consolidated business.

Previous wording

(1)Reflects the amount invested, net of lessor reimbursements of $0.2 million.

Current wording

(1)Reflects the amount invested, net of lessor reimbursements of $1.3 million.

Previous wording

As of March 31, 2024, $63.5 million of letters of credit and no cash borrowings were outstanding under our $100.0 million secured credit facility and the facility had $36.5 million of availability. We also had a separate secured letter of credit facility providing up to $15.0 million of letters of credit as of March 31, 2024 under which $14.5 million had been issued as of that date.

Current wording

As of June 30, 2024, $58.8 million of letters of credit and no cash borrowings were outstanding under our $100.0 million secured credit facility and the facility had $36.1 million of availability. We also had a separate secured letter of credit facility providing up to $17.0 million of letters of credit as of June 30, 2024 under which $15.7 million had been issued as of that date.

Previous wording

The leases relating to these communities are generally fixed rate leases with annual escalators that are either fixed or based upon changes in the consumer price index or leased property revenue. Approximately 88% of our community lease payments for the three months ended March 31, 2024 are subject to a weighted average maximum annual increase of 2.7% for community leases subject to fixed annual escalators or variable annual escalators based on the consumer price index subject to a cap. The remaining community lease payments are subject to variable annual escalators primarily based upon the change in the consumer price index. We are responsible for all operating costs, including repairs and maintenance, property taxes, and insurance. The lease terms generally provide for renewal or extension options from 5 to 20 years, and, in some instances, purchase options.

Current wording

The leases relating to these communities are generally fixed rate leases with annual escalators that are either fixed or based upon changes in the consumer price index or leased property revenue. Approximately 88% of our community lease payments for the six months ended June 30, 2024 are subject to a weighted average maximum annual increase of 2.7% for community leases subject to fixed annual escalators or variable annual escalators based on the consumer price index subject to a cap. The remaining community lease payments are subject to variable annual escalators primarily based upon the change in the consumer price index. We are responsible for all operating costs, including repairs and maintenance, property taxes, and insurance. The lease terms generally provide for renewal or extension options from 5 to 20 years, and, in some instances, purchase options.

Previous wording

For the three months ended March 31, 2024 and 2023, our cash lease payments for our operating leases were $66.5 million and $58.6 million, respectively, and for our financing leases were $5.3 million and $12.4 million, respectively. For the twelve months ending March 31, 2025, we will be required to make $278.4 million of cash lease payments in connection with our existing operating and financing leases.

Current wording

For the six months ended June 30, 2024 and 2023, our cash lease payments for our operating leases were $133.1 million and $122.4 million, respectively, and for our financing leases were $10.7 million and $20.0 million, respectively. For the twelve months ending June 30, 2025, we will be required to make $274.6 million of cash lease payments in connection with our existing operating and financing leases.

Previous wording

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. Net worth is generally calculated as stockholders' equity as calculated in accordance with GAAP, and in certain circumstances, reduced by intangible assets or liabilities and/or increased by accumulated depreciation and amortization, and/or further adjusted for certain other specified adjustments. The debt service and lease coverage ratios are generally calculated as revenues less operating expenses, including an implied management fee and a reserve for capital expenditures, divided by the debt (principal and interest) or lease payment. 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 March 31, 2024, our liquidity was $355.1 million.

Current wording

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. Net worth is generally calculated as stockholders' equity as calculated in accordance with GAAP, and in certain circumstances, reduced by intangible assets or liabilities and/or increased by accumulated depreciation and amortization, and/or further adjusted for certain other specified adjustments. The debt service and lease coverage ratios are generally calculated as revenues less operating expenses, including an implied management fee and a reserve for capital expenditures, divided by the debt (principal and interest) or lease payment. 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 June 30, 2024, our liquidity was $345.8 million.

Previous wording

As of March 31, 2024, we are in compliance with the financial covenants of our debt agreements and long-term leases.

Current wording

As of June 30, 2024, we are in compliance with the financial covenants of our debt agreements and long-term lease agreements.