Fortress to Sell Off 19 Million Brookdale Shares

Fortress Investment Group is unloading more than 19 million shares of Brookdale (NYSE: BKD) stock, almost its entire stake in the company, through an underwritten public offering announced Tuesday.

The offering of 19.4 million shares, later priced at $33 per share, is being underwritten by certain Fortress affiliates, Brookdale stated in a press release. Based on today’s current value of Brookdale stock, the investment amounts to roughly $627 million worth of company shares.

Fortress and its affiliates have long been major investors in Brookdale; as of December 31, 2013, funds managed by affiliates of Fortress and various principals of Fortressed owned roughly 20.3 million shares of Brookdale stock, or approximately 16.3% of the company’s outstanding stock, according to an annual filing with the Securities and Exchange Commission.

Fortress has also invested heavily in other senior housing companies including Holiday Retirement. Affiliate Newcastle last year purchased 52 Holiday Retirement properties for a total of roughly $1.01 billion.

Fortress has been a major stakeholder since Brookdale’s Initial Public Offering in late 2005.

Brookdale will not sell any shares nor will it receive any proceeds from the offering announced Tuesday, indicating the company’s economics will remain the same, Dan Bernstein, an equity analyst with Stifel told SHN.

“I think it’s positive longer term as it takes away an overhang on shares, does not change the economics of the business or rational for [the Emeritus] merger and does not alter Brookdale options for real estate,” Bernstein said in an email.

The largest senior living provider is expected to close on a deal later this year to merge with Emeritus Senior Living (NYSE: ESC), which will result in the combined company’s management of more than 1,100 senior living communities nationwide. The company’s CEO Andy Smith recently told SHN he anticipates Brookdale will be the first and only national senior living brand following the deal’s closing.

Written by Elizabeth Ecker