Brookdale Strikes Deal with Activist Shareholder

The nation’s largest senior living provider has struck a deal with an activist shareholder that’s given the company’s management team a bit of trouble over the last several months.

Brookdale Senior Living (NYSE: BKD) on Wednesday announced that it had reached an agreement with Stamford, Connecticut-based Land & Buildings Investment Management LLC and appointed Marcus E. Bromley as an independent member of its board of directors, effective July 25.

Bromley was simultaneously appointed to the Brookdale board’s investment and audit committees, the Brentwood, Tennessee-based company stated in a press release issued Wednesday.

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Under the terms of the aforementioned agreement, Land & Buildings will adhere to specific voting and standstill provisions, and Brookdale has agreed to review and consult with the shareholder group regarding its board composition before the company’s 2018 annual meeting.

Presently, Bromley sits on the advisory board of the private mezzanine debt and equity investment firm Nancy Creek Capital Management, LLC, and serves as an independent director of non-listed real estate investment trust (REIT) Cole Credit Property Trust V, Inc. At Brookdale, he fills a vacancy on the board created by the departure of Mark J. Parrell, which was announced in April and took effect on July 24.

Bromley’s appointment comes about seven months after Land & Buildings first an raised issue with several decisions made by Brookdale’s management.

Back in December 2016, the group urged Brookdale to monetize its assets through a sale of its owned real estate, thereby transitioning Brookdale to an “asset light” senior housing management company. At the time, Land & Buildings believed shares of Brookdale stock were worth at least $25, but the share price at the time was only $12.72

Then, in January, Land & Buildings CIO Jonathan Litt said in an open letter that he felt “encouraged” by rumors that Brookdale was in talks to be purchased by private equity giant Blackstone Group.

As of this Wednesday, Brookdale is still working with financial and legal advisors to explore various options and alternatives, according to press release.

“We expect that Marc’s insights and contributions will be valuable as we focus on the execution of our strategic objectives, including our ongoing process to explore options and alternatives to create and enhance stockholder value,” Daniel Decker, the executive chairman of Brookdale’s board, said in the press release.

Land & Buildings also still maintains that Brookdale is undervalued.

“Brookdale is substantially undervalued and has significant potential, and we believe that Marc’s presence on the board and on its audit and investment committees will enhance the company’s focus on exploring all pathways towards maximizing value for stockholders,” Litt said in the press release.

As of market close on Wednesday, Brookdale’s share price had fallen 34 cents to $14.20.

Written by Mary Kate Nelson

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