Brookdale Urged by Activist Shareholder to Boost Transparency

In a public letter to Brookdale Senior Living (NYSE: BKD) shareholders on Friday, Stamford, Connecticut-based Land & Buildings Investment Management LLC called for the nation’s largest senior housing provider to offer a material update on its strategic review process.

“It has been more than a year since Brookdale announced the engagement of Goldman Sachs and the beginning of a strategic review process,” Land & Buildings founder and Chief Investment Officer Jonathan Litt wrote in the letter. “As such, Land & Buildings is hopeful that the company will be fully transparent with shareholders and provide a material update on this process when they hold their fourth quarter 2017 earnings call.”

A representative for Brookdale declined to comment to Senior Housing News.

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Land & Buildings believes that Brookdale’s value has likely been impacted in the past year due to recent natural disasters, a severe flu season and new competition.

“While for example a modest 20% or more premium to the current share price might be viewed as disappointing, we trust the Board would have to weigh any such offers against remaining a going concern,” the letter says.

Litt also mentioned in the letter his company’s standstill agreement with Brentwood, Tennessee-based Brookdale.

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“While Land & Buildings is certainly mindful of our standstill agreement with Brookdale, we will be closely monitoring the progress the company is making around the strategic review,” the letter reads. “Based on Brookdale’s historical precedent of holding their Annual Meeting around June, we would expect this standstill to expire in a few weeks if a strategic transaction is not announced before then.” 

As of market close on Friday, Brookdale’s stock price remained flat at $9.19.

In December 2016, Land & Buildings advised Brookdale to monetize its assets through a sale of its owned real estate. At the time, Land & Buildings argued shares of Brookdale stock were worth at least $25, but the share price at the time was only $12.72.

Then, in January 2017, Litt wrote in an open letter that he was “encouraged” by rumors that Brookdale was in talks to be purchased by private equity giant Blackstone Group.

A few months later, in July 2017, Brookdale announced that it had struck a deal with Land & Buildings to appoint Marcus E. Bromley as an independent member of its board of directors.

Written by Mary Kate Nelson

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