Activist Shareholder Blasts Brookdale’s Board, Again Pushes for Real Estate Sales

A vocal activist shareholder with Brookdale Senior Living (NYSE: BKD) has some choice words for the company’s leaders, and is once again seeking to convince them to unlock more value from its real estate through asset sales.

Stamford, Connecticut-based Land and Buildings Investment Management LLC wrote in its latest open letter to shareholders that Brookdale’s top brass should start to “aggressively sell assets” in light of the company’s lease restructurings and turnaround efforts.

Brookdale owns 363 of the 988 senior living communities in its portfolio, a recent investor document shows. Land and Buildings held 2.7% of Brookdale’s stock as of last October.


“In a short period of time, [Brookdale President and CEO Cindy Baier] has restructured the company’s leases–which were the impediment to selling its real estate–and has stabilized operations,” wrote Land and Buildings founder and Chief Investment Officer Johathan Litt in the Aug. 9 letter. “Now that the restructuring is complete, and the company continues to trade at a material discount, as such the board should aggressively sell assets.”

Brookdale’s board of directors has also “hamstrung” Baier’s efforts, Litt wrote. In particular, he took aim at Jackie Clegg, who serves as Brookdale’s chairman of the nominating and corporate governance committees. Clegg is also the board’s longest-serving director, with a 13-year tenure.

“Our engagement with Jackie Clegg … revealed a dated knowledge of best corporate governance practices, as well as a strong bias for entrenchment,” Litt wrote. “We believe the board should reevaluate her inclusion on any committees, and that it would be well-advised not to renominate her at the 2019 annual meeting of shareholders.”


Brookdale’s real estate is likely valued at $7 billion to $8 billion, according to Litt, who suggested that the company’s board package its properties into portfolios of $500 million to $1 billion, and then reload those portfolios as deals are made. At the same time, the company’s board should pursue a senior housing REIT for Brookdale’s real estate, he added.

In addition to pushing for asset sales, Land and Buildings also urged the operator to “modernize” its corporate governance by de-staggering the company’s board of directors so that all members up for election are elected to a one-year term; giving shareholders more power to call special meetings for shareholders; appointing a new finance-oriented board member; and replacing Clegg, “who has overseen material shareholder value destruction at Brookdale,” Litt wrote.

A representative for Brookdale declined to comment, but the company has previously indicated it would like to shed some underperforming or non-strategic assets, and could shrink its senior housing portfolio by as much as 20% in the next three years.

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This isn’t the first time Land and Buildings has pressured Brookdale to change course. Previously, the activist shareholder pushed the senior living operator to unlock more of its real estate valueboost transparency and negotiate a partial or complete sale of the company.

Brookdale’s stock shed about 1.8% to $8.20 by the time the market closed Thursday.

Written by Tim Regan

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