Activist Brookdale Investor Withdraws Flaherty Board Nomination

The ongoing proxy battle between Brookdale Senior Living (NYSE: BKD) and activist shareholder Land & Buildings is on hold — at least for now.

Land & Buildings Investment Management on Tuesday withdrew its nomination to add Jay Flaherty, a former CEO of real estate investment trust HCP (NYSE: HCP), to Brookdale’s board of directors. The Stamford, Connecticut-based real estate investment firm now supports Brookdale’s nominee, Guy Sansone, according to Land & Buildings Founder and CIO Jonathan Litt.

“Recent conversations with our fellow investors have reinforced our confidence in Mr. Sansone, and we are hopeful that he can succeed where others have failed and actually right the ship at Brookdale,” Litt said in a statement. “In light of this, we have decided that the best path forward at this time is to withdraw our nomination.”


Brookdale’s reaction to the news Tuesday was positive.

“We thank our stockholders for their support and appreciate their confidence in Brookdale,” a spokesperson for the company said in a statement. “With a refreshed board and management team, we are confident we will continue to drive long-term sustainable growth for all stockholders.”

The about-face comes less than a week after Brookdale issued its most heated argument yet against nominating Flaherty to the board by questioning his reputation as a senior living executive.


Land & Buildings first nominated Flaherty to Brookdale’s board in July on the notion that he would help turn the senior living provider around, following years of struggle in the wake of acquiring one-time rival Emeritus Corp.

The real estate firm has also long advocated for Brookdale to adopt an arrangement sometimes known as an “OpCo/PropCo,” where the company would spin off its real estate and operations into two seperate companies. The calls for that arrangement intensified after a feasibility study from the advisory and consulting arm of Green Street Advisors found that a Brookdale OpCo/PropCo split could add up to a combined total of $13.60 per share.

But Brookdale fought hard against that idea. In August, the operator said it saw “fundamental flaws” in Green Street’s assessment, and a month later, Brookdale warned that electing Flaherty to its board would only amplify Litt’s calls for a real estate spinoff.

Despite withdrawing its nomination, Land & Buildings believes it was able to spur some positive changes with the Brentwood, Tennessee-based senior living provider in the end.

“Our public and private engagement with Brookdale’s board and management over nearly three years has helped push the company to make specific improvements that we believe would not have occurred without our involvement,” Litt stated. “These include adding Mr. Sansone to the company’s nominee slate and providing a path for him to become chairman of the board; instituting a phased-in de-staggering of the board, and restructuring certain leases.”

Litt added he hopes Sansone can make progress on monetizing Brookdale’s real estate and improving transactions with its landlords.

“The bottom line is that Brookdale must now focus on doing more than just the bare minimum and seek to implement changes that are consistent with best-in-class corporate governance and that put the company on a path towards shareholder value creation,” Litt stated. “Now that the company is clearly in the spotlight of its investors, we urge them to act in good faith and represent the best interests of all shareholders going forward.”

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