Land & Buildings Wants Brookdale To Monetize $8B in Real Estate
It also would like the company to pursue REIT status.
STAMFORD, CT–Land & Buildings is stepping up the pressure for Brookdale Senior Living to monetize its real estate holdings. In a letter sent to shareholders it urges the company to put up for sale portfolios worth $500 million to $1 billion and then reload as the transactions complete. All together it estimates that Brookdale’s real estate is worth $7 billion to $8 billion.
It also would like to see Brookdale simultaneously pursue a senior housing REIT for its real estate, as “comparable companies trade at multiples in the mid-teens compared to mid-single digit multiple for Brookdale today,” according to the letter, penned by Jonathan Litt, founder and chief investment officer of Land & Buildings.
“Senior housing property transaction volumes and valuations in 2017 and 2018 provide credence to the foregoing portfolio sale strategy,” it also said.
Land & Buildings praised Brookdale CEO Cindy Baier for taking “the bull by the horns” and restructuring the company’s leases and stabilizing operations. The old leases were impediment to an selling its real estate, it said.
In June Welltower restructured its joint venture agreement with Brookdale, transitioning a total of 63 assets to other operators. Earlier this year Ventas, and Brookdale entered into definitive agreements to restructure the leases of Brookdale’s portfolio of 128 communities with Ventas.
While Land & Buildings found no fault with Baier it did voice objections to the Board’s decision not to monetize the real estate as well as update its governance procedures. “We have championed for restructuring the company’s leases and now that the restructuring is complete, and the company continues to trade at a material discount as such the Board should aggressively sell assets.”