Activist shareholder Land & Buildings on Tuesday repeated the recommendation that Brookdale Senior Living sell assets or separate its real estate and its management company into two separate companies “to maximize the value of the company’s real estate.”

In an open letter to fellow shareholders, the Stamford, CT-based registered investment manager’s founder and chief investment officer, Jonathan Litt, said Land & Buildings had hired real estate research and advisory firm Green Street Advisors to value the country’s largest senior living company and its real estate as well as the feasibility of a so-called operating company / property company (OpCo / PropCo) split.

“Green Street’s preliminary results based on publicly available information are encouraging: the net asset value (NAV) of Brookdale is substantially above the current share price and there may be several options, including viable OpCo / PropCo REIT structures that could lead to a near doubling of the share price from recent trading levels,” Litt wrote.

In a published response to Litt’s letter, however, Brookdale executives said that the company’s position on an OpCo / PropCo split has not changed since its February earnings call, when President and CEO Lucinda “Cindy” Baier shared that the company had hired an external financial adviser to review the idea with its Investment Committee.

“Based on this review, and as discussed in our February 2019 earnings call, we determined, at the unanimous recommendation of the Investment Committee and with the agreement of the advisory firm, that undertaking an OpCo / PropCo transaction would be unlikely to generate additional value for Brookdale shareholders,” the Brookdale statement said, echoing language that Baier used on the February call. “Brookdale determined that a separation would result in an operating company with uncertain viability and a single-operator PropCo REIT that is unlikely to trade well in the market, due to key structural deficiencies,” the statement continued.

Litt said that “the case for a REIT structure or other strategic options for the real estate has only strengthened over the past 6 – 12 months as Brookdale’s share price is lower, healthcare REIT share prices are higher and trading at significant premiums to NAV, and interest rates have moved sharply down.” Brentwood, TN-based Brookdale should hire Green Street Advisors for additional analysis, he recommended.

Land & Buildings’ letter also said the firm is “disappointed” that Brookdale’s Nominating and Corporate Governance Committee has not contacted two board nominees — Litt and Jay Flaherty, former CEO of real estate investment trust HCP — suggested by the firm July 2.

“We believe our nominees have the deep healthcare, real estate and finance experience necessary to help properly evaluate the best ways to maximize value for all Brookdale shareholders, including evaluating the best strategic options for Brookdale’s real estate and capital structure,” Litt wrote.

He and Laherty should be part of Brookdale’s Investment Committee, Litt said, noting that Land & Buildings will be filing a preliminary proxy statement and a proxy card with the Securities and Exchange Commission to solicit votes for the proposed candidates.

In its letter, Brookdale said “shareholders do not need to take any action at this time.”

The company said its Nominating and Corporate Governance Committee will continue to evaluate the nominees and will make a recommendation to the board “in due course.”

“The entire Nominating and Corporate Governance Committee has previously met with Mr. Litt and is in the process of reviewing background information on Land & Buildings’ nominees,” Brookdale said.

Land & Buildings said it would prefer to reach an agreement with Brookdale about the issues in the letter. “However, if our concerns continue to fall on deaf ears, we will have no choice but to hold this Board accountable,” Litt wrote.

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