Activist investor Land & Buildings released another open letter to fellow Brookdale Senior Living shareholders Tuesday, calling it “a referendum on the company’s historical underperformance” as well as several decisions made by board members.

“The status quo is simply no longer tenable,” wrote Jonathan Litt, Stamford, CT-based Land & Buildings’ founder and chief investment officer.

The letter continued to question the decision by the country’s largest senior living company not to separate its real estate and its management company into two separate companies to maximize shareholder value. Brentwood, TN-based Brookdale, Litt noted, characterized a theoretical assessment of a so-called potential opco/propco (operating company and property company) transaction, performed by Green Street Advisors at the request of Land & Buildings, as having “fundamental flaws.”

On Brookdale’s second-quarter earnings call Aug. 6, Brookdale President and CEO Lucinda “Cindy” Baier said that the flaws included “disregard of numerous critical, practical and market considerations and execution risk and the use of unrealistic assumptions.”

Litt, however, countered in his letter that Green Street Advisors is “the preeminent independent research and advisory firm concentrating on the commercial real estate industry.”

“Unfortunately, neither Brookdale nor its advisors have accepted direct invitations from Land & Buildings to sit down with us and Green Street to evaluate the analysis and help us understand exactly which elements of it are so misinformed,” he continued.

Land & Buildings posted a 25-page Green Street Advisors report online, saying it was doing so to help shareholders “draw their own conclusions” about the firm’s “quite compelling” findings that the combined value of an opco/propco would be $13.60 per share, an increase of approximately 70% over the current share price, and that owned real estate would be worth $5.6 billion at a 6.9% cap rate.

Litt, however, said: “[O]ne thing we want to make absolutely clear is that this proxy contest is not about whether a PropCo/OpCo structure is best for Brookdale. A REIT conversion is simply one of the many avenues available to Brookdale to maximize value.”

In a statement to McKnight’s Senior Living, Brookdale said: “We appreciate the opportunity to carefully review the new Green Street Advisors report, as we privately made clear to Land & Buildings last week. We were pleased to report a strong set of second-quarter earnings, and we remain focused on continuing to provide our residents with high-quality care and services to energize our employees and maintain a clear momentum in our business. At Brookdale, we appreciate and are always open to constructive feedback from all of our shareholders toward a common goal of sustained value creation.”

Land & Buildings previously called for Brookdale to consider an opco/propco in 2016 and 2018 as well as this year

In addition to noting several other board actions in his letter Tuesday, Litt also said that Brookdale is in the process of looking for a president as well as replacements for two retiring board members. Brookdale did not comment on those claims.

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