Don't 'take solace' in improved share price, shareholder tells Brookdale

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Jonathan Litt
Jonathan Litt

Its increasing stock price should not tempt Brookdale Senior Living to abandon efforts to maximize value for shareholders, registered investment manager Land and Buildings founder and Chief Investment Officer Jonathan Litt wrote in a Jan. 13 letter to Brookdale board members and shareholders.

The letter was in response to the Jan. 10 publication of a Wall Street Journal article reporting that the company is in talks to sell some or all of its assets. At the close of the stock market the day the article was published, Brookdale shares were selling for $14.80. At the close of the market Jan. 13, the share price was $15.81.

That compares with the “current” $12.72 share price that Litt cited in a Dec. 20 letter to Brookdale in which he maintained that the country's largest senior living community owner and operator should sell the real estate it owns, distribute the proceeds to shareholders and convert existing leases to management contracts.

“Any decision by the Brookdale board and management to take solace in the improved share price and choose not to pursue strategic alternatives would be thoroughly misguided, as the unaffected share price prior to the article clearly reflected the poor operating performance under current management,” Litt wrote Jan. 13.

Land and Buildings, a Brookdale shareholder, believes that Brookdale's net asset value is at least $25 per share, including owned real estate worth more than $21 per share, Litt said.

“Further, in our opinion, three recently completed multibillion dollar senior housing transactions highlight both the significant institutional demand for senior housing as well as the high valuations the real estate continues to garner in the private market,” he added, referring to deals involving HCP, NorthStar Realty Finance and Welltower.

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