Activist investor Sandell Asset Management Corp. is calling for one of the nation's largest retirement home operators, Brookdale Senior Living, to spin off a portion of its real estate holdings and to make changes to its board of directors “in light of recent management integration missteps.”
Sandell CEO Thomas Sandell released a letter and a white paper (PDF) sent to Brookdale's board on Friday asking the Brentwood, Tenn.-based company to use a portion of its real estate assets to create a real estate investment trust that he said could help raise the value of Brookdale's stock price to $49 per share.
“We are disappointed that the Board has not committed to unlocking the significant value we believe is embedded in the Company's owned real estate portfolio, especially with senior living real estate valuations at all-time highs,” Sandell wrote. “By their own admission, management has classified its owned portfolio as having great 'scarcity' value given its scale and desirability.”
Brookdale shares Friday rose 4.92% to $36.27 in midday trading. Sandell Asset Management owns a 1.25% stake of Brookdale, according to the firm.
Sandell also asked that the board appoint two new board members with real estate experience to help the company create the real estate investment trust.
Brookdale released a statement Friday in response to the letter, stating that the board was “committed to acting in the best interests of the company and shareholders.”
“We maintain a longstanding commitment to open dialogue with our shareholders, and, in that regard, we have met with and listened to the views of Sandell, as we would with any shareholder of Brookdale,” the statement read. “Our Board and management are considering Sandell's suggestions as we continue to execute our strategic plan and deliver on our priorities with the goal of driving significant value for all of our shareholders.”
Brookdale operates around 1,150 senior living facilities across 46 states, serving more than 110,000 residents.
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