An activist investor pushing for change at Brookdale Senior Living has put forward a slate of three nominees for the company's board to help usher in a corporate restructuring.
Sandell Asset Management, a 1.25% shareholder, is pressing the Brentwood, Tenn.-based senior housing operator to separate its real estate portfolio into a real estate investment trust and distribute it to shareholders through a tax-free spinoff.
The nominees, who include the hedge fund's founder and CEO ,Thomas Sandell, would replace a third of Brookdale's current board, including Chairman Jeffrey Leeds.
“Senior living real estate valuations are at an all-time high, and given the robust multiples we are seeing via M&A in the real estate sector, any argument seeking to claim that now is not the right time for a transaction, or that it 'may not be in the best interest of shareholders,' rings hollow to us,” Thomas Sandell said in a statement.
The hedge fund has been pushing for the move since early February, when it released a letter and white paper outlining its rationale. It believes a spinoff could send shares as high as $49. Brookdale is currently trading at $38 per share.
Discussions about the company's corporate structure have been ongoing for as long as two years, analysts pointed out in research notes. However, they did not expect any near-term moves as Brookdale's focus is likely to remain on integrating its acquisition of Emeritus Senior Living, which closed last July.
Brookdale CEO Andrew Smith similarly emphasized on an earnings call last month that the company will continue to consider options for its real estate portfolio, but has decided to focus first on the Emeritus transaction.
As more money flows into the healthcare provider sector, activist investors have been flocking to the previously quiet space. Hospital chain Health Management Associates (now part of Community Health Systems), post-acute-care operator Amedisys, and wellness program developer Healthways have all seen activist shareholder activity over the past two years.
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