2/15/2019

After Review, Brookdale Will Not Split Company in Two

Nashville Business Journal (02/15/19) Stinnett, Joel

Brookdale Senior Living Inc. (BKD) on Feb. 14 said it will not spin off its company owned real estate into a separate investment trust, rejecting repeated calls from investors to do so. Brookdale CEO Cindy Baier made the announcement during the company's fourth quarter earnings call, saying the management team came to the decision after a "comprehensive review." She said tax, valuation, capital, and existing lease concerns were all factors in Brookdale's decision not to spin out a separate REIT. She said Brookdale was assisted in the review by an outside financial adviser who was suggested by an investor that has called for the company to spin off its real estate. "Ultimately ... we simply did not see a path to unlocking value through implementation of this type of transaction at this time," Baier said. "The best way to create shareholder value is through executing our operational turnaround strategy. ... The reality is that we are a senior living health care operator that intentionally owns real estate." Land & Buildings Investment Management LLC Chief Investment Officer Jonathan Litt has been the most vocal proponent publicly urging Brookdale to sell off or spin out its real estate holdings. Litt's firm has a 3.2% stake in Brookdale. Litt has sent numerous letters addressed to shareholders with ideas to boost shareholder value and calls for structural change at the company. Bloomberg in December said that Litt approached Brookdale's management team with the notion of splitting the company into a separate REIT and senior-housing operator. Litt said moving the company's premiere properties into a separate REIT would add value to Brookdale's share price but no agreement was reached on whether to seek a split, according to Bloomberg. It's not clear whether Litt was the investor who recommended the outside financial adviser that aided with the review.

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