Brookdale Senior Residing (NYSE: BKD) reported 79.3% weighted common occupancy in February, up 140 foundation factors from final 12 months , an indication the corporate may see a re-acceleration of progress in 2025, in response to one analyst.
Occupancy for the Brentwood, Tennessee-based senior residing operator elevated by 10 foundation factors from final month, doubtlessly beating seasonal promoting tendencies through which the winter months stay slower than spring and summer time move-in circumstances for older adults in search of senior residing.
Macquarie Senior Healthcare Fairness Analysis’s Tao Qiu wrote in a March 11 notice to traders that the corporate’s present path will serve it effectively amid its ongoing proxy combat with activist investor Ortelius Advisors.
“Present knowledge suggests progress has re-accelerated for 4 straight months,” Qiu wrote. “This boosts our confidence that FY2025 common occupancy progress will outpace the present … consensus estimate.”
On March 5, Ortelius Advisors nominated six new members to Brookdale’s board in response to what the activist investor described as “Brookdale’s abysmal efficiency and persistent undervaluation.” Particularly, the corporate took difficulty with a wide range of efficiency measures which have declined since 2018, together with web working earnings margin, free money stream and share worth. The letter additionally notes that the worth of Brookdale’s owned actual property was “locked.”
“Whereas traders are ready for particulars of a value-unlocking proposal, we expect continued execution of natural progress and portfolio pruning are the most effective technique to enhance shareholder returns close to time period,” Qiu wrote.
He added: “We imagine Brookdale is on the precise path to enhance money stream and shareholder returns. We expect Brookdale is a comparatively high-risk, high-reward play on the private-pay senior housing business benefiting from favorable provide and demand.”
Qiu additionally pointed to the truth that previous activist campaigns from different activist traders, reminiscent of Land & Buildings, “haven’t yielded fast outcomes that many hoped for.”
“Recall related activist campaigns in 2015, 2016, 2018 and 2019 coupled with a rumored sale in 2017, conclusion of strategic assessment and administration change in 2018,” he wrote.
Though Qiu famous that a lot of Brookdale’s intrinsic worth lies in its 353 owned communities, he doesn’t imagine the corporate can simply unload actual property with out incurring operational difficulties.
“Friends Welltower and Ventas, who historically left day-to-day administration to their operator companions, are boosting their very own operational capabilities, investing closely into knowledge, system, and personnel, taking a web page from condominium REITs,” he wrote. “As we realized from current lease negotiations, changing operators for a portfolio of BKD’s scale can be a frightening job for anybody.”
Earlier this 12 months, Brookdale introduced it was increasing its EngagementPlus program that goals to assist residents construct significant friendships and life that match their pursuits, which compliments the corporate’s HealthPlus service line that has grown quickly over the past 5 years.
