Brookdale Senior Residing (NYSE: BKD) is touting current strikes and working enhancements as proof that its board and administration group are “realizing the corporate’s full potential.”
The Brentwood, Tennessee-based firm is bettering its working efficiency, optimizing its actual property portfolio and reinvesting capital into its communities, in keeping with a Could 15 letter to its shareholders.
Earlier this yr, activist investor Ortelius Advisors nominated six new members to Brookdale’s board and referred to as for sweeping modifications in response to what it sees as “abysmal efficiency and power undervaluation” on the a part of the operator.
Brookdale administration stated the corporate has made important enhancements to operations thus far in 2025, together with that it’s within the midst of a CEO transition, elevated its steering for adjusted EBITDA and RevPAR in 2025 and has appointed two new impartial administrators, bringing the common tenure of the board to fewer than 4 years. It’s urging traders to vote for the corporate’s eight nominees at its annual stockholder assembly in July.
“Over the previous a number of years, we streamlined operations, simplified the enterprise, rationalized our lease portfolio and lowered leverage,” the letter from Brookdale reads. “As evidenced by our first quarter 2025 outcomes, together with a rise in our identical neighborhood weighted common occupancy charge to 80 %, Brookdale now stands at a significant inflection level and is well-positioned to capitalize on sturdy demographic and business tailwinds and to ship compelling and sustainable shareholder returns.”
Brookdale administration pointed to the truth that consolidated income per accessible room (RevPAR) was 18% greater and working earnings per accessible unit was 8% greater in 2024 in comparison with 2019.
Brookdale pointed to the truth that it had constructive free money circulation within the first quarter of 2025, that its same-community portfolio common occupancy registered at 80% and that its RevPAR progress of 4.9% in contrast with 2019 exceeded inside expectations as proof it was on the appropriate path. The corporate’s 90-basis-point acquire in working earnings margin versus 1Q25 additionally represented “the very best identical neighborhood working earnings margin achievement in 5 years.”
Brookdale additionally famous 5 initiatives that present it’s “dedicated to constructing on the progress we’ve got made.”
The corporate has taken a “SWAT group” method to bettering operations by deploying specialised groups at various communities all through the nation in a bid to enhance working efficiency. The corporate additionally laid out plans to additional optimize its actual property portfolio by exiting one other 55 leased communities alongside divesting 14 “non-core” owned communities. The operator invested $5 million late final yr, and it plans to speculate an extra $10 million this yr with a view to maintain communities aggressive.
It is usually decreasing leverage by refinancing debt and making use of a portion of asset sale proceeds towards debt discount. Brookdale additionally sees growth applications, profession development pathways and its “mission-driven tradition” as serving to to construct high-quality experiences for residents and workers.
It is usually pursuing its pre-pandemic common occupancy of 84.5%, which it stated will generate $170 million of incremental income and $125 million of incremental working earnings with out considerably rising labor prices.
“The board’s dedication to good governance extends past board refreshment as most lately evidenced by its determination to overview governance enhancements associated to director tenure, in addition to to judge its performance-based long-term incentive awards program for executives, in response to suggestions from shareholders,” the letter states.
Brookdale has raised its annual steering for each RevPAR and adjusted EBITDA to five% to five.75% and $440 million to $450 million respectively.
The operator has positioned its board as an “agent of change” for the longer term, because the board acknowledges that “additional change is required,” the corporate stated.
Brookdale additionally within the letter referred to as into query Ortelius’ “actual motives,” noting that the administration group “made many makes an attempt to have interaction with Ortelius constructively” however bumped into “reluctance and delay in forthright engagement.”
