Activist investor Ortelius Advisors continues to place strain on Brookdale forward of its annual shareholder assembly, whereas the nation’s largest operator continues to tout its working outcomes as proof it’s on the best path in 2025.
Activist investor Ortelius on Tuesday issued an open letter to Brookdale shareholders noting it stays “deeply involved” by Brookdale’s alleged “underperformance and undervaluation” after “years of missteps and shortcomings.”
Ortelius continues to hunt the installment of six candidates to serve on Brookdale’s board of administrators, an entity which Ortelius mentioned has “spearheaded the huge destruction of shareholder worth” over time.
The newest correspondence by Ortelius calls for brand new board members, whereas asking to monetize underperforming property and give attention to high-performing communities. The investor additionally pushed Brookdale to pay down debt to get rid of loss on its stability sheet. The hassle hinges on a technique to unlock actual property worth and optimize Brookdale’s capital construction, in accordance with Ortelius.
“After years of missteps, shortcomings, underperformance, and persistent undervaluation, stockholders have misplaced confidence in Brookdale’s management, judgment, execution and decision-making skills,” Ortelius Advisors Managing Member Peter DeSorcy wrote within the letter. “The board’s failure is palpable, and its current steps smack of self-preserving and defense-oriented techniques within the face of a director election contest.”
The newest letter comes after a back-and-forth between Ortelius and Brookdale, aiming to win over shareholders forward of the board vote on the firm’s annual shareholders assembly, set for July 11, in accordance with Brookdale’s web site.
Former CEO Cindy Baier resigned from her publish on April thirteenth, and was awarded $11.7 million for termination with out trigger, Ortelius claims. Between February 2018 and March 2025, Brookdale’s inventory worth fell 37% and in that point, Brookdale paid Baier $45.4 million.
On Could fifteenth, Brookdale filed a definitive proxy assertion and mailed a letter to shareholders whereas outlining alleged “poor file of engagement” by Pangaea Ventures LP, a fund managed by Ortelius.
In February 2018, the Brookdale board on the time rejected a conditional indication of curiosity to amass the senior residing business’s largest senior housing operator for $9 per share in money. Since that point, Brookdale’s inventory worth has remained under $9 for “most” of the seven years since then, the Ortelius open letter states.
The open letter filed by Ortelius goes on to allege the corporate’s outcomes have been “abysmal” whereas additionally noting efficiency of publicly traded actual property funding trusts Welltower (NYSE: WELL) outperforming Brookdale by 266% since 2018 and Ventas (NYSE: VTR) outperforming the Brentwood, Tennessee-based operator by 93%.
Ortelius additionally outlines how Brookdale’s poor monetary efficiency has led to a decline in money move of $304 million between 2011 and 2017 to -$660 million between 2018 and 2024.
Coinciding with the newest announcement, Ortelius introduced the launch of a web site selling its proxy battle and its proposed path ahead for the corporate.
Brookdale leaders define near-term upside at RBC
Though they didn’t point out the letter from Ortelius, Brookdale management touted the corporate’s current operational outcomes to point the corporate’s current progress.
In the course of the panel Tuesday morning on the RBC Capital Markets International Healthcare Convention, Government Vice President and CFO Daybreak Kussow and Investor Relations Vice President Jessica Hazel touted numerous efforts made by Brookdale to enhance working efficiency. Each touted progress made in near-term occupancy positive factors and the corporate’s path ahead on lease agreements.
Kussow mentioned the corporate’s board will search out a brand new CEO candidate to interchange present interim chief Denise Warren who has “confirmed expertise” and talent to “push operational enhancements rapidly,” together with an govt with a “strategic imaginative and prescient that may sort of take the corporate to the subsequent stage.”
In the course of the panel, Kussow detailed Brookdale’s determination to not renew a lease with Ventas for 55 properties by the top of this 12 months, noting the properties had been underperforming in comparison with the corporate’s consolidated portfolio and with efficiency metrics under the corporate’s total benchmarks.
Brookdale may even exit 14 non-core property by the top of this 12 months whereas weighing acquisition and tendencies sooner or later.
“During the last a number of years, we’ve simplified the enterprise, we’ve streamlined the enterprise, we’ve rationalized the leased portfolio and we’ve taken care of the stability sheet,” Kussow mentioned. “We proactively refinanced our debt in order that we’re actually in an excellent place once more.”
The leaders touted Brookdale’s 80% same-store occupancy and the corporate’s continued rollout of its HealthPlus and EngagementPlus packages to enhance resident care and way of life engagement.
“The 80% occupancy marker is a giant marker for us, as a result of we mentioned on the low 80% occupancy is sort of the place we’re masking our mounted prices. We’ve a excessive mounted value enterprise,” Kussow mentioned.
This 12 months, HealthPlus shall be rolled out to 58 communities, having been applied in 80 communities final summer time, with HealthPlus communities reporting higher year-over-year occupancy development in comparison with non-HealthPlus properties.
Staffing can also be improved at Brookdale communities with HealthPlus rolled out, the leaders said, noting a decrease charge of employees turnover of 20 share factors in comparison with non-HealthPlus communities.
“Our technique is particular to demonstrating that we’re capable of assist assist the scientific challenges, the loneliness challenges that the ageing inhabitants is going through and we can assist the residents with that and we can assist their households with that, and that’s by means of packages like HealthPlus, like EngagementPlus,” Hazel mentioned.
Additionally within the final 12 months, Brookdale made shifts to a extra inner strategy on gross sales and advertising, pivoting away from third-party referral companies as a option to immediately enhance occupancy and generate leads persistently.
“We’re taking a look at that advertising spend, and whether or not it’s junk mail advertising, advertising by means of our name heart, upgrades on our web site,” Kussow mentioned. “So it’s ensuring that’s placing our greatest foot ahead in ensuring we are able to exhibit the standard care and high quality product now we have.”
