Occupancy continues to tumble at Brookdale Senior Living, but this time the legacy Brookdale properties post huge declines.

When Brookdale Senior Living closed its acquisition of Emeritus exactly one year ago, they did not expect to be having the problems they are with the transition. A transition that was supposedly ahead of schedule last December. Brookdale’s first quarter this year was a big disappointment for investors. The second quarter was even worse. And the problem this time was not just Emeritus, which saw a 50 basis point decline in occupancy sequentially. The legacy Brookdale properties had a 120 basis point decline in occupancy in just one quarter, and they are now down 190 basis points year over year. Management also lowered its 2015 earnings guidance for the second time this year. Either someone has been asleep at the wheel, or someone was a little naïve in terms of the difficulties of a merger of this size. Brookdale and Emeritus are really two companies made up of several other companies each, so when it comes to loyalty, I ask, loyalty to whom? That is a very difficult and touchy question, but it is why we think employee turnover may remain high, especially as newly opened communities need key employees. So, how did investors react to the news? In one hour the stock plunged by 9.4% to a new 52-week low on very heavy volume. This is certainly not the time for a capital event, despite the pressures Andy Smith & Co. will be feeling.