Land and Buildings Strikes Again

Still trying to get two board nominees, Land and Buildings steps up its criticism and need for change.

Well, well, well. Jonathan Litt of Land and Buildings is at it again, this time with a six-page letter to Brookdale Senior Living shareholders, eviscerating Brookdale’s management and board, past and present, for the company’s severe underperformance over the past 10 years. So, what else is new?

Look, management and much of the board has changed and the only ones who can be blamed for the disastrous Emeritus acquisition are the old management, the former board and perhaps their advisors, who should have known better. 

Highlighted in his letter was the underperformance of Brookdale relative to the SHOP portfolios of the REITs. What he doesn’t say is why, such as a difference in quality and location, which can help minimize the problems facing the industry over the past few years. Atria’s locations can’t be compared with Brookdale’s and even they have underperformed their landlord’s expectations.

He criticized current management for taking the proceeds from asset sales and, are you ready for it, investing the cash in the company. Can you imagine, a going concern investing in their future? Sarcasm aside, I am sure they looked at using it to also pay down debt, but I am also sure they are looking at the long term.

However, I have a solution, since I don’t think Brookdale will nominate Mr. Litt or his companion, Jay Flaherty, to be on the board. So, why not me? I have known the industry longer than either of them. I was the only one who blasted the Emeritus deal, BEFORE it was announced, and would have done so on the board and saved it from some of the current misery. I think I understand this industry, where it has been and where it is heading, better than most people. I also have capital markets experience, back in my investment banking days. But guess what. It won’t happen. Why? Most boards don’t want people like me. Nothing personal, but can you imagine a board member who knows more about the industry than the CEO, or any other C-suiter? It just doesn’t happen. Maybe it should.


11 comments on “Land and Buildings Strikes Again

  1. I find it interesting that very few have any outside Board members with any industry experience and certainly not as much as you. Agree it could be very uncomfortable to have someone who knows more than management on the Board. However, isn’t that what good leaders do – surround them with people that are smarter than them?

  2. Nice commentary…I had to watch it twice because the first time I was obsessed with the books behind you…board development is for sure a hot topic among nonprofit providers, so this insight in to the other side was more than academically interesting.

    1. Unfortunately, on the not-for-profit side it is far too often that big donors are on the boards, but whether for-profit or not-for-profit, industry expertise is always helpful at the board level. Regarding the books behind me, the thick black ones contain all the legal documents for some hospital bond offerings in the 1980s, another life.

    1. Virginia, board members of publicly traded companies receive total annual compensation ranging from $50,000 to several hundred thousand dollars, depending on the size of the company and time requirements. It comes in the form of cash, stock, options and other benefits. They usually look for other CEOs (often retired) and other C-suiters who have dealt with the issues of being public and running a large business.

  3. Boards should always have a mix of talented, and committed, people . . .especially in a business such as ours . . . senior housing services our greatest generation and thus has an implicit responsibility to deliver the highest quality that can be afforded.
    If that is not done, there will be increasing dissatisfaction that will ultimately result in ‘knee jerk’ political reaction . . . to the detriment of us all.
    The industry should also seriously consider forming an umbrella organization, such as CARF, that would set, and review regularly, operational standards for the benefit of us all.

  4. Thank you Steve and Martin.
    What would be the best approach to begin research into senior housing in an underserved population where families of low incomes can benefit. Low income populations do not qualify?

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