After Brookdale Senior Living finally topped 80% in month-end occupancy in August, reaching 80.4%, the company reported 80.5% in month-end occupancy for September, indicating weaker momentum going into Q4 compared to prior years. We said improvements would need to be maintained through Q4 to head into the winter/flu season in a strong position. So far, the company is, unfortunately, only maintaining, with just a 10 basis point increase from August to September.
Brookdale also reported a Q3 average occupancy of 78.9%. Yes, this is an 80-basis point increase quarter over quarter and a 130-basis point increase year over year, but it is typical to see senior living occupancy grow the fastest in the third quarter. And, Brookdale’s occupancy is still lagging below the industry’s average occupancy. According to NIC, third quarter occupancy for assisted living and independent living combined was 86.5% across the 31 Primary Markets.
In addition to us, investors also don’t seem too happy with Brookdale. On July 24, Brookdale’s stock hit a high of $8.12. Since then, the stock price has steadily declined, with August 8 as an exception (this is when the company announced it topped 80% occupancy). It is now down 29% from that and down 15% since the end of September, when Brookdale announced it is acquiring 41 communities currently managed under triple-net leases.
We hope to soon report that Brookdale is no longer lagging behind the industry and that its investors are satisfied (we’re just as tired of it as you are, Cindy), but we still think the company’s main problem is not being addressed. The problem is the portion of Brookdale’s portfolio that is stagnating below 70% occupancy, representing more than 30% percent of their total properties under management, and the company has yet to turn around operations, census and margin at these locations. Easier said than done, we know, but this is not a new issue.
