Not to toot our own horn (sorry), but very recently we predicted that Brookdale Senior Living’s growing percentage of owned properties would attract activist investors yet again. That, and the continued poor performance of its share price.
It has now happened, again. Ortelius Advisors, which controls approximately 1.3% of Brookdale’s common stock, announced a slate of candidates for the Board that it will propose at Brookdale’s annual meeting later this year. Ortelius, like many other investors, has grown tired of the unfulfilled promises made and slow turnaround at the company, especially compared with the rest of the industry.
The slate being proposed by Ortelius includes six very experienced professionals. Top of the list in our minds is Steven Vick, a Seniors Housing Hall of Famer who we thought was the right person to take the helm at Brookdale years ago. Not only does he have the required industry experience, knowledge and leadership abilities, but he knows how to turn operations around, which he has done several times. We have known him for several decades and his input would be invaluable.
Steven Insoft is also on the slate, and we have known and respected him for several decades as well. He has operating and investment experience in the industry, more on the nursing home side of the business, and held C-suite positions at several senior care REITs. He knows his stuff. Although we do not know her as well as we do the two Stevens, Lori Whitman is also an excellent choice with her background as a former CFO of a senior care REIT and current role on a medical REIT’s board. The three others we do not know personally, but all have solid backgrounds. The only one missing is one of us. We tried more than a year ago, but management was not interested.
Ortelius plans to file a preliminary proxy statement with the SEC, together with Pangea Ventures, the six nominees and Peter DeSorcy, the Managing Member of Ortelius.
In his letter to shareholders, DeSorcy goes through eight years of financial history with Brookdale and missed opportunities to enhance shareholder value. In 2017, the Board rejected a conditional offer of between $9.00 and $11.00 per share because it undervalued the company, and the company’s turnaround strategy would create more value, or so the Board thought. It did not, and the pandemic certainly hurt that effort, but the share price has languished for far too many years. While current management can’t be blamed for all of the ills that Brookdale has faced, more could have been done.
The news of the Ortelius move sent Brookdale’s share price soaring by 8% on very heavy trading volume. The activists are knocking at the door, but will anyone answer? Maybe this time. That is a pretty convincing slate, and we believe shareholders want a change, maybe need a change.
