Brookdale and Capital Senior Volatile

Brookdale and Capital Senior Volatile

During the course of this pandemic, the entire stock market has been extremely volatile. The quick 35% plunge was followed by a nearly as quick return, with the NASDAQ hitting new highs this week. This happened despite more than 40 million people recently hitting the unemployment lines.  This week, however, we saw volatility reaching new highs in the senior living sector. As an example, Brookdale Senior Living hit a near-term low of $2.66 per share on May 13. By June 5, it jumped by 64% to $4.37 per share. Maybe the turnaround was coming around. But by June 11 (just four trading days later), it plunged by 35% to $2.82 per share. After all that volatility, between May 13 and... Read More »
Brookdale Senior Living Reports

Brookdale Senior Living Reports

Brookdale Senior Living reported first quarter earnings and operating results that, in some respects, were better than some investors may have expected. The problem is that everyone is expecting the worst as COVID-19 deaths keep on increasing. The reality, however, is that this pandemic really had little or no impact on the first two months of the quarter for operators. It was the last few weeks of the quarter, and obviously, the entire month of April, that started to do the damage.  Management reported that fewer than 1% of its residents had tested positive for the coronavirus, so that means that there are probably many buildings that are virus free, and we assume they are marketed as... Read More »
Avoiding The MAC Clause?

Avoiding The MAC Clause?

Last week, we were surprised to hear that a few companies quickly drew down on their revolving lines of credit. In the case of Ventas, the amount was $2.75 billion and they withdrew 2020 earnings guidance as well. For Brookdale Senior Living, they did a full drawdown of an unspecified amount, and also withdrew their 2020 earnings guidance. Omega Healthcare Investors drew down $300 million. Mostly, these were stated to be for precautionary and future liquidity reasons.   We were a little surprised that a few more companies did not withdraw 2020 guidance, but perhaps they are not at risk as much as Brookdale and Ventas with the seniors housing uncertainty and... Read More »
Senior Living Investment Brokerage’s Brookdale Sale

Senior Living Investment Brokerage’s Brookdale Sale

Sales are still getting done at Senior Living Investment Brokerage, with Brad Clousing, Jeff Binder and Patrick Burke handling the sale of a 78-unit assisted living community in Northport, Alabama. In 2019, Mr. Clousing had also sold a 161-bed skilled nursing facility in Northport, so we’re sure that experience helped in this transaction.  Built in 1999, the community is situated on about four acres along the Black Warrior River near Tuscaloosa. In addition to the 68 assisted living units, it includes 10 units and 16 beds of memory care. A Mid-Atlantic-based owner/operator bought the community, its second in the state of Alabama, and plans to invest in physical plant... Read More »
Collapse of Brookdale and Capital Senior Living Continues

Collapse of Brookdale and Capital Senior Living Continues

We are officially in unchartered territory. It is now quite embarrassing that we stated two years ago, as Brookdale Senior Living’s share price dropped below $10, that it had reached a floor. Yes, hindsight is 20/20, but we don’t know anyone who really predicted how drastic it has actually become for senior living stocks. The question is, what to do now? The second question is, will it get worse?  The day-to-day volatility in the stock markets is unprecedented. The day-to-day declines in values in our sector are even more unprecedented. It seems that when the major indices drop by 10%, our sector, including the REITs, drops by 20%. It is a magnification of the worries brought on by the... Read More »