Last week, Brookdale Senior Living (NYSE: BKD) shareholders rejected six board of director candidates nominated by Ortelius Advisors during the operator’s annual meeting – but the activist investor believes the battle still led to some positive changes in the end.
On July 11, Brookdale won in its months-long proxy fight with Ortelius, keeping its board of directors intact after the two companies traded barbs and outlined dueling visions for the operator.
Ortelius had previously called for changes to Brookdale that would have included asset sales and unwinding leases of underperforming communities. By unseating certain longtime board members, the company sought to change Brookdale’s trajectory as a company to unlock more real estate value for shareholders.
But while the company’s changes ultimately did not come to pass, Ortelius Managing Member Peter DeSorcy on Wednesday said the firm’s efforts “served as an important catalyst for change” within the Brentwood, Tennessee-based senior living provider. Specifically, DeSorcy believes his firm played a role in the recent departure of former Brookdale CEO Cindy Baier, and that its public proxy fight helped rally other shareholders under the banner of change at the nation’s largest operator.
“Ortelius remains skeptical that the current board has the right strategy, willingness, and ability to do what is necessary to maximize stockholder value, and is convinced that there is significant untapped value within Brookdale,” DeSorcy said. “For the company, and the board, this remains a critical moment.”
DeSorcy added Brookdale needed to find the “right CEO” and be “hired quickly” while the board must “execute on recent promises.”
This comes as DeSorcy said Brookdale “continues to be significantly undervalued” and that a “long-overdue turnaround is imperative.”
“As a stockholder, Ortelius remains deeply invested in the Company’s future, and will closely monitor developments, ” DeSorcy said. “Moreover, we will not hesitate to take further action to ensure that both the Board and management are held fully accountable for maximizing stockholder value.”
Brookdale recently noted that getting back to 84.5% occupancy, last reported in 2020, would result in substantial cash flow improvements up to $380 million in incremental revenue. The company recently surpassed 80% occupancy. Net operating income (NOI) in the first quarter was 28.6%, a 130-basis point increase compared to the same period last year.
The company also overcame a 2019 proxy fight with Land & Buildings to install a new board, but the effort stalled.
The post Ortelius Touts Role as ‘Important Catalyst for Change’ After Losing Brookdale Proxy Fight appeared first on Senior Housing News.
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