Brookdale Senior Living’s (NYSE: BKD) share value jumped Friday morning after a Bloomberg report that the nation’s largest senior living operator is exploring a sale of the company.
The Brentwood, Tennessee-based company is engaged with financial advisors on finding possible buyers, according to a report from Bloomberg citing “people familiar with the matter.” Brookdale’s share value leapt more than 20% as of mid-morning Friday, not long after the story was published.
Brookdale management has not yet made a final decision regarding whether to sell the company, the Bloomberg report notes.
“As a matter of policy, we don’t comment on market rumors or speculation,” Kathy MacDonald, senior VP of investor relations for Brookdale, told Senior Housing News.
Brookdale operates more than 674 communities nationwide, the majority of which offer assisted living and memory care.
Stock price jumps after 52-week low
While Brookdale stock jumped on Friday on Bloomberg’s report, the company’s stock price this week dipped to a 52-week low of $3.88, according to a report on SeekingAlpha.
Brookdale stock hovered shy of $5 per share Friday afternoon.
Despite its recently low stock price, Brookdale has made progress in recent years on the turnaround plan CEO Cindy Baier laid out when she first took the reins in 2018.
Back then, the operator was in far worse operational shape, with a portfolio of more than 1,000 communities that was bleeding cash amid multiple underwater lease arrangements and a host of other pressures.
But thanks to a multi-year effort to renegotiate leases and grow the company’s total owned assets, Baier believes the operator has “a portfolio where we have the ability to win.”
The company reported an average occupancy rate of 77.9% as of the end of August, and Baier noted during a second-quarter earnings call this year that she saw “a huge opportunity for occupancy recovery” in the quarters ahead, as well as for revenue growth.
If Brookdale hit its historic occupancy high of 89% in the future, that would drive at least $500 million in incremental revenue, the company’s management has noted.
“There is tremendous, powerful upside built into our existing portfolio,” Baier said during the company’s second-quarter earnings call this year.
In addition to growing occupancy, the operator is also focused on growing its resident rates. Baier earlier this year told SHN she saw a runway in 2022 to grow the company’s revenue per available room (RevPAR) by about 10% to 12%.
Brookdale’s senior housing operating margins neared 21% in the second quarter of 2022.
Sale rumors have swirled before
If sold, Brookdale would join a growing list of senior living companies that have recently traded hands, including Spring Arbor Senior Living, the operator acquired by Foundry Commercial this year; the former Holiday Retirement, which is now part of Atria; and Tealwood Senior Living, which was acquired by Lifespark.
Other senior living acquisitions in recent years have included Invesque’s (TSX: IVQ.U) acquisition of Commonwealth Senior Living in 2019.
But this is not the first time Brookdale was rumored to have been imminently trading hands. In 2017, it was reported that real estate investment trust Ventas (NYSE: VTR) was considering a buyout of the operator. The company later put those rumors to rest.
Earlier that same year, reports surfaced that private equity giant Blackstone Group was in talks to acquire Brookdale Senior Living, a move that ultimately did not happen.
Additionally, a strategic review ended in 2018 with a decision not to sell the company after it reportedly received a buyout offer for between $9 and $11 per share. Current CEO Baier took the reins at the same time.
Brookdale also has faced repeated calls over the years from activist investor Land & Buildings to consider more moves to unlock shareholder value by spinning off or selling its real estate.
The company has sold off certain assets in the not-too-distant past, however. At the beginning of 2021, the operator sold an 80% stake in its home health and hospice segment to Nashville-based health system HCA Healthcare.
The post [Updated] Brookdale Senior Living Stock Soars Upon Rumor Company Is Exploring Sale appeared first on Senior Housing News.
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