Seniors Housing Weekly Update - Brookdale and Monetizing Real Estate Value
February 17, 2015
February 17, 2015. 60 Seconds with Steve Monroe. Pressure is mounting on Brookdale Senior Living to monetize the value of its owned real estate, but at what cost?...
Brookdale and Monetizing Real Estate Value
The pressure is increasing on Brookdale Senior Living “to do something” to monetize the hidden value in its owned real estate. This has all come up as a result of a weak fourth quarter from the recent Emeritus purchase. We have a big problem with all this. Yes, management always has to look to increase shareholder value. But everything that is being talked about is a short-term fix taking advantage of the current capital markets environment. As you know, we never liked the Emeritus acquisition for Brookdale. But now, by selling off the owned real estate of the combined company, whether to an existing REIT or a newly created REIT, management would be tied down, not only with extremely high rent costs for the next 15 years, but high costs for some properties that they really should divest today. Selling off its B- properties to third parties today, and we are talking about 100 or more, would not only raise capital, but would make for a stronger Brookdale in the long-term, something that some activist shareholders do not care about, but that I do. Capital markets should not dictate short-term strategy at the expense of the long-term, something we plan to focus on in the near future.