(Bloomberg) — Activist investor Ortelius Advisors is kicking off a proxy battle at Brookdale Senior Living Inc. by nominating six directors, blaming the current board for what it called the company’s “abysmal performance and chronic undervaluation.”
Ortelius has built a 1.3% stake in the senior living facility operator and plans to pitch shareholders on board changes ahead of the company’s annual meeting later this year, according to a letter to shareholders reviewed by Bloomberg News.
The nominees include Frank Small, who formerly held senior roles at KKR & Co. and Fortress Investment Group, and Steven Vick, who co-founded Pegasus Senior Living, a competitor that has bought former Brookdale properties.
A representative for Brookdale didn’t immediately respond to a request for comment.
As of December, Brookdale operated 647 senior-living communities in 41 states. This month, the Brentwood, Tennessee-based company completed a $135 million acquisition of 18 communities from Diversified Healthcare Trust.
Peter DeSorcy, an Ortelius co-founder and managing member, says board changes at Brookdale are needed because of its below industry-average occupancy rates and faltering financial metrics. Since a peak in 2015, the company’s shares have shed about 85% of their value, leaving it with a market capitalization of only $1.1 billion.
“The company’s board and management team have spearheaded the vast destruction of stockholder value, and must be held accountable,” DeSorcy wrote in the letter.
Ortelius contends there are “multiple paths” for Brookdale and didn’t specify what strategy its board nominees would pursue. Back in 2019, Ortelius pushed for a higher price in a take-private offer for Hudson’s Bay Co.
Brookdale was targeted in 2018 by activist Jonathan Litt, who argued that the company should unlock shareholder value by splitting itself into a real estate investment trust and a senior-housing operator. That same year, Macquarie Investment Management Ltd. also argued for Brookdale to consider selling its real estate or even the whole company.
As recently as 2022, Brookdale explored options including a potential sale. In 2018, the company rejected a conditional indication of interest to sell the company for $9 to $11 a share. Brookdale fell 1% to $5.54 at 11:54 a.m. in New York trading Wednesday, giving the company a market value of about $1.1 billion.
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