Brookdale Senior Living (NYSE:BKD) is considering options for structuring the company going forward, including the possibility of being bought out by a real estate investment trust, executives said during the Stephens Fall Investment Conference held last week in New York.
As the largest national senior living provider, Brookdale operates about 67,000 units and owns 22,000 of them. Although analysts have valued the company’s shares in the $28 to $33 range, it trades at about $23 to $24 a share, leading the board to look for ways to optimize value and mitigate the impact of cuts to Medicare reimbursements.
“There are different ways to get at that value, and they generally involve some kind of a REIT structure,” said Mark Ohlendorf, co-president and CFO of Brookdale, during a presentation. “The REITs have achieved very high valuations in today’s world, because everyone’s trying to get yield in some way, and REITs are yield.”
There are a number of different options Brookdale is exploring, said Ohlendorf. “We could monetize value in some way with an existing REIT. We have three very large successful REITs in our world,” he continued, referencing HCP (NYSE:HCP), Ventas (NYSE:VTR), and Health Care REIT (NYSE:HCN).
“They could buy our assets, our company, [and] there could be different tax consequences for different structures,” he said.
Occupancy trends are showing 9th consecutive q growth rates in the seniors sector... I suspect we will flatline somewhere around the 91% rate... Meaning 2 more years of nice secular metric improvements... We're sitting at about 88% now.