Brookdale Senior Living, Ortelius Trade Barbs, Outline Strategies Ahead Of July Shareholder Meeting

Brookdale (NYSE: BKD) and Ortelius Advisors have outlined their respective priorities prior to the operator’s annual stockholders meeting next month.

In March, Ortelius, which owns 1.3% of Brookdale’s shares, nominated six new members to Brookdale’s board of directors. The activist investor noted it thought the Brentwood, Tennessee-based company and nation’s largest senior living operator could do more to unlock intrinsic value of its senior living real estate. Specifically, Ortelius is urging Brookdale to offload hundreds of underperforming and leased communities over the company’s current more incremental rate of change, nothing that the company’s move to look for a new CEO after the departure of Cindy Baier as “too little too late.” 

Brookdale and Ortelius again laid out their strategies over the last week in letters urging shareholders to vote for their nominees ahead of Brookdale’s July 11 shareholder meeting.

Brookdale highlights ‘significantly refreshed’ board

On June 11, Brookdale published a letter urging shareholders to vote for its “significantly refreshed” board of directors, citing their “proven track record of taking action to optimize the company’s real estate portfolio and enhance operating performance.” Specifically the company touted achievements it said made operations more efficient, shed leases that weren’t working and improved leverage.

Brookdale’s leaders have renegotiated leases for 250 communities and reduced the number of leased units by 19% since 2021. Additionally, they grew adjusted EBITDA margin by 11% and 12% in 2023 and 2024 respectively, with expected cash flow for 2025 to range from $30 million to $50 million, according to Brookdale.

Brookdale’s weighted average occupancy rate is currently around 80.6% with a same-community end of month occupancy rate of 82.1% in May 2025.

“Brookdale is poised to capitalize on the significant operating leverage of its high fixed cost business, particularly given strong supply/demand demographics,” the release states.

The company’s “significantly refreshed board” of eight directors “has been carefully constructed to represent a diverse range of critical and complementary skills, including but not limited to healthcare (operations, strategy and clinical), finance, hospitality, sales and marketing, real estate and significant senior living experience,” according to Brookdale. The operator noted it appointed six of the board members in the last seven years.

Replacing additional directors is “not necessary, jeopardizes the company’s progress and CEO search and could leave the board without sufficient institutional knowledge,” the company’s June 11 letter reads.

During its first-quarter earnings call earlier this year, the operator’s management noted it was committed to turning around operations at underperforming communities using a “SWAT-team” approach.

In May, Brookdale Interim CEO Denise Warren noted the company was narrowing its list of candidates for its CEO, and that she expected a replacement would be named by the fall.

Ortelius reiterates operator’s ‘strategic failures’

In a June 16 letter to investors, Peter DeSorcy, managing member of Ortelius, highlighted the current Brookdale board’s “missteps, shortcomings, and strategic failures.” He said Brookdale management has so far reacted to Ortelius’ urgings with “defensive changes and half-measures,” and that he “believes that stockholders see through these claims, and support our drive to instill relevant expertise, fresh perspectives, and accountability.”

Ortelius pointed to the fact that the company’s cumulative free cash flow “imploded,” falling to negative $660 million between 2018 and 2024, a far cry from the positive cash flow of $304 million the company reported in 2011. Brookdale’s total stockholder returns registered at negative 37%, “underperforming key benchmarks by 135 percentage points, and the company’s top two peers by 216 percentage points,” according to the activist investor’s letter.

In the letter, DeSorcy also noted that CapEx was negative $731 million from 2018 to 2024, while the average annual adjusted EBITDA margin was 1%.

“In addition, the business segment bears substantial rent expense, capital expenditures, and corporate overhead, and represents a $1 billion-plus liability,” he wrote.

The company’s leased portfolio is also “highly dilutive to the owned properties,” but the company’s board still renewed lease agreements with Ventas (NYSE: VTR), Welltower (NYSE: WELL) and Omega Healthcare Investors (NYSE: OHI), all of which represent the vast majority of the company’s leased portfolio.

DeSorcy also wrote 65% of Brookdale’s total debt is set to mature by 2029, with $426 million slated to mature next year alone. Net debt has grown from $3.4 billion in 2017 to $4.1 billion through the first quarter of 2025, he wrote.

Although Brookdale said it had set aside a “modest group of assets” that it may offload, DeSorcy wrote that “Brookdale should immediately begin to evaluate the monetization of all of the underperforming owned properties, which comprise roughly 135 facilities, and could amount to many hundreds of millions of dollars.”

DeSorcy urged Brookdale’s shareholders to vote for its six nominees, Steven Insoft, Paula Poskon, Frank Small, Ivona Smith, Steven Vick and Lori Wittman.

“Ortelius’ strategy and Brookdale CEO search can be spearheaded day 1 by our six highly qualified nominees, who have decades of expertise in senior housing, real estate, executive searches, capital markets, acquisitions/divestitures, corporate finance, restructurings and senior management,” he wrote.

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