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Our thoughts.

Larry Robbins on Brookdale at Sohn and Tom Sandell

One of Glenview Capital’s picks at Sohn was Brookdale Senior Living, which was not one of the disappointments of Sohn. His fund upped its stake in the company to over 5% in March, but it’s still a small part of the Glenview portfolio. What Glenview is pushing for is the monetization of its real estate - potentially a tax-free spin.

One of the more active names in Brookdale is Tom Sandell and his Sandell Asset Management. His fund recently got two of its nominees on the Brookdale board the other week. One step closer to getting the company to form a REIT - his key thesis.

Other thoughts - Brookdale runs some 650 communities. About half its revenues are generated from leased facilities and 40% via owned properties. The other 10% is via its management fees and the Innovative Senior Care segment. The beauty of Brookdale is just 20% of its revenues are generated from government-related reimbursements.

Brookdale has apparently known about the potential value in its real estate for a couple years now. But it hasn't done anything about it. To Sandell, that's especially troubling, as it notes that Brookdale's real estate value is at all-time highs.

The REIT would be PropCo, with OpCo being an asset-light business. This would allow the company to be a true industry consolidator and further make strategic acquisitions.