By Steve Moran
I am doing backflips over Brookdale’s “letter to shareholders” that directly, publicly, and aggressively attacks the attempts by Jonathan Litt’s organization, Land & Buildings, to force Brookdale into an Opco/Propco structure.
I want to high five Cindy Baier.
A couple of quotes:
“We believe that Mr. Flaherty’s election to the Brookdale Board would result in a repeated push for the adoption of this single-minded and fundamentally flawed plan, to the potential detriment of Brookdale’s momentum under its strategic plan.”
“Even viewed with a short-term perspective, we believe that the OpCo/PropCo structure is an inferior alternative to our comprehensive strategic plan as it carries significant execution risk . . .”
I have begged Brookdale leadership in a number of articles and some private emails, to take this position for years. In my view OpCo/PropCo is:
- Bad for shareholders — Would it result in a short-term pop in overall valuation? Maybe, and honestly that is all Litt and Land & Buildings care about. While I have asked Land & Buildings and Litt for an interview or a comment several times, they have ignored those requests, so I have no idea what they would actually say. But I believe they don’t give a rat’s ass about the damage to residents and team members their proposal would do. I believe what they want Brookdale to do is fundamentally immoral.
- Bad for residents — It would increase pressure on management to create short-term cash flow instead of long-term value. Theoretically, those things should be congruent, but in a practical sense, they are not. The current structure provides more flexibility and opportunity.
- Bad for team members –– It makes it harder to provide team members the financial and structural support they need and deserve. Doing this cascades to better care for residents, which then cascades into higher occupancy, better cash flow, and long-term shareholder value.
- Bad for the industry — I believe with my whole heart that the leadership of Brookdale is 100% sold out to the idea that great resident care is their highest priority, but having to deal with this kind of nonsense makes it really hard for them to focus on the right thing. When they are distracted they are not at their very best. When Brookdale is not at their very best, the whole industry is impacted in a negative way.
The Best Part . . . The Biggest Opportunity
In a very real way, Jonathan Litt and Land & Buildings have delivered to Brookdale the perfect vehicle for catapulting them to mind-boggling, resident and team satisfaction and occupancy. We know there is no better way to create loyalty than to have a common enemy and the Opco/Propco fits that role to perfection.
I would love to be holding press briefings about it; writing a letter to team members about it; and writing letters to residents and family members. They would all have the same theme: “We are under attack . . . they don’t care about our residents, they don’t care about team members. All they care about is getting a few more million dollars.
“We are going to fight this by being the best senior living company in the whole world. More than that, being the best company in the whole world. We can do it with your help, your passion, and your commitment.
“Every time we do the right thing, we strike a blow against everything that is wrong with this proposal.”
And yes . . . I still think they need to put me on the board or hire me as a consultant.