Brookdale Senior Living (BKD) - Get Brookdale Senior Living Inc. Report is exploring options to enhance shareholder value, according to non-executive chairman Daniel Decker on an earnings call Tuesday morning.
Announcements of that sort often indicate a company is shopping around itself or some of its assets. No decision has been made to enter into any transaction at this time, Decker said.
Shares of Brookdale were changing hands at $15.14 Tuesday, up 2%.
Decker's comments come on the heels of a media report last month stating that the senior living communities operator was in early-stage discussions with Blackstone Group (BX) - Get Blackstone Group Inc. Class A Report and others regarding a potential sale of all or part of the company.
Nashville, Tenn.-based Brookdale has been targeted by activist investor Land & Buildings Investment Management, which in December urged the company to consider a variety of strategic options, such as selling its real estate and distributing proceeds to shareholders in buybacks or dividends. Days after the Wall Street Journal report in January, Land &Buildings issued a letter to the board and fellow shareholders saying that shareholders would be "extremely disappointed" if the strategic alternatives process is not fully explored and does not result in a successful conclusion.
If Brookdale were to do a deal with Blackstone, it would not be the first time the firms have worked together.
In November, Blackstone Real Estate Partners VIII LP agreed to buy 64 properties Brookdale was leasing from healthcare REIT HCP Inc. for $1.125 billion. Separately, Brookdale and Blackstone agreed to form a joint venture into which Blackstone will contribute the portfolio when the transaction with HCP is complete. Brookdale, for its part, plans to contribute around $170 million to acquire a 15% equity interest in the joint venture, terminate the existing lease and fund its share of anticipated closing costs and working capital.
In the fourth quarter, Brookdale had a net loss of $268.6 million, representing a 54% increase from the year-ago period. Adjusted Ebitda grew 3.5% to $184.2 million year over year. Not counting integration, transaction, transaction-related and strategic project costs, adjusted Ebitda was $194.2 million.
Adjusted free cash flow swung to a positive $33.2 million, compared with negative $32.7 million in the year-ago period. Brookdale's proportionate share of adjusted free cash flow of unconsolidated ventures was $6.8 million, compared with $6.2 million in the same period in 2015.
Revenue for the quarter was $1.21 billion, down 2% year over year.
"We are operating in a difficult environment with intense supply pressure and a competitive labor market," said Brookdale president and CEO Andy Smith in a statement on Monday. "Despite these macro-economic conditions, we were able to grow both fourth quarter Adjusted EBITDA and Adjusted Free Cash Flow over the prior year quarter. With the fourth quarter results, we achieved results at the upper end of our full year guidance range provided last quarter."
For full-year 2017, Brookdale expects adjusted Ebitda -- excluding integration, transaction, transaction-related and strategic project costs -- of $670 million to $710 million and adjusted free cash flow of $140 million to $170 million. The company's proportionate share of adjusted free cash flow of unconsolidated ventures is expected to be in the $25 million to $35 million range.
"We believe that supply and labor pressures will continue for the majority of 2017 and we have reflected this impact into our guidance," Smith said, adding that the company has "prioritized our efforts in marketing, pricing, product positioning, community management retention and capital expenditures in markets where we are experiencing or expect heightened competitive pressure."