Brookdale Senior Living  (BKD - Get Report)  will need to sell itself or its real estate -- otherwise expect REIT-focused activist Land & Buildings Investment Management's Jonathan Litt to launch a director-election proxy battle in the coming months at the assisted living facility owner.

Litt last week escalated his effort to drive a strategic transaction at Brookdale, suggesting in a letter to the board and shareholders that he would be "extremely disappointed" if the strategic alternatives process is not fully explored and fails to result in a successful conclusion.

That comes after a report last week suggesting that the company is in talks with buyout shop Blackstone  (BX - Get Report)  on a potential deal. A Wall Street Journal report on the news sent Brookdale's share price soaring.

The report noted that the discussions are early stage and may not result in a sale of Brookdale outright. Additionally, the report noted that others could be involved in discussions.

However, consider that Litt's letter noted that shareholders, including Land & Buildings, would "hold" the company's board accountable if the strategic alternative process is not fully explored. In translation, those comments suggest that Litt may seriously be considering a director-election proxy contest at Brookdale Senior Living if a thorough strategic review is not conducted. 

According to FactSet, Litt has launched fifteen campaigns and five proxy contests since founding the fund in 2008. That track record - and Litt's success at installing dissident director candidates at corporations in the past -- suggests another contest may be coming soon. 

People familiar with the situation note that Litt is considering all alternatives to work with management and the board to maximize value for all shareholders. They added that Brookdale has acknowledged privately to shareholders that its recent stock price drop suggests that a real estate monetization may make more sense, even though the assisted living facility company completed a strategic review process at the end of 2015 without pursuing any major deal. Brookdale did not return calls seeking comment.

If no deal is forthcoming, Litt could nominate director candidates at the company's 2017 annual meeting, likely to take place in June or July. Brookdale has a classified board, which means that Litt couldn't take over a majority of the directors in a contest. Nevertheless, Brookdale's CEO, Andrew Smith, and chairman, Daniel Decker, are two directors up for election this year. If Litt does launch a director election, Brookdale doesn't have long to respond -- director nominations for the annual meeting are due March 15.

It's very possible that a Blackstone deal could involve a sale of real estate to the buyout shop. The two companies already have done deals together in the past. Blackstone Real Estate Partners VIII LP bought properties Brookdale was leasing from HCP for $1.125 billion in November.

Two of the company's main rivals -- and partners in some cases -- HCP (HCP - Get Report)  and Ventas (VTR - Get Report)   -- may also express an interest in acquiring Brookdale's remaining real estate.

Litt's recent letter is a follow up to a missive he submitted last month urging the assisted living company to consider a variety of strategic options, such as selling its real estate and distributing proceeds to shareholders in buybacks or dividends. He argued that the company's housing portfolio is valued at $7 billion or more.

The work of another activist at Brookdale may also help give Litt a boost in his efforts. Tom Sandell's Sandell Asset Management in 2015 sought to drive a sale or spinoff of its real estate to shareholders in a REIT. In early 2016, Sandell liquidated his position but not before successfully installing a REIT-friendly director on the board as part of a settlement. In that deal Sandell installed one of his candidates -- Lee Wielansky, a REIT expert -- and the company added Mark Parrell -- described by the Brookdale as having "real estate, capital markets and M&A" experience. Parrell is widely regarded as REIT-focused and would likely support the kind of change Litt is seeking.