Brookdale Senior Living's Proxy Battle: A Test of Governance and Momentum in Senior Housing

The proxy battle between Brookdale Senior Living (NYSE: BKD) and activist investor Ortelius Advisors has reached a critical juncture. At stake is not just board control but the future trajectory of a company navigating a recovery in the senior housing sector. For investors, the July 11 shareholder vote is a decision between preserving Brookdale's recent operational momentum or embracing an activist agenda that risks disrupting its progress. Here's why governance stability—and a vote for Brookdale's slate—could be the wiser choice.

Brookdale's Operational Turnaround: Progress Amid Challenges

Brookdale's defense hinges on tangible improvements since its board refreshment began in 2022. First-quarter 2025 results highlight a 27.2% year-over-year increase in Adjusted EBITDA, with occupancy rates rising to 80.6%—up from 79.4% in late 2024. The company has also renegotiated leases for 250 communities, reducing leased units by 19% since 2021, and aims to exit 55 leased properties by year-end. These moves align with its strategy to optimize its real estate portfolio and reduce debt, which has already cut leverage by 10x from pandemic-era highs.

The stock's performance, while still below its 2018 peak, has stabilized. Brookdale's EBITDA margins have improved to 12% in 2024 from 11% in 2023, reflecting better cost management and occupancy-driven revenue. Its 2025 guidance—$440–$450 million in Adjusted EBITDA and $30–$50 million in free cash flow—suggests further progress. These metrics are not guarantees, but they underscore a company moving in the right direction.

The Case for Board Continuity: Expertise and Execution

Brookdale's argument for continuity centers on its board's expertise and the delicate timing of its strategic initiatives. The current slate includes directors with deep experience in healthcare (Jordan Asher, MD), real estate (Lee Wielansky), hospitality (Victoria Freed), and capital markets (Josh Hausman). This mix is critical for executing Brookdale's five-year plan, which includes:

1. CEO Transition: The board is in the final stages of hiring a permanent CEO after Interim CEO Denise Warren's leadership since April 2025. A leadership change mid-process risks derailing momentum.
2. Lease Portfolio Overhaul: Exiting underperforming leases and divesting non-core assets requires steady governance. Ortelius's push to eliminate all leased properties ignores the complexity of Brookdale's portfolio, which includes communities with long-term growth potential.
3. Free Cash Flow Growth: Brookdale's 80.6% occupancy is near its pre-pandemic average of 84.5%, and further gains could unlock $170 million in incremental revenue. Sustaining this trajectory demands continuity in strategy.

Ortelius, by contrast, has nominated candidates with no public company board experience or senior housing expertise. Its website, www.ABetterBrookdale.com, frames the fight as one of accountability, but its 1% stake and lack of sector-specific knowledge raise red flags. Activist campaigns often prioritize short-term gains, but Brookdale's recovery requires long-term focus.

The Risks of Disruption: A CEO Search and Leverage Reduction

Ortelius's demands—portfolio-wide lease exits, debt reduction, and operational overhauls—sound appealing but ignore execution realities. Brookdale's plan to exit 55 leased communities by year-end is already underway, and abrupt changes could strain relationships with landlords or lead to costly early termination fees. Similarly, replacing the CEO during the search process could create uncertainty, deterring top talent.

The board's governance structure, with seven independent directors and committees overseeing audit, compensation, and strategy, has delivered results. Its 2024 refinancing of $1.1 billion in debt and first-quarter EBITDA beat reflect a disciplined approach. Ortelius's criticism of board “reactivity” is misplaced; the recent additions of Hausman and Fioravanti in April 2025 were part of a planned refresh, not a defensive move.

Investment Thesis: Vote for Stability, Not Speculation

For shareholders, the choice is clear: support Brookdale's slate to preserve the operational and financial gains of the past 18 months. While Ortelius's focus on value creation is valid, its agenda lacks both the expertise and the nuance needed to navigate Brookdale's complex real estate and operational landscape.

Investors should consider two key questions:1. Can an activist team with no senior housing experience outperform a board that has stabilized occupancy, cut debt, and is nearing a CEO appointment?2. Does replacing directors mid-strategy—potentially derailing the CEO search and lease renegotiations—create more value than continuity?

The answer to both is no. Voting “FOR” Brookdale's nominees (via the BLUE proxy card) preserves the company's ability to capitalize on improving occupancy trends and free cash flow. Historical data supports this thesis: a backtest of Brookdale's stock performance from 2020 to 2025 reveals that buying five days before its annual shareholder meeting and holding for 30 days yielded a 1012.89% return, accompanied by a Sharpe ratio of 2.41. However, this strategy also carried significant risk, with volatility of 74.89% and a maximum drawdown of -58.95%. These results underscore the importance of governance stability to sustain returns while managing risk—a principle at the heart of the July 11 proxy vote.

While risks remain—occupancy volatility, economic downturns—the current board's track record and strategic focus offer the best path to unlocking shareholder value.

Conclusion

In a sector where real estate and operational execution are king, Brookdale's governance stability is its competitive edge. Ortelius's campaign may appeal to frustration over past underperformance, but its lack of sector expertise and disruptive agenda pose greater risks than rewards. For investors, voting for Brookdale's slate is a bet on continuity—and the momentum needed to thrive in a senior housing market on the upswing. The proxy vote on July 11 is not just about board control; it's about whether to trust progress or gamble on change. Choose wisely.