Continued dissatisfaction with what he called “lackluster returns” and “long-term underperformance” is leading an activist shareholder to vote against long-serving board members at Chicago-based real estate investment trust Ventas’ upcoming shareholder meeting.
In a public letter, Stamford, CT-based Land & Buildings’ founder and Chief Investment Officer Jonathan Litt said he intends to vote against the election of lead independent Director James Shelton and Board Chair Debra Cafaro — the two longest-serving directors — at the REIT’s upcoming annual shareholders meeting May 16.
Litt said he was disappointed by the “continued poor performance” of the company, “especially against a backdrop of positive senior housing tailwinds.” He added that this “underperformance” was “perhaps not surprising” given that Ventas did not act on his company’s recommendations, including adopting reactive cosmetic board and governance changes.
“There has been a lack of material change in the company’s strategy, investor communication and leadership,” Litt wrote. “This status quo is unacceptable. Increased accountability is clearly required in the boardroom.”
In March 2022, Land & Buildings accused Ventas of “long-term underperformance” and announced Litt’s own nominations to the board of directors, but the nomination was withdrawn a month later.
To improve and drive value, Litt said, Ventas’ board must refresh its investment committee with “truly independent and credible directors,” revamp investor communications to provide real-time information on achievable goals and potential issues, operate senior living at best-in-class margins with a diversified group of operators, and enact governance changes that include “refreshing” the board and bolstering senior leadership.
Litt held Shelton and Cafaro responsible for the “long-term underperformance and lack of accountability” at the REIT. He compared Ventas with Toledo, OH-based Welltower, saying that the Chicago REIT’s lower cash flow, earnings growth, shareholder returns and senior housing net operating income trail Welltower’s performance.
Land & Buildings, he added, will “keep all options open” on engaging with Ventas and “remains open to working constructively with the company to help drive value” for all shareholders.
Other letters sent
Land & Buildings issued a similar letter in 2019 to Brookdale Senior Living shareholders, calling it “a referendum on the company’s historical underperformance” as well as several decisions made by board members. Land & Buildings in 2016 and 2018 as well as in 2019 had called for Brookdale to sell assets or separate its real estate and management company into two separate companies to maximize the value of the company’s real estate. Brookdale rejected the approach.
Land & Buildings also proposed nominations to the Brookdale board, but ultimately, Litt withdrew his candidacy as well as the candidacy of an additional person that Land & Buildings had put forth.Litt also was a vocal critic of the 2016 proposed merger of NorthStar Asset Management Group with private equity firm Colony Capital and commercial real estate company NorthStar Realty Finance.
