The shares of specialty real estate investment trust Brookdale Senior Living (NYSE: BKD) rose by about 15% Tuesday following a report that it might be on the block. An article published in The Wall Street Journal, citing "people familiar with the matter," has it that the company is in talks with private equity giant Blackstone Group (NYSE: BX) and other potential suitors regarding a sale. Such a deal would involve part or all of the REIT's business.
The newspaper's sources stressed that the discussions are at an early stage, and might not necessarily result in a buyout. The article did not identify any possible bidders besides Blackstone.
Neither Brookdale nor Blackstone has yet commented on the report.
Brookdale has not been a popular stock of late, even though it operates in a segment with much potential -- housing and associated services for senior citizens. After all, both the raw numbers of seniors and their proportion within the U.S. population are expected to rise sharply in the coming years. Some estimates forecast that the 65-and-older demographic will approximately double between now and 2050.
Despite this, Brookdale has lately struggled with profitability and declining occupancy rates. That spike in the share price on the back of the Journal article hasn't lifted the REIT's stock above water -- it's still down by 14% over the past 12 months.
At the end of its most recently reported quarter, Brookdale had around 1,077 facilities spread across 47 U.S. states. During the period, the REIT's revenue grew by less than 1% on a year-over-year basis to $1.25 billion, while its net loss narrowed to just under $52 million from the year-ago quarter's $68 million.
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Eric Volkman has no position in any stocks mentioned.