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Land & Buildings withdraws Flaherty nomination to Brookdale's board

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Land & Buildings withdraws Flaherty nomination to Brookdale's board

Activist investor Land & Buildings Investment Management LLC abandoned its effort to nominate a director to the board of Brookdale Senior Living Inc., criticizing but endorsing the company's counter-proposal to replace its chairman.

The hedge fund, which owned about 4% of Brookdale shares as of a Sept. 19 filing, withdrew its nomination of former HCP Inc. Chairman, President and CEO Jay Flaherty III after Brookdale charged that Flaherty had a "troubled" history in that role.

Land & Buildings had earlier withdrawn a second nomination — of its co-founder Jonathan Litt — to Brookdale's board.

With no candidates up for election to the board at Brookdale's Oct. 29 shareholder meeting, the firm is now endorsing Brookdale's proposal for one of the company's nominees, Guy Sansone, to become its new nonexecutive chairman by the start of 2020. Sansone would take over the role from current chairman Lee Wielansky.

Litt, who has pushed for Brookdale to separate its real estate and operations into separate companies, said in a news release that Flaherty would have been an ideal addition to Brookdale's board, adding, "I have known Jay for 20 years and can attest that he has a very high level of integrity, an incredible focus on creating shareholder value ... and a commitment to best-in-class corporate governance."

Litt called the appointment of Sansone to the chairman role, which is conditioned on both of Brookdale's board nominees being selected, "the epitome of bad corporate governance," but said he is nevertheless confident that Sansone "can succeed where others have failed and actually right the ship" at the seniors housing operator.

In its own filing, Brookdale said: "We thank our stockholders for their support and appreciate their confidence in Brookdale. With a refreshed Board and management team, we are confident we will continue to drive long-term sustainable growth for all stockholders."

Morgan Stanley is serving as Brookdale's financial adviser and Skadden Arps Slate Meagher & Flom LLP is acting as its legal adviser.