Brookdale Senior's shares rise on REIT conversion speculation

Fri Nov 16, 2012 2:50pm EST

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(Reuters) - Brookdale Senior Living Inc's (BKD.N) shares rose nearly 11 percent after an analyst said that an investor who pushed for Penn National Gaming Inc's (PENN.O) conversion into a real estate investment trust may do the same at Brookdale.

Deutsche Bank Markets Research analyst Darren Lehrich said Fortress Investment Group, Penn stockholder who played a big role in effecting the company's conversion into a REIT, owns 14 percent of Brookdale's shares, terming it an "interesting connection".

Penn National on Thursday said it plans to hive off 17 casino properties into a new company that will operate as a dividend-paying REIT. [ID:nL3E8MG3ZB]

Fortress has two seats on Brookdale's board, the analyst said in a client note. The board has 9 members as of April 16.

Brookdale, which operates 648 retirement facilities, owns a significant portion of its real estate and has a valuable operating platform that can grow due to improving industry fundamentals, Lehrich said.

A REIT structure helps companies reduce tax burden on their rental income, while also benefiting investors as REITs are required to distribute at least 90 percent of their profit as dividends.

Shares of Brookdale were up 9 percent at $23.56 in late afternoon trade on the Nasdaq on Friday. They touched a high of $23.90 earlier.

(Reporting By Pallavi Ail in Bangalore; Editing by Sriraj Kalluvila)

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