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On Monday, I awoke to news that Cindy Baier had stepped down from Brookdale Senior Living (NYSE: BKD). I was surprised, and also not.
On the one hand, I have written a couple times now about how I thought Brookdale under Baier’s leadership was turning a corner, especially with her strategy of renegotiating leases with landlords and pivoting to owned communities and coordination of lifestyle and care services. I was not the only one who thought the company had momentum and room to grow in 2025.
On the other hand, Brookdale’s most recent weighted average occupancy of 79.5% still lags its pre-pandemic rate of 84.5%, and also lags industry-wide occupancy statistics. The company also has faced criticism in recent years from investors like Land & Buildings and Ortelius Advisors, L.P., which wanted the operator’s leaders to be more aggressive to unlock the value of its owned real estate. And that is not to mention the fact that Brookdale’s stock price is still not higher than it was when Baier took over as CEO in 2018.
As I pondered the fate of Brookdale in the wake of Baier’s exit, I also reflected on the fact that the nation’s largest operator is not the only one navigating a top leadership change in 2025. In just the past 10 days, two other well-known operators, Watermark Retirement Communities and Silverado, announced their own C-suite changes.
While new leadership can infuse a company with new ideas, they also have big shoes to fill, especially when they are replacing senior living industry pioneers like Shook and Watermark Founders David Barnes and David Freshwater.
These leadership transitions represent the latest changing of the guard in senior living, and highlight the speed at which the industry is entering a new era. I also think new leadership will have their work cut out for them in the years to come.
In this members-only SHN+ Update, I analyze these leadership transitions and recent trends and offer the following takeaways:
- Brookdale’s road ahead as it navigates a CEO transition
- How C-suite changes at Watermark and Silverado indicate a leadership sea change underway
- Why I think more leadership changes will follow in 2025
Brookdale, post-Baier
Brookdale’s CEO change comes at a time when the company is seemingly stuck between pandemic-related lows and a strong recovery.
As the operator has noted before, returning to its pre-pandemic occupancy rate would unlock $170 million of incremental revenue. Baier noted during the company’s fourth-quarter 2024 earnings call in February that the operator has multiple communities with rooms that aren’t currently serving residents, and that the company can add occupancy without growing expenses “to drive higher RevPAR and a higher profitability.”
At the same time, Baier also said that the company had “solved the single largest capital structure issue that Brookdale has faced in the last decade” by exiting 55 underperforming communities in 2024.
I’ve talked to Baier long enough to know that she values liquidity as a primary safeguard against tough times. Managing liquidity in business “is like managing your personal bank account,” she wrote in her 2022 book, “Heroes Work Here.”
“If you don’t have the cash to pay your mortgage, you’ll eventually lose your house,” she wrote.
To that end, she has grown the company’s liquidity to $389 million at the end of last year, with $329 million of that cash on hand. Baier also has successfully pared down Brookdale’s senior living footprint almost by half, going from 1,100 communities when she took over to 647 communities as of the company’s most recent count.
As I think about Baier’s tenure as CEO, I think that she has done much to right the Brookdale ship given her efforts exiting troublesome leases and amassing cash. She also helped the company navigate the difficult Covid-19 pandemic years during a time when some doubted the operator’s ability to turn things around.
I also think that the company’s push into care coordination and resident engagement via its HealthPlus and EngagementPlus programs are savvy moves to better connect with the baby boomers, who value wellbeing and independence. Brookdale’s portfolio is also heavily weighted in favor of assisted living and memory care, two settings where I think those kinds of services are especially valuable.
That said, I also think that making good on its potential will be a daunting challenge. I believe Interim CEO Denise Warren and her successor will have to grapple with how to increase Brookdale’s occupancy, and more importantly, its revenue and margins.
As of the end of last year, almost a quarter of the operator’s consolidated communities – 147 out of 619 – had occupancy at or below 70%. The company’s operating margins in the fourth quarter of 2024 also registered at 25.7%, representing a decrease of 50 basis points from its 4Q23 margins of 26.2%.
That said, better results might be just ahead for Brookdale. The company in its CEO transition announcement touted that its adjusted free cash flow is trending positive for 1Q25, with revenue per available room (RevPAR) exceeding internal projections.
Still, I wonder what a new CEO will be able to immediately accomplish, if Baier couldn’t in her seven years. I also wonder if this presages a seismic shift for the company and its properties, such as a property sale or big operational change. My colleague Tim Mullaney anticipates a big change is indeed coming, as he noted in a LinkedIn post on the CEO transition.
Mullaney also has pointed out in the past that operations could be a weak spot for Brookdale. The company has struggled to hold onto a top executive in charge of operations during Baier’s tenure as CEO, with Labeed Diab leaving the COO role, Cindy Kent departing as president of senior living operations, and Kevin Bowman exiting his position as executive vice president of community operations.
While a real estate sale or spinoff might accomplish the goal that investors are so keen on, in terms of unlocking value, such a move will not have an impact on the company’s day-to-day operations, which ultimately are responsible for driving occupancy, revenue and margin. While there is sure to be much attention and speculation over who will replace Baier in the CEO chair, perhaps it is just as important for the board to hire a strong COO.
In the end, I think Brookdale’s current road exemplifies what many other operators are going through in 2025. Companies like Brookdale have done well to survive the Covid years – but I also think they are struggling to thrive.
Leadership sea change underway
Days before the Brookdale news, two other well-known operators, Silverado and Watermark, announced their own top leadership changes, albeit in a more premeditated way than Brookdale, with successors already in place.
Last week, Watermark announced that co-founders Freshwater and Barnes are stepping back from day-to-day leadership, and that Paul Boethel is the company’s new CEO. A few days later, Silverado announced Wayne Sanner is joining the company on April 28 as “CEO designate,” a role in which he will work alongside Shook and eventually take the reins.
It’s important to note that both companies are giving their new leaders a long runway on which to learn from their predecessors. However, Barnes, Freshwater and Shook are all senior living industry pioneers, and they are taking with them decades of knowledge regarding senior living operations.
While writing this article, I was perusing the last few years of leadership changes. And it struck me that the top-three largest operators according to the most recent Argentum 150 list – Brookdale, Atria and LCS – all have relatively new or incoming leadership.
I believe there will be more such announcements this year. I can think of more than a few operators that are still led by their longtime leaders.
That is not to say the leaders of these companies aren’t still up to the job, and this industry has many examples of industry pioneers who are still firing on all cylinders. But I do think it’s only a matter of time until these leaders pass the baton.
What I wonder now is how the next generation of leaders will move the industry into its next iteration. Fresh ideas and new perspectives are sorely needed in senior living, and I think there’s a tremendous opportunity to create something truly new for the baby boomers.
On the other hand, the senior living industry still has a hill left to climb in the form of margins, revenue, and more generally, growth. Outgoing CEOs and the boards who are working on succession planning have tricky decisions to make in terms of seeking outside talent versus industry veterans, and balancing vision with operational acumen.
