As talks continue about a proposed merger between real estate investment trusts Diversified Healthcare Trust and Office Properties Income Trust, the accumulation of shares of DHC stock by Adam Portnoy is “concerning,” according to DHC shareholder Flat Footed and its affiliates. 

Portnoy is a managing trustee on the DHC Board and the OPI Board as well as president and CEO of The RMR Group, the alternative asset management company that manages both REITs. 

DHC, with a senior housing operating portfolio that included 237 communities with 25,346 living units as of April, entered into an agreement in April to combine with OPI. If approved by shareholders in a special meeting — the date of which has not been announced — the merger is expected to be completed in the third quarter. It would result in a new REIT named Diversified Properties Trust.

“In light of his deeply conflicted status as an insider of DHC, OPI and RMR, we urge the board to assess whether it is appropriate for Mr. Portnoy to continue buying shares and to also commit to capping his potential ownership at the same levels other DHC shareholders adhere to,” Flat Footed said Tuesday in a statement.

“It is equally concerning to see that Mr. Portnoy continues to purchase shares at much higher prices than the potential merger premium, which highlights the meager consideration being offered to DHC shareholders and further underscores why the proposed deal should be voted down,” Flat Footed added.

Flat Footed, which owns approximately 9.7% of the outstanding common shares of DHC, filed a preliminary proxy statement last week with the Securities and Exchange Commission formally expressing opposition to the proposed DHC-OPI merger. Hedge fund D.E. Shaw, which owns a 6.1% stake in DHC, on Monday filed a statement with the SEC formally opposing the merger as well.

Portnoy also is the sole trustee and controlling shareholder, as well as an officer, of ABP Trust, a subsidiary of which acquired AlerisLife in March. AlerisLife, now a private company, as of the time of the deal operated 140 Five Star Senior Living independent living, assisted living and memory care communities, 120 of which were owned by DHC.