Special shareholder meetings scheduled for Wednesday to vote on a proposed merger were delayed a week to allow Diversified Healthcare Trust and Office Properties Income Trust time to continue ongoing discussions with shareholders.
The Newton, MA-based real estate investment trusts, both managed by The RMR Group, announced early Wednesday morning they planned to convene and then immediately adjourn special shareholder meetings on a proposed merger to continue ongoing discussions with shareholders. Those meetings will reconvene Sept. 6.
During a second-quarter earnings call recently, DHC President and CEO Jennifer Francis said that the company continues to face “steep challenges” in the coming year. She said if the merger did not close, then DHC would be forced to defer capital investment in its portfolio, significantly delaying the turnaround in its senior housing operating portfolio segment and forcing it to raise “expensive resume financing.” Francis reiterated that stance in a monthly performance update issued last week.
That view, however, was challenged last week by proxy advisory firm Egan-Jones, which joined proxy advisory firms ISS and Glass Lewis in recommending that DHC shareholders vote against the proposed merger. Shareholders Flat Footed and D.E. Shaw also said they planned to vote against the merger, and they encouraged other shareholders to follow suit.
Following the REITs’ announcement, Flat Footed managing member Marc Anderson issued a statement: “We continue to believe that it is in the best interest of DHC shareholders to vote against the proposed merger with OPI at the adjourned special meeting.” Flat Footed owns 9.8% of DHC outstanding common shares
DHC announced the proposed merger with OPI in April as an effort to bring the company into compliance with debt covenants, provide immediate access to multiple capital sources and increase liquidity.
In the deal, OPI would acquire all of the outstanding common shares of DHC in an all-share transaction. OPI would be the surviving entity and would change its name to Diversified Properties Trust upon closing of the transaction. The combined company would be led by OPI executive management team members.
As of June 30, 119 of the 230 senior living communities in DHC’s senior housing operating portfolio were operated by Five Star Senior Living, a division of AlerisLife, according to an Aug. 1 presentation.
Other operators with properties in DHC’s portfolio, according to the presentation, include Cedarhurst Senior Living, Charter Senior Living, IntegraCare Senior Living, Life Care Services, Navion Senior Solutions, Northstar Senior Living, Oaks-Caravita Senior Care, Omega Senior Living, Oaks Senior Living, Phoenix Senior Living, Stellar Senior Living and The RMR Group.
