Key Summary: Flat Footed LLC, D.E. Shaw, and H/2 Special Opportunities strongly opposed the proposed merger between the company and Office Properties Income Trust, urging alternative solutions. Proxy materials and letters criticized the merger, leading to its termination on September 1, 2023. Flat Footed LLC continued advocating for better alignment with The RMR Group and opposed the sale of a stake in AlerisLife, urging repurchase before December 31, 2023.Market Cap: $860 million| Diversified Healthcare Trust is a real estate investment trust, or REIT, focused on owning high-quality healthcare properties located throughout the United States.
On May 23, 2023, Flat Footed LLC (7.4%) delivered a letter to the Board expressing its strong opposition to the company’s proposed merger with Office Properties Income Trust and its intention to vote against the Proposed Merger.
On June 12, 2023, D. E. Shaw (6.1%) stated that it has delivered a private letter to the Board expressing opposition to the company's proposed merger with Office Properties Income Trust, its intention to vote against the Proposed Merger, and its request that the Board pursue superior alternative actions. Source
On June 14, 2023, Flat Footed LLC (9.8%) filed proxy materials soliciting votes against the company’s proposal to approve the proposed merger between the company and Office Properties Income Trust at the upcoming special meeting of shareholders
On June 28, 2023, Flat Footed LLC filed proxy materials urging shareholders to vote “AGAINST” the DHC Merger Proposals. Source
On June 30, 2023, H/2 Special Opportunities (6.2%) delivered a letter to the Chairman of the Board expressing concerns about the proposed merger. It believes that the merger is not in the best interests of the company, its shareholders, or its creditors. The letter suggests that there are alternative solutions to address the company's near-term challenges, such as refinancing the 2024 debt maturities through bank lender financings, bondholder financings, asset sales, or bondholder consents. H/2 Special Opportunities stated that it is interested in participating in these alternatives and is currently working on an updated proposal to resolve the company's 2024 debt maturities.
On July 14, 2023, D. E. Shaw (5.85) filed a presentation setting forth its opposition to the proposed merger.
On July 19, 2023, Flat Footed (9.8%) responds to the growing shareholder opposition to the proposed merger with Office Properties Income Trust (OPI). It expresses encouragement that fellow shareholders share their concerns about the value-destructive nature of the merger. It mentions that significant shareholders, including D.E. Shaw and H/2 Capital Partners, have also opposed the deal and proposed alternative solutions. FFL criticizes the company for canceling meetings, removing the Special Meeting date from the latest proxy amendment, and resorting to fear-mongering tactics to garner support for the deal.
On July 27, 2023, Flat Footed (9.8%) filed proxy materials, reiterating its stance and stated that the company has rescheduled its special meeting for August 30, 2023. Source
On August 1, 2023, Flat Footed issued an Investor Presentation titled “The Case for Voting AGAINST the Proposed DHC-OPI Merger”
On August 14, 2023, ISS and Glass Lewis recommend shareholders vote AGAINST the proposed merger with Office Properties Income Trust at the Company’s upcoming Special Meeting of Shareholders on August 30, 2023. Source
On August 21, 2023, Egan-Jones recommended that shareholders vote AGAINST the proposed merger with Office Properties Income Trust. Source
On September 1, 2023, the company and Office Properties Income Trust announced that they have mutually agreed to terminate their previously announced merger agreement dated April 11, 2023, pursuant to which OPI had agreed to acquire all outstanding common shares of DHC. Accordingly, the companies have cancelled their respective Special Meetings of Shareholders scheduled for September 6, 2023. Source
On September 18, 2023, Flat Footed sent a letter to the Board, expressing its belief that the company would benefit from a better alignment of interests with its outside manager, The RMR Group, to promote targeted asset sales for liquidity improvement. Source
On December 19, 2023, Flat Footed (9.8%) sent a letter to the Board expressing concerns about selling a stake in AlerisLife to ABP Acquisition 2 LLC, controlled by the Managing Trustee, and waiving defaults in the agreement without apparent consideration. It questioned the Board's analysis for not repurchasing AlerisLife at $1.31/share, citing undervaluation, depressed 2023 EBITDA projections during acquisition, and the need for influence. It strongly urged the company to exercise its AlerisLife repurchase option by December 31, 2023. Source
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